Estimating Demand Function of Supplementary Health Insurance in Iranian Insurance Industry

In this paper, we used the models based on Panel Data to determine the factors that affecting demand for supplementary health insurance in Iran. For this purpose, statistics and information about the provinces has been gathered during the period of 1380-1387. The result of Hausman test confirms the compatibility of estimation which based on fixed effects regression model (FEM). According to the results, the per capita income, health expenditures per capita and inflation rate are the most important factors that determining the demand for this branch of insurance.The income elasticity of demand for the supplemental health insurance has been estimated 0.83 that shows this product is a necessary good in the consumption basket of households. Also, the demand elasticity of health expenditures and inflation calculated 0.1 and 0.23 respectively which indicates low elasticity of demand on these variable. In fact, increase in family income plays more fundamental role in the development of health insurance.