Eco Dev Insurance

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What is the role of insurancein economic development?Lael Brainard124935A01.indd 1 14/1/08 14:49:06

124935A01.indd 2 14/1/08 14:49:06

AuthorDr. Lael Brainard, Bernard L. Schwartz Chair inInternationalEconomics at the Brookings Institution and ZurichFinancialServices International Advisory Council member.

This paper has benefited from the helpful comments ofRobert Gibbons,Daniel Hofmann and Roy Suter.This is the second paper in the Zurich Government andIndustry Affairs thought leadership series.To request other papers in the series or additional copies,please call +41 44 625 27 37.

124935A01.indd 3 14/1/08 14:49:06What is the role of insurancein economic development?What role does insurance play in economicdevelopment? Considerable attention hasbeen devoted to evaluating the relationshipbetween economic growth and financialmarket deepening. Most of what we havelearned relates to banking systems andsecurities markets with insurance receivingonly a passing mention. Yet, whileinsurance, banking, and securities marketsare closely related, insurance fulfills


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somewhat different economic functionsthan do other financial services, and in turnrequires particular conditions to flourish and

to make a full economic contribution.Fortunately, in the past few years, severalinteresting lines of research have begun tomap the specific contributions of insuranceto the economic growth process as well asto the well-being of the poor. The evidencesuggests that insurance contributesmaterially to economic growth by improving

the investment climate and promoting amore efficient mix of activities than wouldbe undertaken in the absence of riskmanagement instruments. This contributionis magnified by the complementarydevelopment of banking and otherfinancial systems.

Empirical studies suggest that nonlifeinsurance contributes to growth in countriesat many different levels of development. Lifeinsurance makes a substantial contributionto growth mostly in wealthier countries,since life insurance is typically a smaller partof the total insurance market in low incomecountries. The relationship between percapita income levels and insurancepenetration is also strong in the reversedirection with rising income a strongdriver of life insurance coverage. However, itis difficult to disentangle whether lower


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insurance consumption at lower incomelevels reflects reduced demand for lifeinsurance products or constraints on the

supply side associated with weak regulatoryand supervisory environments and highcosts of insurance provision.Of course, even if the data did not supporta strong causal role for insurance as anengine of overall aggregate growth, theremight be a strong case for insuring thepoor on social welfare grounds that those

at or below the poverty line are particularlyvulnerable to catastrophic shocks to incomeand consumption. And indeed, it appearsthat the gap between the potential socialvalue of insurance and the transactionscosts of provision might be unusually widefor the poorest segment of society, which

explains the growing interest in microinsuranceon the part of non governmentalorganizations and philanthropicfoundations, some of whom are partneringwith commercial providers.Contributions of Insurance toGrowth and DevelopmentInsurance serves a number of valuableeconomic functions that are largely distinctfrom other types of financial intermediaries.In order to highlight specifically the uniqueattributes of insurance, it is worth focusingon those services that are not provided by


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other financial services providers, excludingfor instance the contractual savings featuresof whole or universal life products.

The indemnification and risk poolingproperties of insurance facilitate commercialtransactions and the provision of credit bymitigating losses as well as themeasurement and management of nondiversifiable risk more generally. Typicallyinsurance contracts involve small periodicpayments in return for protection against

uncertain, but potentially severe losses.Among other things, this income smoothingeffect helps to avoid excessive and costlybankruptcies and facilitates lending tobusinesses. Most fundamentally, theavailability of insurance enables risk averseindividuals and entrepreneurs to undertake

higher risk, higher return activities than theywould do in the absence of insurance,promoting higher productivity and growth.124935A01.indd 1 14/1/08 14:49:07

What is the role of insurance in economic development?The management of risk is a fundamentalaspect of entrepreneurial activity.Entrepreneurs manage the risk of accidentalloss by weighing the costs and benefits ofeach alternative. In a structured riskmanagement process, this involves: (1)identifying the exposures to accidental loss;(2) evaluating alternative techniques for


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treating each loss exposure; (3) choosingthe best alternative; and (4) monitoring theresults to refine the choices. Those who do

not apply a structured process still makedecisions about risk, although sometimes bydefault rather than design. The scope of aneconomys insurance market affects boththe range of available alternatives and thequality of information to support decisions.For example, a manufacturer might produceonly for the local market, forgoing more

lucrative opportunities in distant markets inorder to avoid the risk of losing goods inshipment. Transport insurance can mitigatethis loss exposure and enable themanufacturer to expand. Similarly, to avoidthe risk of total loss from drought, acommercial farmer may keep half of his

seed in reserve. Crop insurance can protectagainst drought and permit all of the seedto be planted for a smaller premium thanthe cost of holding half in reserve. Thuspublic policies that encourage insuranceoperations improve the economysproductivity by broadening the rangeof investments.Insurers also contribute specialized expertisein the identification and measurement ofrisk. This expertise enables them to acceptcarefully specified risks at lower prices thannon-specialists. They also have an incentive


