The Impact of Demographic Burden on Insurance Density

The article investigates the relationship between demographic burden and insurance market by employing panel vector autoregression models with six groups of endogenous variables to a dynamic panel data set of 25 economies for the period 1980-2016. Demographic burden is represented by dependency ratios measured in respect to the population younger than the age of 15 (young-age dependency ratio), population above the age of 64 (old-age dependency ratio) as well as males and females above the age of 64 being examined separately. As indicators of insurance market development, life insurance density, non-life insurance density, and total insurance density are used. The robustness of the results is verified across 10 subsamples of the main observation period. The conducted analyses show a heterogeneous impact of demographic burden on the insurance market. The impulse responses reveal that negative effects prevail in the long term, which may result from the negative impact of an increasing demographic burden on the economy. In the short term, growth in female and male old-age dependency ratios drives up life and non-life insurance density.