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. 2021 Jun;28(23):29432-29444.
doi: 10.1007/s11356-021-12760-w. Epub 2021 Feb 8.

Does insurance sector development improve environmental quality? Evidence from BRICS

Isaac Appiah-Otoo  1 , Alex O Acheampong  2   3
Affiliations

Does insurance sector development improve environmental quality? Evidence from BRICS

Isaac Appiah-Otoo et al. Environ Sci Pollut Res Int. 2021 Jun.

Abstract

The effect of financial development measured by banks, bonds, and stocks on carbon dioxide emissions (CO2E) has been widely studied while not much is known about the effect of the insurance sector development on CO2E. Thus, this study fills this void by estimating the effect of insurance consumption on CO2E for BRICS (Brazil, Russia, India, China, and South Africa) from 2000 to 2016 using the instrumental variable generalized method of moments model. The findings indicate that, generally, insurance sector development spurs CO2E in BRICS. Specifically, a 10% rise in life insurance development increases BRICS CO2E by 1%. Also, a 10% rise in non-life insurance development increases BRICS CO2E by 4%. Finally, a 10% rise in the composite insurance development index increases BRICS CO2E by 2%. The study further finds that population size, trade openness, and energy consumption drive CO2E in BRICS, while economic growth mitigates CO2E. These results were robust to alternative econometric estimators, and alternative CO2E proxy. Policies that promote green insurance consumption are recommended.

Keywords: BRICS; Carbon emissions; Insurance sector development.

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