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Law and the Demand for Property-Casualty Insurance Consumption

Author

Listed:
  • Neil Esho

    (Australian Prudential Regulation Authority, Sydney, Australia)

  • Anatoly Kirievsky

    (School of Banking and Finance, The University of New South Wales, Australia)

  • Damian Ward

    (Bradford University, Bradford West, United Kingdom)

  • Ralf Zurbruegg

    (School of Commerce, University of Adelaide, Australia)

Abstract

This paper examines the importance of legal rights and enforcement in influencing property-casualty insurance consumption. We extend the existing literature by examining the role of legal factors in determining insurance density across countries. Also, measures of risk aversion, loss probability and price, which overcome limitations of proxies used in the existing literature on insurance demand are analysed. Using a panel data set we apply a Generalized Methods of Moments dynamic system estimator, which relaxes the assumption of strict exogeneity of the regressors and produces unbiased and efficient estimates. The results show a strong positive relationship between the protection of property rights and insurance consumption, which is robust to various model specifications and estimation techniques. Moreover, the results show the purchase of property-casualty insurance is significantly and positively related to loss probability and income, as well as providing weaker evidence of a negative relationship with price.

Suggested Citation

  • Neil Esho & Anatoly Kirievsky & Damian Ward & Ralf Zurbruegg, 2003. "Law and the Demand for Property-Casualty Insurance Consumption," Centre for International Economic Studies Working Papers 2003-14, University of Adelaide, Centre for International Economic Studies.
    • Handle: RePEc:adl:cieswp:2003-14
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    File URL: http://www.adelaide.edu.au/cies/papers/0314.pdf
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    Cited by:

    1. Mohammed, M.A. & Ortmann, Gerald F., 2005. "Factors influencing adoption of livestock insurance by commercial dairy farmers in three Zobatat of Eritrea," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 44(2), pages 1-15, June.

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