Institutional determinants of insurance penetration in Africa

This paper investigates the institutional determinants of insurance demand in Africa. We used a panel of 42 countries over the period 1996–2017. A system GMM approach was used for the estimations. Consistent with previous results, we find that institutional quality has positive and significant effects on insurance penetration in Africa. Specifically, regulatory quality, rule of law, control of corruption, political stability and absence of violence, and government effectiveness are the five institutional quality indicators that have positive and significant effects on the demand for total insurance and life insurance. However, only regulatory quality, control of corruption and government effectiveness are positively associated with non-life insurance demand. This indicates that governments should improve the business environment and strengthen the political environment to boost insurance development in Africa. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1057/s41288-022-00278-2.