8/9/2019 Determinants of insurance demand

1/13

S-curve growth

models for insurancepenetration

Mabel Ramírez, Industrias Peñoles, M!ico

"apen Sinha, I"#M, M!ico

8/9/2019 Determinants of insurance demand

2/13

Rudolf Enz´ s-curve*

$ "he S-%urve Relation &etween per-capita Income and Insurance Penetration, Published b' "he (eneva Papers on R, .o+ / 01ul', 2223 pp+ /45-625+

8/9/2019 Determinants of insurance demand

3/13

Rudolf Enz´ s-curve: Penetration Life

• Minimum

penetrat

• Ma!imumpenetrat

• In8ectionU!"3#8per capit

• Ma! incoelasticit'U!#0per capit

%hart depicts the s-curve using onl' points for the 'ear :44;+

8/9/2019 Determinants of insurance demand

4/13

Rudolf Enz´ s-curve: Penetration &on-L

• Minimum

penetrat

• Ma!imumpenetrat

• In8ectionU!(#8)per capit

• Ma! incoelasticit'U!"$#0per capit

%hart depicts the s-curve using onl' points for the 'ear :44;+

8/9/2019 Determinants of insurance demand

5/13

e+ican ,nsurance aret

• Penetration and per capita (9P for the period7 :

2:2+

8/9/2019 Determinants of insurance demand

6/13

e+ican insurance enetration

 

•Income elasticit' in the model of =nz+

•:46-:4; 7 >?ow income stage@

•:4;-2:2 7 >=!ponential growth stage@

 /ear Estiated in. and a+.

1oundaries for insurance det2

Real insuran

enetratione+ico4

222 0:+:;5AB , :+:;A/B3 :+:B

2:2 0:+/5B, :+42B3 :+45B

8/9/2019 Determinants of insurance demand

7/13

e+ican insurance enetration

 

•%orrelation between Penetration and per capita (9Pmodel of =nz+

•:46-:4; 7 >9emand-Collowing@ pattern

•:4;-2:2 7 >9emand-Collowing@ pattern

5raner 7ausalit

9irection e of causalit ustained;

P=.

8/9/2019 Determinants of insurance demand

8/13

e+ican insurance enetration

• FofstedeGs cultural dimensions7

8/9/2019 Determinants of insurance demand

9/13

2e deand for life insurance in e+ico U= 

ruett and ruett4

$ Published b' "he 1ournal of Ris) and Insurance, *ol+ A, .o+ 01une, :4423 pp+ /:-/;+

8/9/2019 Determinants of insurance demand

10/13

 >2 ruett and ruett analsis is ?ron

Variable Type of variableADF

statisticUn

Roo

per capita GDPMexico

Level2.382996 Ye

Logarithmictransformation   0.124402 Ye

8/9/2019 Determinants of insurance demand

11/13

7onclusions

• "he s-curve model is a countr' comparison of diHerent level

capita income, but is not a reliable predictor on insurance penfor an individual countr'+ %orrelation between insurance penand per capita (9P does not predict how insurance penetratrise as the countr' becomes wealthier over time+

• "he use of s-curve models e!plaining the insurance mar)et penin a specic countr' or line of business presents a numtheoretical and practical problems+ Individual adJustment b' co

based on assumptions of economic growth and social behavcannot be applied in general+ "herefore, if this heterogeneitac)nowledged, the results given b' an s-curve will onl' be appli>an average countr'@, raising the Kuestion of the e!istence of athat can serve as LrepresentativeL for this t'pe of anal'sis+

8/9/2019 Determinants of insurance demand

12/13

7onclusions

• e need to consider that the assumption of >one-in-a-)ind i

0represented b' the (9P per capita3 for a whole countr' supercial, income distribution inside a countr' ma' himpact on the aggregate insurance demand+

• Curther anal'sis must be performed to identif' a modaddress individual characteristics for each countr'

• Nurich < in-depth surve' of the factors that have slow

e!pansion of insurance mar)ets in ?atin #merica7 lac) of sueducation about insurance as the greatest impediment to development+ Dther factors were lac) of condence in the s'stem and law enforcementOs failure to collect informatiothefts and automobile accidents+

8/9/2019 Determinants of insurance demand

13/13

"han) 'ou