Dependence relationship between insurance demand and some economic, financial, and socio-demographic factors: Evidence from different groups of European countries

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The insurance sector is a significant component of the economy and its financial system. Therefore, sound growth and protection of the insurance industry against systemic risks are critical requirements for any country’s social and economic development. The paper analyzes the dependence between insurance demand represented by insurance penetration and various factors from economics, finance, socio-demographics, and institutions. The analysis is conducted within certain clusters of European countries, which are determined by functional clustering analysis concerning the magnitude and shape of the insurance penetration curves. The dependence is analyzed via linear mixed-effect models. The analysis shows significantly different dependencies between the clusters, proving the existence of different conditions for different European insurance markets, especially concerning economic growth, income, financial development, and unemployment. In contrast, interest rates, inflation, urbanization, and education do not play a significant role in these insurance markets. The institutional development seems insignificant for all clusters except for certain economies in transition. The findings imply that there is a need for countries across Europe to identify country-specific determinants of insurance. In that respect, European policymakers and managers can direct specific policies based on the identified determinants’ relationship with insurance, especially in developing countries.

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    • Table 1. Coefficients and p-values of factor significance tests for all formed clusters obtained before stepwise-backward regression analysis
    • Table 2. Coefficients and p-values of factor significance tests for all formed clusters obtained after stepwise-backward regression analysis
    • Conceptualization
      Stavros Athanasiadis, Marek Šulista, Tomáš Mrkvička
    • Investigation
      Stavros Athanasiadis
    • Validation
      Stavros Athanasiadis
    • Visualization
      Stavros Athanasiadis
    • Writing – original draft
      Stavros Athanasiadis, Marek Šulista
    • Data curation
      Marek Šulista, Tomáš Mrkvička
    • Funding acquisition
      Marek Šulista
    • Writing – review & editing
      Marek Šulista, Tomáš Mrkvička
    • Formal Analysis
      Tomáš Mrkvička
    • Methodology
      Tomáš Mrkvička
    • Supervision
      Tomáš Mrkvička