What Drives the Development of Life Insurance Sector? Empirical Evidence from Tanzania

Abstract

The study was conducted to examine determinants of life insurance development in Tanzania where by inflation rate, interest rates, income level, domestic savings and financial depth as independents variables while life insurance development specified by premium written was a dependent variable. The study guided by, the ex post facto research design. The study population consist the whole macroeconomic environment where sample of five aspects named interest rates, income level, domestic savings, financial depth and inflation rate selected with coverage of twenty-three (23) years from 1996 to 2018. The study employed a purposeful sampling technique to select five aspects of macroeconomic factors. The study employed secondary data pooled from the Tanzania Insurance Regulatory Authority (TIRA), Bank of Tanzania (BOT) and National Bureau of Statistics (NBS). Basing on the hypotheses testing the study found that financial depth and interest rate have a statistically positive influence on life insurance development. Moreover, inflation rate, income level and domestic savings have a statistically negative influence on life insurance development at 5% significant level. The study findings provide insights from a practical point of view on the determinants of life insurance development in developing countries like Tanzania, thus filling the gap in the literature reviews. The study findings serve as guidance to regulators and policymakers on what set of factors to review and incorporate into policy in order to foster positive development of life insurance in Tanzania.