The Impact of Culture on the Demand for Non-Life Insurance

Non-Life Insurance has been increasing in market during the last few decades. While the insurance world is expanding though, the variety of available insurance differ in each country depending on the type of tradition, culture and/or individual preferences each country, city and province have.

Axis Capital with our group of insurance companies around the world explores the determinants of insurance consumption, and attempt to find variables that significantly impact life and non-life insurance purchases. All studies implicitly assume that policyholders are making rational decisions, maximizing benefits to dependents after death and protecting their assets, and focus on economic determinants such as income, legal system, and education using international panel data. However, it may be unreasonable to expect such a high degree of competence and rationality on the part of insured confronted with the purchase of very complex and abstracts products. It may very well be that national culture has a strong impact on insurance purchase decisions. Humans do not share the same decision-making process when facing economic decisions. Consumers may respond to insurance solicitations according to their cultural beliefs, not only on economic rationality.

The Gross Domestic Product at Purchasing Power Parity

Reviews say that income, measured as GDP per capita, is the most important factor affecting purchasing decisions. Obviously, increased income allows for higher consumption in general, makes insurance more affordable, and creates a greater demand for non-life insurance to safeguard acquired property. We expect income to have a strong, positive impact on nonlife insurance demand.


Urbanization can be an important determinant in availing non-life insurance for a variety of reasons. Urban dwellers that have the higher risk of road accidents would have higher demand for car accident and theft insurance. This is the situation now in Jakarta, Indonesia which is reported to have the highest rate of traffic-related accidents in the world. A study by Browne in 2000 states that urban concentration increases the rate of interaction among individuals, with more activities undertaken in close proximity to neighbors and consequently uses urbanization as a proxy for loss probability. 

Education or the percentage of population enrolled in the third level education

Education increases the awareness of risk and enables a better assessment of threats to financial stability. Educated people are more able to understand the benefits and advantages of having insurance as they can comprehend the legalities of the industry more and are less likely to file complaints for petty issues.

Market Concentration

Competition forces down the price of insurance, and makes it more affordable. Monopolistic market has a negative effect on life insurance growth. When only a few insurance company is existing in a particular area, it is likely that the market may not be that high as well.


Religion has opposed life insurance. Some religious people believe that reliance on insurance to protect one’s life or property results from distrust in God’s protective care. Until the 19th century, several European nations condemned and banned life insurance on religious grounds. Religious antagonism to insurance is still quite prevalent in many Islamic countries.