The Impact of Macroeconomic Factors on the Insurance Market in the Western Balkan

Abstract

The insurance market plays a crucial role in supporting national economic stability and growth. It does this by offering financial protection, enhancing risk management, and strengthening the economy’s overall resilience. It acts as a shield for individuals, corporations, and governments by providing coverage against numerous hazards, including health, property, and liability. The COVID-19 pandemic had a significant effect on the insurance markets of the Western Balkan countries exposing vulnerabilities and prompting revolutionary change in these economies. Additionally, the COVID-19 pandemic's impact was observed across various sectors, including the financial and insurance industries. This thesis aims to assess the economic impact of key indicators, such as: inflation, interest rates, economic growth and unemployment on gross premiums in the insurance markets of Albania, Kosovo, and North Macedonia. By comparing the economic indicators of these three countries, this study provides valuable insights into regional trends. The association between economic growth and insurance sector growth is investigated using a panel data approach that includes economic indicators from these nations between 2014 and 2024. For this study, it is used quantitative method to analyze numerical data, identify relationships between variables and random effect model. The analysis suggests that price stability and higher deposit rates are conducive to the faster development of the insurance market. This study aims to establish a foundational basis for future research on the subject.