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This paper studies the causes of the low development of the insurance sector in the Middle East and North African (MENA) region, particularly for long term insurance. The paper shows that life and non-life premiums, as well as assets, are very low relative to expected levels given per capita income and demographic characteristics, and examines the causes of such poor performance. There is a wide range of factors constraining the development of the industry, including the absence of mandatory insurance in key areas, the predominant presence of the state in some countries, gaps in regulation and supervision, unsupportive tax regimes, fragmented market structures, a chronic lack of suitably skilled people, as well as the absence of products that conform with cultural/religious preferences, especially in the case of life insurance. The lack of development of the insurance sector is a matter of concern, as research shows that the sector can contribute to both financial and economic development. Key recommendations to accelerate the development of the sector include wider introduction of mandatory insurance lines that have clear positive externalities, continuing the privatization process for government owned insurers, employing non capital techniques to force rationalization of insurance sectors with too many small and inefficient players, removing tax distortions, taking steps to stabilize motor third party liability markets (typically the largest line of business), strengthening reporting and disclosure, regulating banc-assurance, improving consumer protection, further developing Takaful long term insurance ('Family Insurance'), and establishing regional centers of excellence for skills development.

Climate Change Economics --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Human Capital --- Insurance & Risk Mitigation --- Insurance Law --- Insurance Market --- Insurance Sector --- Mandatory Insurance --- Private Sector Development --- Takaful Insurance --- Middle East and North Africa (Mena) Region

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While the real sector and governments (along with a few micro economists) have long recognized the core economic role that the insurance function plays, the mainstream economics profession has largely treated it as invisible background. This literature review of the relevant research, most of which has been carried out in the past few decades, demonstrates that the insurance sector contributes at a basic level to inclusive economic growth and the effectiveness of the credit function. It also shows that the latter impact may be particularly fundamental in assisting the poor to avoid poverty traps and to progress economically. However, the research and the theoretical models underpinning it also highlight certain constraints to the efficient utilization of the insurance function. The literature dealing with innovations designed to overcome these constraints is reviewed and successful initiatives and remaining challenges are identified.

Banks and Banking Reform --- Climate Change Economics --- Credit --- Debt Markets --- Economic Activity --- Economic Growth --- Finance and Financial Sector Development --- Insurance & Risk Mitigation --- Insurance Function --- Insurance Industry --- Insurance Law --- Law and Development --- Macroeconomics and Economic Growth

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Social policy --- Insurance --- Geophysics --- Turkey

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The insurance sector can play a critical role in financial and economic development. By reducing uncertainty and the impact of large losses, the sector can encourage new investments, innovation, and competition. As financial intermediaries with long investment horizons, insurance companies can contribute to the provision of long-term instruments to finance corporate investment and housing. There is evidence of a causal relationship between insurance sector development and economic growth. However, there have been few studies examining the factors that drive the development of the insurance industry. This paper contributes to the literature by examining the determinants of insurance premiums (both life and non-life premiums) and total assets for a panel of about 90 countries during the period 2000-08. The results show that life sector premiums are driven by per capita income, population size and density, demographic structures, income distribution, the size of the public pension system, state ownership of insurance companies, the availability of private credit, and religion. The non-life sector is affected by these and other variables. While some of these drivers are structural, the results also show that the development of the insurance sector can be influenced by a number of policy variables.

Debt Markets --- Economic Growth --- Economic Theory & Research --- Emerging Markets --- Financial Services --- Income --- Insurance & Risk Mitigation --- Insurance Law --- International Economics & Trade --- Investment Projects --- Policy Instruments

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Natural disasters --- Risk management. --- Economic aspects.