Study on the Insurance Density Determinants in Romania

• Author: Andronic (Bratulescu) M. L.
• Position: Transilvania University of Brasov
• Pages: 69-78

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 12 (61) No. 2 – 2019

https://doi.org/10.31926/but.es.2019.12.61.2.9

A STUDY ON THE INSURANCE DENSITY

DETERMINANTS IN ROMANIA

Maria Letiţia ANDRONIC (BRĂTULESCU)1

Abstract: The objective of this study is to establish the extent to which

several specific social and financial macroeconomic variables influence the

density of the insurance market in Romania. By using multiple regression

and ANOVA instruments within a period of 21 years (1997-2017), the results

show a strong correlation between the average net salary, the

unemployment rate, the enrolment ratio in education and the birth rate, on

the one hand, and, on the other hand, the density of the whole insurance

market (life and non-life components). Results also reveal that the inflation

rate does not seem to have a major impact on the analysed indicator.

Key words: insurance density, insurance market, insurance penetration

degree, gross written premiums, multiple regression.

1. Introduction

Insurance plays a central role in the financial wellbeing of each individual, company or

public institution. Although most of the insurance contracts concern the assets held by

the natural persons and legal entities, during the last decades the importance of

insurance in a long term plan increased as people realized that life and the ability to

make a living are the matters which really count. This is more visible on the insurance

markets of the more developed countries. However, there are also several less

economically developed states which record an increase in the total number of life

insurance policies or in the value of the life insurance gross written premiums (LIGWP).

It is the case of Romania, where the share of LIGWP in the total gross premiums written

by the insurance companies authorized and supervised by the Financial Supervisory

Authority (FSA) was of about 21% in 2018.

Not only the gross written premiums (GWP) for the life and non-life sectors are

relevant in analysing the insurance market, but also indicators like the insurance

penetration degree (IPD), the insurance density (ID) and many other general

macroeconomic indicators that might have a certain impact on the evolution of this

market in Romania. In the context of these multiple influences and as a consequence of

1 Transilvania University of Braşov, letitia.andronic@unitbv.ro