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to collect and analyze information aboutloss exposures, since the more preciselythey measure the cost of risk, the more

they can expand. As a result, the insurancemarket generates price signals to the entireeconomy, helping to allocate resources tomore productive uses.Insurers also have an incentive to controllosses, which is a significant social benefit.By offering discounts for seat belts, smokedetectors, or other measures that reduce

the frequency or severity of losses, theylower their eventual claims costs, in theprocess saving lives and reducing injuries.On the investment side, due to the longterm nature of their liabilities, sizeablereserves, and predictable premiums,life insurance providers can serve an

important function as institutional investorsproviding capital to infrastructure and otherlong term investments as well asprofessional oversight to these investments.Of course, these benefits are fully realizedonly in markets where insurance providersinvest a substantial portion of theirportfolios domestically.The net result of well functioning insurancemarkets should be better pricing of risk,greater efficiency in the overall allocationof capital and mix of economic activities,and higher productivity. Importantly, these


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unique functions of insurance should becomplementary to banking and financialsector deepening more broadly. For

instance, insurance facilitates credittransactions such as the purchase ofhomes and cars and business operations,while depending in turn on wellfunctioning payment systems and robustinvestment opportunities.124935A01.indd 2 14/1/08 14:49:07

Measured Contribution of

Insurance to GrowthGiven the multiple potential benefits ofa vibrant insurance sector, how much ofa contribution does insurance make inpractice? While still sparse, the researchpoints to several relatively robust inferences:1: Insurance Contributes Positively to

Economic Growth.The deepening of insurance markets makesa positive contribution to economic growth.While life insurance is causally linked togrowth only in higher income economies,nonlife insurance makes a positivecontribution in both developing and higherincome economies.1 Some research suggeststhat the positive contribution of lifeinsurance to growth is primarily through thechannel of financial intermediation and longterm investments. However, it is importantto note that these studies do not address


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the important contributions to individualand social welfare from risk management.22: Strong Complementarity between

Insurance and Banking.Insurance and banking system deepeningappear to play complementary roles in thegrowth process. Although insurance andbanking separately each make positivecontributions to growth, their individualcontributions are greater when both arepresent.3 There is also some evidence

that the development of insurancemarkets contributes to the health ofsecurities markets.4As suggested above, there are manyreasons why this complementaryrelationship might hold, including thelikelihood that the presence of property

casualty insurance avoids inefficiently highlevels of bankruptcy and helps to facilitatecredit transactions for houses, consumerdurables, and small- and medium-sizedbusinesses that banks typically finance.Separate evidence that a growing presenceof life insurance providers and pensionfunds is associated with more efficientbanks suggests that they promote somecapital market discipline on the investmentside that is also complementary.5Drivers of Insurance CoverageOf course, if growing insurance markets


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make a positive contribution to growth,then it is important to understand in turnthe enabling factors that contribute to the

development of robust insurance markets.Here, the evidence points to rising incomes,macroeconomic stability, and financialdeepening as the key drivers of insurancemarket growth, against the backdropof a conducive regulatory andsupervisory environment.1: Rising Incomes, Moderate Inflation,

and Financial Deepening are Key Drivers.Growth in insurance coverage is stronglyassociated with rising incomes, thedevelopment of an increasinglysophisticated banking sector, and low ormoderate levels of inflation.6 The strongcontribution of rising incomes to greater

insurance coverage might be attributable todemand factors (rising demand for coverageas individuals become wealthier), supplyfactors (it becomes more cost-effective toprovide insurance as the economy expands,providing both a stronger institutionalenvironment and greater returns relative totransactions cost), or a combination.The overall institutional environment playsan important role, in terms of politicalstability and openness as well asgovernment effectiveness, rule of law, andcontrol of corruption. Religious factors also


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play a role, with insurance consumptioninversely correlated to the share of thepopulation that is Islamic.

