The impact of macroeconomic variables on the performance of life and health insurance in Malaysia / Noraznira Abd Razak and Afzan Nor Talib

The economic factor might have a prominent result on the expansion of the insurance business. In Malaysia, premiums in force for life business grew at an average rate of 19.1% over the period to reach RM6208.3 million in 1998. The growth however, moderated to 4.2% in 1998 because of the economic crisis. This research need to done so that we can identified which macroeconomic variables that effect the growth of life and health sector in Malaysia in order to ensure that it can contribute clearly to developing pricing strategies to achieve a specific sales target for life and health business. This study attempts to examine the relationship between selected key – macroeconomic variable namely income per capita, inflation rates, price of the product ,saving deposit rates, fixed deposit rates and unemployment rates. In this study, the researcher used secondary data in order to achieve and accomplish the objectives of the study. The regression and correlation analysis were conducted on the time series data for 11 years that is from 1998 to 2008. In selecting and testing predictors to increase the efficiency of analysis, the researcher used the backward elimination method in Multiple Regression analysis. We test the independent level at three different level that are whether p value is significant at 1%, 5% and 10% level so that we can identified the most significant independent variables among six variables involved. From our finding, only income per capita, saving deposit rates and fixed deposit rates have significant relationship with the performance or demand of life and health insurance.