Impact of Insurance Industries To The Growth And Development of N : Current School News

Impact of Insurance Industries To The Growth And Development of Nigerian Economy

Filed in Current Projects, Insurance by on July 7, 2021



Impact of Insurance Industries To The Growth And Development of Nigerian Economy.


The study examined the impacts of insurance industries on Nigeria’s economic growth from 1981 – 2015 using the ordinary least squares estimation method and secondary data sources obtained from the central bank of Nigeria’s statistical bulletin.

The study provided evidence that the insurance sector exerted a positive significant effect on Nigeria’s economic growth. The study, therefore, recommended that if the government wants to grow the Nigerian economy, it should focus on the development of the insurance sector.

Furthermore, policies that will bring insurance services to the people should be formulated and implemented by the government.


Background to the Study

The role of the insurance sector in mitigating sudden negative occurrences thereby stimulating economic growth cannot be over-emphasized.

Both in developed and developing countries, the insurance sector contributes to economic growth both sectorally and geographically.

Since the insurance sector has links to sectors such as industrial, transportation, agriculture, mining, petroleum, and trade both locally and internationally, its relevance to general human activities has continued to grow for all ages as all categories of risks increase.

Recently, several interesting lines of research have begun to map the specific contributions of insurance to the economic growth processes as well as to the wellbeing of the poor.

In particular, several studies have focused on the relationship between insurance and economic growth.The origin of insurance in Nigerian can be traced to the activities of European merchants in the West African coast.

This was influenced by two factors; first, the expansion of cash crop production for exports, and the upward surge in economic activities in the 1890s; second, the British desire to protect its interest and properties in the protectorate of West Coast Africa.

According to Uche and Chikeleze (2001), increased trade commerce (in Nigeria) led to increased activities in shipping and banking, and it soon became necessary for foreign firms to handle some of their risks locally.

They further show that “trading companies were therefore subsequently granted insurance agency licenses by foreign insurance companies”.

The Nigerian economy at that time depended so much on agriculture, so the major risk the European merchants were confronted with, was the risk of transporting their cash crops to Europe.