What is the role of insurance in economic development?124935A01.indd 3 14/1/08 14:49:07A number of factors that might be assumedto be strong drivers of insurance marketgrowth appear much less significant inpractice, including demographic factors,such as the share of the population that isapproaching or at retirement relative to the

share that is young, and the educationallevel of the population. Notably, socialprovision of insurance, such as socialsecurity and government health insurance,appears to grow in tandem with theprovision of private insurance perhapsbecause both are associated with increasing

incomes rather than acting as substitutesas some have conjectured. In addition, eventhough urbanization might be expected tolead to growth in insurance coverage dueto the associated separation from traditionalinformal insurance practices prevalent inrural settings, urbanization does not appearto be a significant driver.2: Variation in Insurance Coverage.Although the key drivers noted above arerelatively robust in explaining insurancemarket coverage, nonetheless there issubstantial variation in insurance coverage


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among economies that cannot be fullyexplained by these factors. This suggestssome idiosyncratic factors may be at work.

Observers have noted an S-curverelationship between per capita income andinsurance penetration: insurance penetrationis moderately positively correlated with percapita income within the group of lowincome countries and the same is true forthe highest income countries. However,within the group of middle income

countries, insurance penetration is stronglypositively correlated with per capita income.This S-curve is somewhat misleadinghowever, since it compares countries atdifferent levels of per capita income, butdoes not predict how insurance penetrationwill rise as an individual country becomes

wealthier over time.Indeed, even after controlling for income,there is substantial heterogeneity ininsurance coverage between regions (withLatin America and the Middle East laggingbehind) and even among different countrieswithin regions (a handful of countries inLatin America have much deeper insurancemarkets than the remainder). Analysis ofthe heterogeneity even within the group ofrelatively wealthy OECD member countriesleads some analysts to conclude that a fullunderstanding of the relationship between


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insurance and growth requires someanalysis of cultural and institutionalcharacteristics within individual countries.7

At minimum, the high degree ofheterogeneity might suggest that attitudestowards insurance and risk must be takeninto account in the development of countryand regional insurance markets. Related, itsuggests an important role for industrywideinitiatives on consumer education andself-regulation in addition to the

development of trustworthy regulatory andsupervisory frameworks as the globalizationof insurance markets proceeds.Micro-InsuranceThe contribution of insurance to aneconomys growth and efficiency is not theonly entry point into its role in development.

The contribution of insurance to povertyalleviation and the welfare of the poor isalso potentially of considerable importance,although the quantitative evidence on thispoint is not on very firm grounding.Nonetheless, case studies and otherqualitative evidence make a persuasive casethat the potential social value of so-calledmicro-insurance provision to poorhouseholds and small-scale entrepreneurswarrants a great deal more experimentationwith business models and products todevelop scaleable approaches that combine


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commercial and philanthropic elements.What is the role of insurance in economic development?124935A01.indd 4 14/1/08 14:49:08

As noted above, patterns of insurancecoverage suggest a positive correlation withincome at least up to a point where thevalue of insurance begins to diminishrelative to the value of overall householdassets. But this does not tell us anythingabout the potential social value of insuranceprovision at lower levels of income only

that poor consumers either do not orcannot purchase insurance at currentlyprevailing prices and availability. Moreover,insurance market development faces manyspecial informational challenges that havebeen extensively documented in economicresearch even in wealthier countries. Put

simply, insurance is likely to be relativelymore expensive even prohibitively sofor low income households and small-scaleentrepreneurs because of the highinformational problems and transactionscosts relative to the size of the risk to beinsured. As a result, most types of insuranceare simply not available to the vast majorityof the worlds poorer citizens.8In the absence of risk pooling mechanisms,plunges in incomes due to death, disability,and adverse agricultural outcomes oftentranslate into substantial decreases in


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consumption and investment that canpermanently set back a poor familyslivelihoods and prospects. When drought or

floods lead to low agricultural yields, criticalhealth interventions may be delayed,education of younger members of ahousehold put on hold indefinitely, andland, livestock or equipment permanentlyforfeited. Due to the catastrophicconsequence of such losses, there isextensive evidence that in the absence of

formal insurance poor households andcommunities attempt to self-insurethrough a combination of building assets9and diversifying sources of income. Theresult most likely is investment in a set oflower risk but also lower return activitiesand even this degree of self-insurance is

highly incomplete.There are also a variety of mechanisms thathave emerged at the community level, suchas community pooling of informal insurancecontributions to cover burial costs.Community-based insurance mechanismssurmount the problems of transactionscosts and lack of legally enforceablecontracts through personal relationshipsand piggybacking on traditional small-scalefinancial collection mechanisms, similar tothe early stages of micro-credit. However,they offer only feeble protection in the face


