Economic and Demographic Determinants of Life Insurance Industry Development

Life insurance industry represents an important part of economy in all developed countries. In European area, the majority of life insurance business is concentrated in the West European countries, where life insurance has a long tradition in the population. Central and Eastern European (CEE) countries are significantly behind in this area, what is documented by the level of their life insurance density and penetration. However, during the last few decades, we have observed extensive growth in these markets. In addition, CEE countries also overcome dynamic changes in economy and demography, during this period. The main aim of the paper is to uncover whether these trends affected the development of life insurance industry in CEE and to identify the most relevant economic and demographic factors. For the analysis, we chose data from the block of four Central European counties: the Czech Republic, Hungary, Poland and the Slovak Republic. We decided to analyse these four CEE countries based on their common cultural, historical and economic similarities. Our panel regressions results suggest that both economic and demographic determinants significantly affect the life insurance industry development in these countries.