FACTORS INFLUENCING NON-LIFE INSURANCE DEMAND: CASE OF LITHUANIA

This paper studies factors affecting non-life insurance demand in Lithuania. The study identified variables that are important in analyzing the demand for non-life insurance and were applied in estimating multivariate VAR, Classical Granger, and Toda-Yamamoto causalities. Lithuania's case showed three significant causal relationships: positive -between non-life insurance demand and inflation and loss probability, negative -between density and short-term interest rate. Loss probability and short-term interest rate have been shown to be significant across all models. Inflation was deemed to be the effect of shift in demand rather than the cause.