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of community-wide, covariate shocks, sincethey do not typically pool risk acrossbroader populations and are limited in

the types of products they can provide.For micro entrepreneurs and farmers, thenet result can be a significant drag onoverall economic performance as theychoose to invest in activities that might offerthe best risk-return profile from an individualpoint of view but are suboptimal from aneconomy-wide point of view where a higher

returning but riskier set of investmentsmight lead to better aggregate outcomes.High transactions costs are the mainimpediment standing in the way of asystematic shift from informal to formalmechanisms for managing and pooling riskfor poorer households and small

entrepreneurs. As such, the emerging fieldof micro-insurance faces many of the samechallenges faced by micro-credit twodecades ago in developing creativemechanisms for reducing or subsidizingtransactions costs. Indeed, micro-creditinstitutions are among the first to ventureinto micro-insurance products, and theirmost popular initial insurance productoffering was credit-life insurance to payoff any debts associated with outstandingmicro-credit loans in the event of death.As this field expands, it might follow a


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trajectory similar to that of micro-finance,perhaps starting with NGO providersfunded on a philanthropic basis, but rapidly

What is the role of insurance in economic development?124935A01.indd 5 14/1/08 14:49:08expanding to include commercial partnersas financial intermediaries as scaleablebusiness models emerge.In parallel, in some countries the publicsector is taking a greater interest in theprovision of social insurance to poorer

populations through subsidized publicinsurance schemes for health, naturaldisasters, or weather-related crop insurance.Government mandates for compulsoryinsurance also expand the coveredpopulation although the difficulty ofachieving risk-based pricing can lead to

market distortions.1: Household Insurance:Micro-finance providers and othercommunity-based financial intermediarieshave begun to diversify into insuranceproducts. In Uganda, 2 million people havepurchased life insurance bundled withsavings and micro-credit. Burial insurance isgrowing rapidly in other areas, and there aresome experiments with property insurancesuch as for livestock and dwellings.2: Natural Disasters, Weather, andCrop Insurance


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There should be enormous potential fornatural disaster and weather insurance toimprove the performance of lower income

economies, which tend to be morevulnerable to high volatility in incomes dueto commodity price fluctuations and naturaldisasters due to poor building codes andinfrastructure. Current investments in newproducts and innovations in weather andnatural disaster insurance should befollowed closely, as it is anticipated that

climate change will exacerbate theincidence of weather patterns and naturaldisasters in many poor areas.In recent years, the World Bank and otherdonors have been involved in experimentsin countries such as Turkey and Mexico thatprovide earthquake risk insurance financed

through a combination of reinsurance andthe capital markets. In areas of Asiaand Africa, there is growing interest inweather derivatives to insure againstweather-associated agricultural losses.These are designed to sidestep thetraditional incentive (moral hazard)problems associated with crop insuranceby using independent measurements ofweather outcomes such as rainfall ratherthan crop yields.3: Health InsuranceAs with the wealthier economies, the


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development of health insurance markets indeveloping economies depends on thecomposition of health delivery providers

whether private or public and thegovernments involvement in healthinsurance provision. However, there is astrong tendency in poorer economies forhouseholds to bear responsibility for payinga much higher proportion of overall healthcosts out of pocket than in richereconomies, which leads to underinvestment

in health services (particularly on thepreventive side) and vulnerability to healthrelatedconsumption shocks. Thus, a strongcase can be made for improving healthoutcomes in poor countries through a variedcombination of public and private insuranceprovision depending on the institutional

setting. Indeed, countries such as Mexicoand Colombia have undertaken interestingreforms in this area in recent years, and thisis likely to be an area of strong growth.4: Small-Scale EntrepreneursThe economic contribution of smallenterprises to middle- and high-incomeeconomies is well-known. However, in manypoor economies, start-ups and small-scaleenterprise fall short of their potential due toa variety of barriers, including access tocapital. As attention to these barriers grows,it is critical to put insurance high on the list.


