Insurance markets in developing countries: Economic importance and retention capacity

Abstract

In the past, developing and emerging countries have considered financial institutions locally incorporated or even state-owned monopolies, an essential element of their economic and political independence. At the same time, structural, financial, and technical constraints such as the small size of the markets and the lack of sufficient experience have limited the retention capacity of these markets. Reliance on foreign insurance and reinsurance has remained an important policy issue. The purpose of this study is to present two important features of insurance markets in developing and emerging economies. The first issue is the relationship between insurance development and economic development which has been assessed in many empirical studies. The second issue is to present some empirical tests of the relationship between the market structure and the retention capacity for some of these countries.