Insurance Market Development

Table 5.
Households with
Access to Private Health Insurance (%)
Nonpoor Poor Total
Ecuador
9.6
1.0
6.8
Guatemala
9.5
1.8
6.0
Panama
3.8
0.1
2.8
Nicaragua
3.0
0.6
2.1
Paraguay
13.1
1.3
10.0
Peru
8.5
0.7
4.9
Dominican Republic
27.8
10.9
22.8
Average
11.0
2.0
8.0
Australia
45.0
U.S. (Individuals)
68.0
Source:
For Latin America, authors’ calculation 
based on household surveys obtained from the ME-
COVI database; for U.S., United States Census Bu-
reau (2003); for Australia, Colombo and Tapay 
(2003). 
For all of the reasons articulated earlier, the 
challenge is to overcome the market failures 
that hinder insurance development and to 
identify the factors that promote it. Using 
information from the survey we selected the 
variables that are most likely to have an im-
pact on the effectiveness of insurance mar-
kets. The selection of variables was made 
based on previous studies as well as on ex-
perience. In the first place, insurance mar-
kets will be affected by variables that have 
an impact on the overall health of the econ-
15
10
Swiss Re (2002).
11
Swiss Re (2004: 5–6). 

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omy, such as income level, macroeconomic 
stability, average education of the popula-
tion, culture, political stability and financial 
depth. A second set of factors that affect in-
surance markets in a more direct manner are 
competition in the insurance sector, moral 
hazard, supervision of insurance companies, 
adverse selection, enforcement of consumer 
protection laws, enforcement of the law, and 
availability and clarity of information about 
products and services.