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While the risk appetite of large corporationscan be debated, small scale entrepreneurswhose household wealth is tied up in their

What is the role of insurance in economic development?124935A01.indd 6 14/1/08 14:49:09business enterprises are undoubtedlypreoccupied with managing risk. In theabsence of risk management tools providedby formal insurance, there will be a tendencyto under invest in higher risk, higher returnactivities, thus diminishing the potential

contribution of the critical small and mediumsized enterprise sector to employment,investment, and growth overall.In sum, extending accessible insuranceproducts to poor households and smallscale entrepreneurs should be a core part ofthe agenda of democratizing access to

financial assets. When successful programsare taken to scale, it will not only addmeasurably to social welfare but also holdthe promise of generating a moreproductive and higher growth mix ofactivities and investments with a payoffperhaps greater than micro-credit.Globalization of Insurance marketsAlthough the evidence suggests thatinsurance market deepening should be apriority in the financial sector strategies ofdeveloping countries, awareness of the roleof insurance lags behind that of banking


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and capital markets. For these reasons, it isimportant to raise the visibility of this sectorand to clarify what unique regulatory

provisions might be needed to enableinsurance market development alongsideother facets of financial deepening. Formany countries, a good starting pointwould be to include analysis andrecommendations specifically for insurancein financial sector assessments.101: Institutional Foundations for Insurance

Market DevelopmentThe development of robust insurancemarkets generally requires many of thesame foundations as for banking andfinancial market deepening: reasonablemacroeconomic and political stability, clearproperty rights, enforceability of contracts,

and safeguards against corruption. However,these are necessary but not sufficientconditions. Insurance market deepening alsodepends on the scale and growth of relatedmarkets, including sales of cars and otherconsumer durables, residential andcommercial mortgage markets, businessestablishments, disposable income, andcommercial and trade transactions, to namea few. Growth in these related markets iscritical in order for the nascent insuranceindustry to reach scale in developing sharedinfrastructure, underwriting capacity,


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statistical databases for actuarial purposes,and the associated skills.A variety of public goods are critical for

jump starting and sustaining the growth ofdomestic insurance markets. These includethe collection and sharing of data on aconsistent basis, common supervisoryprinciples, for instance on reserves andsolvency, and consumer education.Recognizing the critical role of such publicgoods, several of the multinational

development banks, internationalassociations of regulators and supervisors aswell as private sector associations arealready active in providing technicalassistance on all of these dimensions.11According to an in-depth survey of thefactors that have slowed the expansion of

insurance markets in Latin America, theregions insurance professionals view thelack of sufficient education about insuranceas the greatest impediment to marketdevelopment. They also cited lack ofconfidence in the effectiveness of the

judicial system and law enforcementsfailure to collect information about theftsand automobile accidents as keyimpediments to market development.122: Insurance for Different Stages ofEconomic DevelopmentAlthough there is broad agreement on the


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need for adequate regulatory andsupervisory frameworks, there is somedebate on the content of these frameworks,

What is the role of insurance in economic development?124935A01.indd 7 14/1/08 14:49:09What is the role of insurance in economic development?and in particular the extent to whichdeveloping countries can or shouldharmonize their standards to global bestpractice or seek some intermediatestandards. Global best practices relying on

disciplined transparency and corporategovernance are still largely lacking in manydeveloping countries. For some regionswithin Africa and Latin America, a strongcase can be made for the development ofregional standards that are common acrossgroups of neighboring countries or Free

Trade Agreement (FTA) partners. Regionalharmonization offers many benefits, and itcan be a step toward global standards.The International Association of InsuranceSupervisors has articulated the CorePrinciples of Insurance Supervision, but theimplementation of those Core Principles hasbarely begun.Given the evidence connecting insurancemarket takeoff to achievement of middleincome status, a case can be made that lowincome economies below this thresholdshould concentrate limited resources on


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either specific insurance segments (suchas natural disaster risk mitigation) or othersectors. In countries with limited capacity,

it makes sense to undertake institutionaldevelopment sequentially for instancefocusing initially on laws and regulationsthat are foundational for overall financialsector expansion rather than specific toinsurance. In parallel, the growing field ofmicro-insurance is likely to yield productsand business models that contribute to

social welfare and small enterprises in lowincome economies, while establishing broadfamiliarity with formal insurance and settingthe stage for future growth as income rises.3: Trade and Investment Liberalizationand Insurance MarketsExpanding cross-boarder trade and

investment will remain key drivers ofinsurance market growth. Trade fuelsinsurance market growth both indirectlythrough the growing volume of transactionsrequiring insurance and directly bydriving privatization and liberalization ofinsurance markets and the migration ofnew products across borders.As global insurance companies pressforward on cross-border marketliberalization, they would be well-advisedto advocate just as actively for buildingconsumer confidence in the regulatory and


