INSURANCE INDUSTRY AND ECONOMIC DEVELOPMENT

ABSTRACT

Insurance is one of the cornerstones of modern day financial service sector that aid in reducing uncertainty and volatility, smoothen the economic cycle and reduce the impact of crisis situations on the micro and macro level. It is against this background that this study examined the impact of the insurance industry on the economic development of Nigeria. The study adopted the ex-post facto research design and annualized cross sectional data for 20- year period 2000-2020 were collated from the Central Bank of Nigeria statistical Bulletin, National Insurance Commission and Nigerian Insurers Association. Four hypotheses were proposed and tested using the Ordinary Least Square (OLS) regression model. Descriptive statistics and graphs were also used to complement the regression results. The results emanating from this study indicate that while life insurance penetration and insurance density had positive and significant impact on economic development in Nigeria, both total insurance penetration and non-life insurance penetration had positive but insignificant impact on economic development in Nigeria under the period of this study. The study therefore recommends among others, that for the insurance industry in Nigeria to have more positive impact on the Nigerian economy, the government should work to see that some of the premiums collected and other income generated by the industry are being invested to ensure diversification of insurance industry to boost the economy. This will assist at enhancing savings therefore providing funds for investment into the Nigerian real sector.