Determinants of Life Insurance Demand: Multivariate Analysis
Determinants of Life Insurance Demand: Multivariate Analysis

Summary/Abstract: The aim of this paper is to summarize a large number of economic and demographic determinants that are used to predict the demand for life insurance into a smaller number of component variables (components) and to determine which component has a stronger influence on demand for life insurance. The analysis is addressed to actuaries in insurance companies in order to help them to deal with life insurance’s products pricing problems. Data are collected for 150 countries during the period 2005-2010. Final cross-country database is consisted of six-year average values on variables for selected countries. The methodology includes techniques of multivariate analysis: principal component analysis (PCA) and multiple linear regression. Results show that initial determinants of demand for life insurance can be summarized into two components: economic and demographic. Both components have a significant positive influence on the demand for life insurance. On the basis of standardized regression coefficients it can be concluded that economic component is stronger determinant of demand for life insurance in compared to demographic.

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