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supervisory infrastructure of emerginginsurance markets. Global industry leadersmay find their victories short lived if they

win major concessions in new markets oninsurance market liberalization throughWTO and bilateral free trade agreementnegotiations, without putting appropriateemphasis on the concurrent developmentof regulations and prudential supervision aswell as industry self-regulation. The hardwon market opening can backfire when

the actions of a handful of poorly regulateddomestic providers undermine consumertrust, leading to adverse reputationeffects for all providers that may takeyears to overcome.The Road AheadThe evidence suggests there is substantial

potential for insurance to make a greatercontribution to economic growth and socialwelfare in many lower and middle incomecountries. Indeed, industry experts arguethat insurance lags behind other financialservices in the extent of globalization,providing substantial growthopportunities.13 The large variation ininsurance coverage among countries atsimilar income levels, strong trendaggregate growth and stability in a largenumber of lower and middle incomeeconomies, and diminishing domestic


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market concentration in several countries allpoint to significant growth potential forinsurance with concomitant benefits for

productivity, growth, and welfare.124935A01.indd 8 14/1/08 14:49:091 Marco Arena, Does Insurance Market Activity PromoteEconomic Growth? A Cross-CountryStudy for Industrialized and Developing Countries, WorldBank Policy Research WorkingPaper 4098, December 2006. M. Conyon and D. Leech,Top Pay Company Performance and

Corporate Governance, Oxford Bulletin of Economics andStatistics, Volume 56, No. 3, pp.229-47, 1994.2 Hak Hong Soo, Life Insurance and Economic Growth:Theoretical and EmpiricalInvestigation, University of Nebraska, Department ofEconomics, 1996.

3 There is some contrary evidence on this point. Thus, forinstance, Adams et al (2005) findthat banking sector growth but not insurance marketgrowth preceded growth in Sweden.While in some specifications life and nonlife insurance donot appear to be significantcontributors to growth in the presence of an interactionterm with banking, subsequentresearch such as Ian P. Webb, Martin F. Grace, andHarold D. Skipper, The Effect of Bankingand Insurance on the Growth of Capital and Output,Center for Risk Management and


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Insurance Working Paper 02, Georgia State University,2002, suggests the independentcontribution of insurance is robust to the inclusion of

banking sector variables, and higherlevels of insurance and banking penetration jointlyproduce a greater effect on growth thantheir individual contributions combined.4 Gregorio Impavido, Alberto R. Musalem, and TherryTressel, Contractual SavingsInstitutions and Banks Stability and Efficiency, PolicyResearch Working Paper,

the World Bank, 2001.5 Gregorio Impavido, Alberto R. Musalem, and TherryTressel, The Impact of ContractualSavings Instritutituions on Securities Markets, World BankPolicy Research Working Paper2498, 2003.Endnotes

124935A01.indd 9 14/1/08 14:49:0910What is the role of insurance in economic development?6 Thorsten Beck and Ian Webb (2003), Economic,Demographic, and InstitutionalDeterminants of Life Insurance Consumption acrossCountries, The World Bank EconomicReview, Vol. 17, No. 1, pp. 51-88.7 Damian Ward and Ralf Zurbruegg, Does InsurancePromote Economic Growth? Evidencefrom OECD Countries, The Journal of Risk andInsurance, Vol. 67, No. 4, pp. 489-506, 2003.


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8 Jonathan Morduch, Micro-Insurance: the NextRevolution, forthcoming in What have WeLearned about Poverty, Abhijit Banerjee, Roland Benabou,

and Dilip Mookherjee (eds.),Oxford University Press, June 2004, provides an excellentreference for this section. See alsoStijn Claessens, Access to Financial Services: A Reviewof the Issues and Public PolicyObjectives, World Bank Policy Research Working Paper3589, May 2005.9 Caroline Moser, Reducing Global Poverty, Brookings

Press, 2007.10 USAID, Assessment on How Strengthening theInsurance Industry in Developing CountriesContributes to Economic Growth, February 15, 2006.11 USAID, Assessment on How Strengthening theInsurance Industry in Developing CountriesContributes to Economic Growth, February 15, 2006.

12 Pietro Masci, Luis Tejerina, and Ian Webb, InsuranceMarket Development in Latin Americaand the Caribbean, Inter-American Development BankSustainable Development DepartmentTechnical Papers Series, IFM-146, 2007.13 Robert Gibbons, The Global Insurance Market Comesof Age, International InsuranceQuarterly, Number 2, Volume 14, June 2007.124935A01.indd 10 14/1/08 14:49:10

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