Insurance and Sustainable Structural Transformation: Does Renewable Energy Matter?

The existing body of research examining the interplay between finance and development predominantly concentrates on the banking sector and capital markets, often overlooking the significant potential of the insurance sector. To address this gap, this paper investigates the impact of the insurance sector on sustainable structural transformation, specifically emphasizing the mediating role of renewable energy adoption. Employing panel data from 40 African countries spanning the period 2000-2019 and utilizing panel corrected standard error (PCSE) and feasible generalized least squares (FGLS) estimation techniques, the findings indicate a positive and statistically significant relationship between insurance sector development and sustainable structural transformation. Further, the disaggregation of insurance into life and non-life insurance reveals that both sub-sectors contribute positively, with non-life insurance exhibiting a more substantial effect. Crucially, the analysis establishes renewable energy as a key transmission mechanism through which the insurance sector influences sustainable structural transformation. These results suggest that policymakers should strategically leverage the savings generated by the insurance sector to foster and fund initiatives that promote a transition towards sustainable development pathways.