Does economic policy uncertainty matter for insurance development? Evidence from 16 OECD countries

Abstract

We examine the influence of economic policy uncertainty (EPU) on the liveliness of local insurance markets across 16 OECD countries during the 1998–2017 period. Our static panel data estimations suggest that global policy uncertainty is negatively associated with the life insurance development of a country, as measured by national life insurance penetration (gross insurance premium per GDP in %). Meanwhile, such uncertainty does not significantly affect non-life insurance development in our sample. Furthermore, the analysis shows that the impacts of global EPU on life insurance markets are particularly stronger in periods of increasing EPU.