Life Insurance and Provincial Economies

Abstract

This paper aims at two modest objectives: First, to analyze life insurance ownership and mobilized saving through life insurance contract, based on provincial panel data, with primary focus on two variables, namely, i) insurance deepening which is defined as the number of life insurance policies per thousand population of each province; and ii) insurance premium per capita.  Secondly, to empirically estimate the relationship in which life insurance deepening and mobilized saving as dependent variables and tested against a set of explanatory variables, which include GPP, population, business establishment and regional dummies.   Among our findings: (1) wide variations in terms of insurance deepening are found and as such it may be sensible to group provinces into 5 quintiles for comparison and discussion; for instances, only 174 persons per 1,000 people found in the 1^st quintile whereas 592 persons per 1,000 people for the 5^th quintile, (2) the GPP elasticities of insurance deepening are estimated to be 0.647 for the first three quintiles, and 0.298 for the 4^th and 5^th quintiles, (3) the GPP elasticities of insurance premium are estimated to be 0.750 for 1^st – 3^rd quintiles, and 0.465 for 4^th - 5^th quintiles  (4) inequality in insurance deepening over provinces has been slightly decreasing over 3 periods measured by Gini coefficients, specifically from 0.270 during 2543-2549  to 0.237 during 2556-2562  which may be interpreted as a convergence tendency. This study may contribute to deepen understanding about life insurance at provincial level and its relationship with provincial economies of Thailand.