During the 1980s and early 1990s, the world insurance market grew substantially.
World insurance premiums in 1993 accounted for about 8 percent of world gross
domestic product (GDP), compared to 4 percent in 1984.
This article explains a substantial proportion of the variation in property-liability insurance consumption across countries belonging to the Organization for
Economic Cooperation and Development (OECD). The study focuses on two lines
of insurance: motor vehicle and general liability. The authors’ analysis indicates
that economic conditions affect the demand for insurance differently across lines
of coverage. In particular, the authors’ results suggest that income has a far
greater effect on motor vehicle insurance consumption than on general liability
insurance consumption. The authors find evidence that several factors are
important in explaining the purchase of both kinds of insurance. These factors
include income, wealth, the percent of a country’s insurance market controlled by foreign firms, and the form of the legal system
in the country.
Advances in technology have spurred significant growth in international trade
during the past 30 years. National economies have become increasingly
intertwined as evidenced by world trade dependency  that reached 32
percent in 1991 (Human Development Report, 1994). In 1969, total world
exports and imports were approximately $256 billion and $268 billion,