On Non-Life Insurance & Economic Activity in Developing Countries: An Analysis of Select LAC Countries

Economists often cite financial markets and institutions as a primary driver of economic growth. Often overlooked is the role of the insurer. Banking and finance have been the primary focus of much research; whereas, insurance receives little fanfare. The aim of this research is to highlight the relationship between economic activity and non-life insurance – and, in general, bring more attention to the value the insurer can create. A quantitative approach was embraced for this investigation. Data was compiled from FRED, SwissRe, UNESCO, and World Bank. This piece of research employs three OLS regression models to measure the link between economy size and non-life insurance over the period of 2000 to 2020 for select Latin American and Caribbean countries. The three largest economies of the region were selected: Brazil, Mexico, and Argentina as case studies for the research. Moreover, each of the three OLS regressions that were run was done for each economy. Model 1 simply examines nominal GDP and key non-life insurance statistics. Model 2 adds various additional elements including the CPI, Debt-to-GDP ratio, access to domestic credit, and other salient aspects of economic activity. Model 3 exclusively surveys facets of non-life insurance and recessionary years. Findings from the three models helped identify that there is a relationship between economic activity and non-life insurance in each of the three selected economies. When the three models were married together – the impact of non-life insurance on economic activity became clear and illuminated the importance of non-life insurance in quantitative terms.