Determinants of Life Insurance Demand in Tunisia

This paper investigates the variables driving the demand for life insurance in Tunisia based on annual macroeconomic data spanning the period from 1990 to 2014 and collected from the Swiss Reinsurance company and the World Bank's databases. We provide a characterization of the Tunisian life insurance sector and a comparison to some emerging markets. Empirical results show that life insurance demand increases with income and financial development. However, other economic variables such as inflation and interest rate do not seem to influence life insurance consumption in Tunisia. Socio-demographic variables such as dependency, life expectancy at birth and the country's level of urbanization stimulate life insurance demand, while the level of education dampens it. Finally, pension expenditures have a negative effect on life insurance consumption confirming the substitution by social security system for private insurance.