Life insurance and income growth: the case of Sweden 1830–1950

Abstract

In this paper we provide an analysis of the life insurance market in Sweden from the early nineteenth century to the mid-twentieth century. We consider determinants put forward in the financial history literature to explain the growth of life insurance. The paper shows that income elasticity of demand gives a fairly good approximation of the development in the twentieth century, while the development of risk and insurance innovation among other things need to be taken into account to explain the growth of life insurance in the nineteenth century. The price of life insurance, measured as the overhead-to-premium-income ratio, remained fairly constant during the second half of the nineteenth century, while the risk, as indicated in terms of crude mortality rates and its volatility, did decline. This probably improved the return on life insurance savings and further helped the entry of new firms. The average premium size was reduced to enable the diffusion of life insurance to workers.

The dynamics of insurance sector development, banking sector development and economic growth: Evidence from G-20 countries

“…The diffusion of well-managed public finances, stable money, a central bank, a banking system, securities markets, and a sound insurance system all play a crucial role in promoting economic development (Andersson, Eriksson, & Lindmark, 2010;Billio, Getmansky, Lo, & Pelizzon, 2012). However, the insurance sector has gained less attention in the finance-growth dilemma (Lee, Lee, & Chiu, 2013;Ward & Zubruegg, 2000).…”

Insurance market density and economic growth in Eurozone countries: the granger causality approach

“…Therefore, the inclusion of financial depth of a nation is an equally important consideration for research (see, inter alia, Enz 2000). 6 Exceptions are Pradhan et al 2014;Hassan et al 2011;and Andersson et al 2010 (see , Table 8 for more details). 7 Both life and non-life insurance activities promote economic growth in their own way.…”

Managing policy lapse risk in Sweden’s life insurance market between 1915 and 1947

“…Additionally, we expect larger life insurers to have a proportionately greater rate of policy lapses than their smaller counterparts because they are able to spread the economic losses arising from policy lapses across larger and more diversified underwriting and investment portfolios (Dar and Dodds, 1989). Moreover, because large life insurers operate at a national scale they are potentially more susceptible to a higher rate of premature policy lapses than small local life insurers that, especially in Sweden, have generally stronger local ties with customers and relatively higher rates of policy retention (Andersson et al, 2010). Bigger life insurers are also better placed than their smaller counterparts to benefit financially from economies of scale and scope, and a more prominent brand-name (Adams et al 2012).…”

“…From the onset of World War I right up to the end of World War II, international life insurance markets, including Sweden, were affected both by socio-economic developments and major institutional structural changes that created opportunities and challenges for insurers (Andersson, Eriksson and Lindmark, 2010;Andersson and Eriksson, 2015;Eriksson, 2010). Over this period, economic growth and rising standards of living transformed the aspirations of Sweden's working-class and consequently, increased the demand for self-protection through private insurance.…”