Health Insurance

ASSESSMENT ON HOW STRENGTHENING THE INSURANCE INDUSTRY IN DEVELOPING COUNTRIES CONTRIBUTES TO ECONOMIC GROWTH

February 15, 2006
This publication was produced for review by the United States Agency for International Development. It was prepared by Chemonics International Inc. and the International Insurance Foundation.

ASSESSMENT ON HOW STRENGTHENING THE INSURANCE INDUSTRY IN DEVELOPING COUNTRIES CONTRIBUTES TO ECONOMIC GROWTH
Final Report
Financial Sector Blanket Purchase Agreement Contract No.: EEM-E-00-05-00006-00 Task Order No. 01

The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

TABLE OF CONTENTS
TABLE OF CONTENTS ..........................................................................I List of Abbreviations................................................................................ ii Glossary of terms.................................................................................... ii I. EXECUTIVE SUMMARY ....................................................................III Links between Insurance Development and Economic Growth ............. iii Links between Insurance Technical Assistance and Growth ................. iii Stages of Insurance Market Development ............................................. iv Strategies for Technical Assistance ....................................................... iv Adapting Technical Assistance Strategies to the Country Context .........v II. INTRODUCTION ................................................................................1 III. INSURANCE, FINANCE AND ECONOMIC DEVELOPMENT ..........2 Insurance Development’s Contribution to Economic growth ...................2 Insurance’s Role in Financial Sector Development.................................4 IV. STAGES OF INSURANCE MARKET DEVELOPMENT ...................8 Dormant

Bibliography: Caprio, Gerard, Jr. and Asli Demirguc-Kunt (1997), The Role of Long-Term Finance – Theory and Evidence. Policy Research Working Paper, The World Bank. Dorfman, Mark S. (2001), Introduction to Risk Management and Insurance, (7th Edition) Saddle River, NJ: Prentice Hall International. Erbas, Nuri S. and Chera L. Sayers (2005), Institutional Quality, Knightian Uncertainty, and Insurability: A Cross-Country Analysis. International Monetary Fund. Hardin, Rector R. (1958), Contributions of Life Insurance to Capital Formation in the South. The Journal of Insurance, Vol 25, No. 2, 47-52. Harichandra, Kuhan and S.M. Thangavelu (2004), Institutional Investors, Financial Sector Development and Economic Growth in OECD Countries. National University of Singapore, Working Paper No. 0405. Impavido, Gregorio, Musalem, Alberto R., and Therry Tressel (2001), Contractual Savings Institutions and Banks’ Stability and Efficiency, Policy Research Working Paper, The World Bank. Little, L. T. (1937), Economics and Insurance. The Review of Economic Studies, Vol. 5, No. 1:32-57. Kugler, Maurice, and Reza Ofoghi (2005), Does Insurance Promote Economic Growth?: Evidence from the UK. Working Paper, University of Southampton. Impavido, Gregorio, Musalem, Alberto R., and Dimitri Vittas (2002), Contractual Savings and Countries with a Small Financial Sector. Policy Research Working Paper, The World Bank. Outreville, J. Francois (1996), Life Insurance Markets in Developing Countries. The Journal of Risk and Insurance, Vol 63, No. 2, 263 -278. USAID, Financial Sector Strategy (2003). Skipper, Jr., Harold D. International Risk and Insurance: An Environmental/Managerial Approach (1998). Chicago, IL: Irwin McGraw-Hill, Inc. Soo, Hak Hong (1996), Life Insurance and Economic Growth: Theoretical and Empirical Investigation University of Nebraska: Dissertation. Swiss Re, (2004), Sigma Series: Exploiting the Growth Potential of Emerging Insurance Markets – China and India in the Spotlight. Vaughan, Emmet J. and Therese Vaughan (2003). Fundamentals of Risk and Insurance (9th edition), John Wiley & Sons. Ward, Damian and Ralf Zurbruegg (2003). Does Insurance Promote Economic Growth? Evidence from OECD Countries, The Journal of Risk and Insurance, Vol 67, No. 4., 489-506. Webb, Ian, Grace, Martin, F., and Harold D. Skipper (2002), The Effect of Banking and Insurance on the Growth of Capital and Output. Center for Risk Management and Insurance Working Paper. World Bank (1990), The World Development Report 1989. World Bank (1995), The World Development Report 1994. 29 Ian Webb Ian Webb oversees research and publications at the International Insurance Foundation (IIF). The research agenda includes country studies on emerging insurance industries, expositions on regulatory best practices, and papers expounding on the role of insurance in economic development. He also manages technical assistance projects funded by donor agencies aimed at regulatory reform and market strengthening. His responsibilities include advising, training, and coordinating technical assistance on solvency, asset/liability management, actuarial standards, and risk management, and contributing to insurance regulatory training seminars. Following an MBA in finance from the College of Insurance, Mr. Webb received his master 's in Economics, and Doctorate in Risk Management & Insurance from the internationally recognized actuarial and risk management school, Georgia State University. Previous to the IIF, he served as a consultant in the Financial Sector Development Department of the World Bank, and recently completed a 2 year secondment to the Infrastructure and Financial Markets Department of the Inter-American Development Bank. Mr. Webb also served as insurance consultant to the Multilateral Investment Guaranty Agency of the World Bank. 30