The S-curve and Reality

We challenge the common wisdom that the income elasticity of insurance is higher, ceteris paribus, in developing countries (the so-called S-curve hypothesis). Focusing on non-life insurance, we show that the available evidence is contradictory and heavily dependent on methodology. Based on a recent approach to consistent inference on the income elasticity of insurance, we show counterexamples to the theory. Although not supporting it in general, we argue that it could still be relevant for explaining the behaviour of particular lines of business.