Insurance market development, renewable energy, and environmental quality in the UAE: Novel findings from a bootstrap ARDL test

Abstract

The present work aims to contribute to the existing literature by assessing the influence of insurance market development on the UAE's environmental quality. This study stands to be the first to evaluate the influence of the insurance market on environmental quality in the UAE. The study used an advanced approach to confirm the cointegrating relationship among selected variables: bootstrap Autoregressive Distributed Lag (ARDL) testing and the Bayer and Hanck test for co-integration. The empirical outcomes reveal that renewable energy consumption stimulates environmental quality in the short and long run. Furthermore, empirical outcomes show that insurance market development has a positive effect on the level of environmental quality in the country. Therefore, policymakers in the UAE are advised to make policies and strategies to reinforce the sustainability of insurance markets that would minimize environmental pollution by giving incentives to whoever contributes minimal carbon and uses eco-friendly materials. This can be achieved through an active role in green investments and product development to promote environmental quality and increase insurers” profitability and credit rating.