1
Ensuring Insurance Market Development
In Latin America and the Caribbean
(Asegurando el Desarrollo de Seguros en LAC)
IIF Annual Meeting Symposium: "Missing
Markets: Why Isn't the Whole World
Insured?"
INTERNATIONAL INSURANCE
FOUNDATION
Washington, DC
November 10, 2005
James Sylvester
Luis Tejerina
Pietro Masci
3
Porcentaje de Hogares Afiliados a Seguro de Salud
100%
84.3%
32.8%
74.9%
43.5%
36.1%
29.8%
28.7%
23.9%
21.9%
3.9%
45%
68.1%
7.9%
4.9%
6.8%
22.8%
10.0%
2.1%
2.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Australia
EEUU
Promedio
Peru
Ecuador
Republica Dominicana
Paraguay
Salvador
Guatemala
Nicaragua
Panama
Total
Privado
Status:
Effectiveness can be enhanced
Distribucion de Respuestas a Preguntas de Efectividad del Mercado de Seguros
(Porcentaje)
19 .2 3
2 1.2 9
5.81
55.77
54 .8 4
3 4 . 8 4
17.3 1
13.55
3 1.6 1
5.77
10.32
27.10
1.92
0 .6 5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Están pagando demasiado
por el seguro
Los términos de los
productos de los seguros
son demasiado complejos y
no estan bien explicados
El proceso de reclamar al
asegurador para el pago
de un siniestro es incierto y
no confiable
5
Past Approaches:
Current research
S t u d y
S a m p l e
M o d e l
D e p e n d a n t V a r i a b l e
I n d e p e n d e n t V a r i a b l e s
( i f s i g n i f i c a n t , o r d i n a l i t y i n P a r e n t h e s e s ) F e c h e r e t a l ( 1 9 9 3 ) F r e n c h i n s u r e r s n / a P r o d u c t i v e p e r f o r m a n c e s c a l e o w n e r s h i p d i s t r i b u t i o n r e i n s u r a n c e c l a i m s r a t i o B o r d e , C h a m b l i s s a n d M a d u r a ( 1 9 9 4 ) n / a n / a I n s u r a n c e r i s k f i n a n c i a l c h a r a c t e r i s t i c s … t y p e o f i n s u r a n c e c o m p a n y K r a m e r ( 1 9 9 6 , 2 0 0 0 ) 1 9 5 D u t c h c o m p a n i e s O r d e r e d L o g i t F i n a n c i a l s o l i d i t y S o l v e n c y r a t i o P r o f i t a b i l i t y r a t i o I n v e s t m e n t p o r t f o l i o R e i n s u r a n c e M a r k e t p e n e t r a t i o n T a y l o r ( 2 0 0 1 ) 1 6 5 s u r v e y s f r o m o n e O L S R e p u r c h a s e i n t e n t i o n S e r v i c e Q u a l i t y l a r g e U S i n s u r e r C u s t o m e r S a t i s f a c t i o n C u s t o m e r t r u s t D i a c o n a n d O ' S u l l i v a n ( 2 0 0 2 ) T i m e s e r i e s f o r 5 3 U K 2 - w a y F i x e d E f f e c t s F i r m P e r f o r m a n c e : B o a r d c o m p o s i t i o n v a r i a b l e 1 , C E O / C h a i r d u a l i t y l i f e i n s u r a n c e c o m p a n i e s a n n u a l % c h a n g e i n f i r m ' s l i f e f u n d B o a r d c o m p o s i t i o n v a r i a b l e 2 , % n o n - E x e c D i r e c t o r s a n n u a l % c h a n g e i n M k t v a l u e o f I n v S i z e , L o g o f t o t a l a s s e t s a n n u a l % c h a n g e i n T P W B u s i n e s s c o m p o s i t i o n , L - T p r e i m u m s a s % o f T n e t W P v o l u m e o f n e w b u s i n e s s s l a e s s a l a r y o f h i g h e s t p a i d D i r e c t o r D i a c o n , S t a r k e y a n d O ' B r i e n ( 2 0 0 2 ) 4 5 4 E u r o p e a n c o m p a n i e s T o b i t F i r m E f f i c i e n c y G e a r i n g r a t i o , b o r r o w i n g f r o m c r e d i t o r s a s % o f c a p i t a l L i q u i d i t y , c a s h + d e p o s i t s a s a % o f t o t a l a s s e t s M u t u a l , d u m m y f o r w h e t h e r f i r m h a s z e r o s h a r e c a p i t a l P r o f i t , P & L a s a % o f T n e t W P R e i n s u r a n c e p r e m i u m s S i z e , l o g o f t o t a l a s s e t s S o l v e n c y , c a p i t a l a s a % o f t o t a l a s s e t s L e v e r t y , L i n a n d Z h o u ( 2 0 0 4 ) C h i n e s e c o m p a n i e s 1 ) W e i g h t e d T o b i t F i r m E f f i c i e n c y N u m b e r o f F i r m s ( - ) ( p r o p e r t y / c a s u a l t y i n s u r e r ) S i z e o f f i r m , l o g o f T o t a l P r e m i u m s W r i t t e n ( + ) D u m m y f o r w h e t h e r f i r m i s f o r e i g n ( + ) I n t e r a c t i o n b e t w e e n s i z e a n d f o r e i g n f i r m d u m m y ( - ) 2 ) P o i s s o n F i r m E f f i c i e n c y S i z e o f f i r m , l o g o f T o t a l P r e m i u m s W r i t t e n ( + ) ( p r o p e r t y / c a s u a l t y i n s u r e r ) D u m m y f o r w h e t h e r f i r m i s f o r e i g n ( + ) I n t e r a c t i o n b e t w e e n s i z e a n d f o r e i g n f i r m d u m m y ( - )M e t h o d o l o g y o f F i r m - l e v e l S t u d i e s o n I n s u r a n c e
Our Focus: “Effectiveness”
and its conceptual model
F i g u r e 1 : S t r u c t u r a l M o d e l f o r L A C I n s u r a n c e M a r k e t s
E f f e c t i v e
I n s u r a n c e
M a r k e t s
S u p p l y o f
I n s u r a n c e
P o l i t i c a l
S t a b i l i t y
A g e
M a c r o
S t a b i l i t y
I n c o m e
F i n a n c i a l
D e p t h
E d u c a t i o n
C u l t u r e
I n f o r m a t i o n
S o c i a l
T r u s t
C o m p e t i t i o n
M o r a l
H a z a r d
A d v e r s e
S e l e c t i o n
S u p e r v i s i o n
R u l e o f
L a w
C o n s u m e r
P r o t e c t i o n /
E n f o r c e m e n t
D e m a n d f o r
I n s u r a n c e
E x o g e n o u s V a r i a b l e s E n d o g e n o u s I n t e r v e n i n g V a r i a b l e s E n d o g e n o u s D e p e n d a n t V a r i a b l e7
Results:
Specification
Figure 1 : Structural Model for LAC Insurance Markets
Effective Insurance Markets Supply of Insurance Political Stability Age Macro Stability Income Financial Depth Education Culture Information Social Trust Competition Moral Hazard Adverse Selection Supervision Rule of Law Consumer Protection/ Enforcement Demand for Insurance Exogenous Variables Endogenous Intervening Variables Endogenous Dependant Variable
