Depth, Not Size: Rethinking the Insurance–Growth Nexus in Mature OECD Markets

This study examines the relationship between insurance market development and economic growth in 33 OECD countries over the period 2011–2021, with particular emphasis on life insurance markets and structural characteristics. To capture the multidimensional nature of insurance development, the analysis distinguishes between insurance depth (density), size (penetration), and structure (retention and foreign participation). Using a two-way fixed effects panel framework with country and year effects and insurance-market controls, the results reveal a differentiated pattern. Insurance density—both total and life—is positively and statistically significantly associated with GDP per capita, indicating that the intensity of insurance usage remains economically relevant in advanced economies. In contrast, life insurance penetration is negatively associated with economic growth. Life insurance retention is also negatively associated with economic growth, highlighting the role of risk allocation in mature insurance systems. Foreign insurer participation does not exhibit a statistically significant effect. The findings suggest that in OECD countries, the economic contribution of insurance markets depends more on efficiency and structure than on scale.