Determinants of Household Demand for Insurance: The Case of Korea

Soon-Jae Lee, Soon Il Kwon and Seok Young Chung
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Soon-Jae Lee: School of Business, Sejong University, 98 Gunja-Dong, Gwangjin-Gu, Seoul 143–747, Republic of Korea
Soon Il Kwon: Korea Insurance Development Institute, 35–4 Yeido-Dong, Yeongdeungpo-Gu, Seoul 150–606, Korea
Seok Young Chung: Faculty of Business & Economics, Wonkwang University, 344–2 Shinyong-Dong, Iksan, Chullabuk-Do, 570–749 Korea

The Geneva Papers on Risk and Insurance - Issues and Practice, 2010, vol. 35, issue S1, S82-S91

Abstract: This article analyses the effect of household characteristics on the demand for insurance using consumer survey data in Korea. Using Tobit analysis, we have found that the self-employed have a stronger demand for insurance than salaried workers, and that residents of small cities and rural areas purchase more protection-type insurance than metropolitan residents. Demand for insurance can differ depending on employment type and residential area, which has not been examined in previous studies. We have also found that there is a curvilinear relationship between age and demand for insurance. Results suggest that households with different demographic characteristics choose different risk-reducing instruments.

Date: 2010
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