DETERMINANTS OF NON-LIFE INSURANCE SECTOR DEVELOPMENT IN NIGERIA

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.