The relationship between insurance and economic growth

Abstract

Insurance business has several important functions within the economic structure such as providing insurance through the premiums collected by the insurance companies against the risks for the economic structure, managing these premiums collected through using the financial institutional role, risk management and transfer of the premiums into productive areas. While continuing on its activities, insurance business also enhances the economic development. In this study, a research on the relationship between insurance business and economic growth was conducted by using the data from 36 countries from the period between the years 19852018. Results of the panel causality test introduced by Dumitrescu and Hurlin (2012) indicated that there is a mutual causality between life insurance business and economic growth & a one-way causality from economic growth to the non-life insurance business. These results bring the conclusions that rather than the non-life insurance business, life insurance business brings contributes more to the economic growth with the long term and regular resources that it provides.