Determinants of Non-Life Insurance Sector Development in Nigeria
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Date
2021-12
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Abstract
The low rates of the insurance market’s density and penetration in Nigeria put
to question the level of development and the determinants of the sector. This
study, therefore, investigates whether the issues are related to dynamics in
demographic, macroeconomics, and institutional factors for the period 1987
to 2018. The autoregressive distributed lags estimation technique is used to
examine the factors that determine non-life insurance sector development in
Nigeria. Findings from the study showed that trade openness, real interest
rate, population growth, and financial development are positive and
significant factors affecting the demand and supply of non-life insurance
services while the level of education is a negative (positive) and significant
factor that affects the demand (supply) for non-life insurance services. Based
on the findings, the study recommends, among others that, the Nigerian
government put in place measures to increase exports and enhance financial
development to promote non-life insurance sector development. Furthermore,
the real interest rates should be checked and monitored through monetary
policy actions of the apex banking institution. Policies and strategies such as
cross-selling may be introduced to intensify and consolidate the cooperation
between the insurance and banking sectors to ensure that the insurance
market is made more competitive and efficient in-service delivery.
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Keywords
Non-life Insurance, Penetration, Density, Autoregressive Distributed Lags, Financial Development