On the determinants of life insurance development in Sub-Saharan Africa: the role of the institutions quality in the effect of economic development

Etudes & documentsThis paper analyzes the determinants of life insurance development on a panel of 20 countries in sub-Saharan Africa over the period 1996-2011. It also highlights the role of the institutions quality on the effect of economic development on the life insurance. Controlling for the presence of a possible endogeneity bias using the instrumental variable technique, we find evidence that increased of per capita income leads to an increase in life insurance premiums. We show that the life insurance is a luxury good in SSA. The demographic variables such as life expectancy and the young dependency ratio influence negatively the life insurance development while the old dependency ratio has a positive effect. We also find that the protection of property rights and the government stability are positively associated to life insurance. The results are robust to the introduction of more variables. Furthermore, the marginal impact of the income per capita on the life insurance varies according to the quality of the legal and political environment. Finally, the marginal effect of the economic development on life insurance is less for french legal system countries compared to non-french legal system countries