nep-ias New Economics Papers
on Insurance Economics
Issue of 2011‒04‒02
three papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. The insurance sector in the Middle East and North Africa : challenges and development agenda By Lester, Rodney
  2. "No way out": the lack of efficient insolvency regimes in the MENA region By Uttamchandani, Mahesh
  3. The Poverty Reduction Capacity of Private and Public Transfers in Transition By Paolo Verme

  1. By: Lester, Rodney
    Abstract: This paper studies the causes of the low development of the insurance sector in the Middle East and North African (MENA) region, particularly for long term insurance. The paper shows that life and non-life premiums, as well as assets, are very low relative to expected levels given per capita income and demographic characteristics, and examines the causes of such poor performance. There is a wide range of factors constraining the development of the industry, including the absence of mandatory insurance in key areas, the predominant presence of the state in some countries, gaps in regulation and supervision, unsupportive tax regimes, fragmented market structures, a chronic lack of suitably skilled people, as well as the absence of products that conform with cultural/religious preferences, especially in the case of life insurance. The lack of development of the insurance sector is a matter of concern, as research shows that the sector can contribute to both financial and economic development. Key recommendations to accelerate the development of the sector include wider introduction of mandatory insurance lines that have clear positive externalities, continuing the privatization process for government owned insurers, employing non capital techniques to force rationalization of insurance sectors with too many small and inefficient players, removing tax distortions, taking steps to stabilize motor third party liability markets (typically the largest line of business), strengthening reporting and disclosure, regulating banc-assurance, improving consumer protection, further developing Takaful long term insurance ('Family Insurance'), and establishing regional centers of excellence for skills development.
    Keywords: Insurance Law,Insurance&Risk Mitigation,Debt Markets,Climate Change Economics,Emerging Markets
    Date: 2011–03–01
  2. By: Uttamchandani, Mahesh
    Abstract: This paper provides a comparative summary of the payout phase of insolvency systems in the MENA Region. Countries in the region generally have weaker restructuring and liquidation systems than those in most other regions. The paper summarizes many of the weaknesses common across the region.
    Keywords: Bankruptcy and Resolution of Financial Distress,Debt Markets,Deposit Insurance,Banks&Banking Reform,Investment and Investment Climate
    Date: 2011–03–01
  3. By: Paolo Verme (University of Torino)
    Abstract: The transitional economies of the Former Soviet Union (FSU) have enjoyed an extraordinary period of growth and poverty reduction between 2000 and 2007 and this occurred in concomitance with significant increases in private and public transfers to households. The paper assesses the relative importance of these transfers for welfare and poverty in Moldova, the poorest country in Europe. A longitudinal analysis based on panel data reveals that private transfers and social insurance transfers are effective in improving welfare and reducing poverty whereas social assistance transfers have little or no effect. Social insurance and social assistance seem to have swapped roles. Social insurance is most relevant for lifting people out of poverty while social assistance - if anything - has a small role in protecting the non-poor from falling into poverty. We also find that the different types of transfers do not crowd-out each other and that social insurance may in fact reinforce the capacity of private transfers to reduce poverty. Such findings have several policy implications for the near future: a) Poor households in FSU transitional economies remain highly vulnerable to shocks in public and private transfers; b) the 2008-2009 recession is likely to expose this vulnerability and result in a surge in poverty larger than expected and c) the social assistance systems remain in great need of pro-poor reforms and cannot currently provide an adequate protection from economic shocks.
    Keywords: Private Transfers, Social Insurance, Social Assistance, Transitional Economies
    JEL: H5 I3 O1 P2
    Date: 2010–08

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