Macroeconomic environment and insurance industry development: The case of Visegrad group countries

Abstract

The insurance industry accumulates a considerable number of financial assets and represents an essential element of the sustainable economic growth in all developed countries. Theory predicts economic changes as one of the most important determinants of insurance industry development. In transition economies, the insurance industry is in a different situation due to its specific historical context. This paper focuses on an examination of the role of a macroeconomic environment in the development of insurance sectors in selected transition countries. Our sample consists of four central European countries: the Czech Republic, Hungary, the Republic of Poland and the Slovak Republic – the Visegrad Four countries. Based on our findings, we are able to confirm that the macroeconomic environment has a strong impact on the development of the insurance industry in the selected transition countries. In addition, the results suggest that the development in the non-life insurance industry is more sensitive to the macroeconomic environment.