Estimation of Iran’s Life Insurance Demand Function using Panel Data Method from 2006 to 2014

Background: Insurance industry is recognized as a major economic entity.Development of insurance, and particularly life insurance, is among the necessitiesof industrial societies as this plays a substantial role in reinforcement of thesociety’s economic power and, thus, establishes security and confidence. Aimed atanalyzing the economic-social factors affecting insurance demand, the presentstudy deals with estimation of life insurance demand function using panel datafrom 2006 up to 2014 in Iran.Methods: The present research is a descriptive-analytical study of the retrospectivecohort applied type. Information registered in Iran’s Statistics Centerencompassing the interval from 2006 to 2014 was analyzed. Benefitting fromeconomic evaluation mechanism and macro-scale economic and social variablesaffecting life insurance demand were investigated in 30 provinces of Iran. Finally,the country’s demand function of life insurance was estimated using Stata12 andEviewes8 software packages with panel data method.Results: Life expectancy rate has the largest impact on life insurance demandamong the variables analyzed. In addition, urban settlement rate leaves the smallesteffect on life insurance demand.Conclusion: Results of the study indicate that increase and rise of variables such aslife expectancy rate, dependency rate, urban settlement rate, literacy rate,likelihood of family head’s death, population, and average net annual expendituresof urban family lead to increased tendency of individuals to life insurance.Furthermore, increase of other parameters like inflation rate and interest rate resultin reduction of people’s tendency toward life insurance.

Keywords:

Life Insurance , Demand , Inflation Rate , Interest Rate , Life Expectancy Rate