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Macroeconomic environment and its implication on the penetration of insurance business in Nigeria

Author Affiliations

  • 1Department of Insurance, School of Management Studies, The Federal Polytechnic, Ilaro, Ogun, Nigeria
  • 2Department of Business Administration, School of Management Studies, The Federal Polytechnic, Ilaro, Ogun, Nigeria

Res. J. Management Sci., Volume 10, Issue (3), Pages 15-24, September,6 (2021)


The Nigeria complex environment coupled with the recurrent economy downturn has poses threats to insurance market in terms of business penetration and market share, both nationally and across the border. This study carried out to investigate how macroeconomic environment has affected the sustainability of Nigeria insurance business penetration. The study adopted expo-facto research design, using correlation analysis to established the present relationship, whiles ordinary least square (OLS) regression model was employed to predict the future relationship between the dependent variable: penetration of insurance business proxies by Insurance Gross Premium (LIGP) and set of independent variables: Unemployment Rate (LUMP), interest rate (LINT), Bank Money Supply (LBMS), Population Growth Rate (PGRT), and inflation rate (LINF). Secondary data were sourced from the Statistical Bulletin of Central Bank of Nigeria (CBN) and the Digest report of Nigeria Insurers Association (NIA), from 1988-2018 and 2011 to 2018 respectively. The findings of the study show the inflation rate (LINF) for the periods of this study has a positive relationship with insurance business penetration (LIGP) in Nigeria, but not significant. Also, bank money supply (LBMS) has affected insurance business penetration (LIGP) in Nigeria positively and significantly; and furthermore, the population growth rate (PGRT) has a positive and significant effect on Nigeria insurance business (LIGP) penetration. However, interest rate (LINT) within the period of this study hurts the insurance business penetration (LIGP) in Nigeria with no significant relationship; and unemployment rate (LUMP) has a negative effect on insurance penetration (LIGP), nonetheless, significant within the time of this research. The study recommends that, there should be compulsory of some insurance policies in the economy, such as health insurance should be compulsory for all citizens. Also, the government on its part should enact and enforce enabling laws the will create enabling atmosphere for the insurance companies in Nigeria to boom, because this is one of the ways the state can make deeper inclusion in the industry to boost the economy.


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