Assessment of the Macroeconomic Determinants of the Performance of Insurance Industry. Evidence from Uganda (1987-2019)
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The overall objective was to find out the macroeconomic determinants of the performance of insurance industry in Uganda using time series data of 1994-2019. It specifically investigated the effect of Inflation rate, real interest rate, Population growth rate, rate of employment, GDP growth rate and gross domestic savings growth rate on the performance of the insurance industry in Uganda by considering gross written premiums as a measure of insurance industry performance. The study explained the summary (descriptive statistics) at the univariate level while pairwise correlation and Ordinary Least Square regression technique were employed at bivariate level and multivariate level respectively. The ordinary least square regression results indicated that GDP growth rate and inflation rate had statistically significant negative impact (p-value<0.05) on gross written premiums and that Employment rate, growth rate of gross domestic savings and Population growth rate had statistically significant positive impact (p-value<0.05) on gross written premiums. The real interest rate was found not to have a statistically significant impact on gross written premiums. The R-squared value was found to be 0.9858 implying that the model is a best fit. The study concluded that GDP, employment rate, gross domestic savings, inflation rate and population growth influence the performance of the insurance industry of Uganda and real interest does not influence the performance of Uganda’s insurance industry. The study recommended that the government should increase interest rate on deposits (savings), educate the Ugandans on fighting poverty, support the agricultural sector, put in place tight fiscal policy and strong money supply control policies and follow the flexible exchange rate regime.