The demand factors of mandatory insurance of motor liability: An empirical case from Serbia

The motor vehicle insurance market is most developed in areas with a large number of cars. A logical consequence of this is the dominant position of motor vehicle insurance within non-life insurance, considering its share in the total realized premium, which is also the case in the Republic of Serbia. However, data from member countries of the European Insurance Association show that this branch of insurance does not achieve satisfactory results. The amount of paid claims and the share of premiums spent on implementing motor liability insurance are significantly higher than the amount of premiums collected. The subject of this paper is the analysis of the determinants that affect the demand for motor liability insurance in the Republic of Serbia, taking into account that it is a mandatory type of insurance. Using adequate statistical methods and analysis, the authors developed a model to calculate the impact of certain determinants on the demand for this type of insurance, bearing in mind that only an increase in the volume of use can ensure the sufficiency of premiums for paying insurance claims and the profitability of insurers. The model defines two variables-gross domestic product (GDP) and net income (NI)-as statistically significant factors influencing the dependent variable.