Adebisi, W. (2006). Principles and Practice of Insurance: First Edition.Akure, Ondo:Adefemi Publisher ISBN: 978-068-721-1
Agbaje, A. R. (2005). Accounting for Specialized Transactions: First Edition, Akins Prints,Mokola, Ibadan ISBN: 978-040602-2
Aaron HJ (1966). “The Social Insurance Paradox”.Can. J. Economy. Polit. Sci., p. 32.
Arestis, P. (2005), “Financial Liberalisation and the Relationship between Finance and Growth”,Working Papers Series No.05/05, Department of Land Economy, University of Cambridge, UK
Arestis, P, and Demetriades, P. O. (1999), “Financial liberalisation and economic development: A Critical Exposition” In Money and Banking: Issues for the Century (ed. P. Arestis), London: Macmillan
Allen, Franklin / Santomero, Anthony, M., (1999). What do Financial Intermediaries do? The Wharton School, University of Pennsylvania
Arena M (2008). “Does insurance market promote Economic Growth? A cross-country Study for Industrialized and developing countries”. J. Risk Insure. 75(4): 921-946
Adams MJ, Andersson LF, Lindmark M (2005). “The historical Relation between Banking, Insurance and Economic Growth in Sweden: 1830 to1998”, Department of Economic Discussion Paper. SAM, 26
Ajayi, L. A. (2000). Element and Scope of Insurance, Hybrid Publishers Limited, Akure.ISBN: 978-2858-66-47
AnyanwuAham (2000).Research Methodology in Business and Social Sciences, Owerri, Canon Publishers.
Bhattacharya, S., Thakor, A.V., (1993).“Contemporary banking theory”.Journal of Financial Intermediation.
Boyd, J., Prescott, E.C., (1986). “Financial intermediary coalitions”.Journal of Economic Theory
Babington, A.F. (2008). Refocusing the Insurance Industry towards FSS 2020.Property of Risk Analyst Insurance Brokers Ltd.
Babbie, Earl (1986). The Practice of Social Research, California, Wadsworth Publishers Company.
Brown MJ, Chung, JW, Frees EW (2000). “International Property-liability insurance consumption”. J. Risk Insure.
BGL Insurance Report (2010). Promise Kept or Promise Deferred Retrievedon 14th of April, 2011 from
Beenstock, Michael / Dickinson, Gerry / Khajuria, Sajay, (1988).“The Relationship between Property-Liability Insurance Penetration and Income”: An International Analysis, The Journal of Risk and Insurance, 55(2): p.259 – 272, American Risk and Insurance Association.
Beck, Thorsten / Webb, Ian, (2002).Economic, Demographic and Institutional Determinants of Life InsuranceConsumption across Countries, World Bank and International Insurance Foundation
Browne, Mark J. / Kim, Kihong, (1993).An International Analysis of Life Insurance Demand, the Journal of Risk and Insurance, 60(4): p616 – 634, American Risk and Insurance Association
Bowers, N.L, Gerber, H.U, Hickman, J.C, Jones, D.A & Nesbitt, C.J (1997).Actuarial
Mathematics. Illinois: Society of Actuaries
Boon, Tan Khay, (2005). Do Commercial Banks, Stock Market and Insurance Market Promote Economic Growth? An analysis of theSingapore Economy, working paper of the School of Humanities and Social Studies, Nanyang Technological University.
Catalan, M. / Impavido, G. / Musalem, A. R., (2000).Contractual Savings or Stock Markets Development: Which Leads?PolicyResearch Paper Nr. 2421, World Bank, Washington.
Campbell, T.S., Kracaw, W.A. (1980). “Information production, market signaling, and the theory of financial intermediation”.Journal of Finance.
Chikeze and Echekoba (2008).Insurance Business and Information Communication Technology; Nigeria Insurance Industry Experience.
Diamond, D., (1984).Financial intermediation and delegated monitoring.Review of Economic Studies.
Dionne, G., (1991). Contributions to Insurance Economics.Kluwer Academic Publishers, Dordrecht.
Dickson, P.G.M. (1960). The sun insurance office: the history of two and a half centuries of British insurance. London: Prentice Hall
Davies, E. Phillip / Hu, Yuwei, December (2004).Is there a Link between Pension-fund Assets and Economic Growth? – A Cross-Country Study, Public Policy Discussion Papers from Department of Economics and Finance, Brunel University, Uxbridge,Middlesex UB8 3PH, England
Esho, Neil / Kirievsky, Anatoly / Ward, Damian / Zurbruegg, Ralf, (2004).“Law and the Determinants of Property-Casualty Insurance”, The Journal of Risk and Insurance, 71(2): p265 – 283, American Risk and Insurance Association
Egbulonu K.G (2005). Advanced Econometric Methods,Owerri, Peace Publishers ltd
Fry M.J. (1995), Money, Interest and Banking in Economic Development, Baltimore, John Hopkins University Press
Gurley, J.G., Shaw, E.S., (1960). Money in a Theory of Finance. Brookings Institution, Washington, D.C
Gale, D., Hellwig, M., 1985. Incentive-compatible debt contracts: The one-period problem. Reviewof Economic Studies.
Gollier, C., (2003), To insure or not to insure: An insurance puzzle, Geneva Papers on Risk and Insurance, 28, 5-24
Holsboer JH (1999). “Repositioning of the Insurance Industry in the financial sector and its Economic role”, Geneva Pap. Risk Insure. 24(3): 243-290
Hofstede G (1995). “Insurance as a product of National values”, Geneva Pap. Risk Insure. 20(4): 423-429
Hill R.D and WasawB  (1986). The Insurance Industry in Economic Development, New York University Press, New York.
Haise P, Sümeg K (2008). “The relationship between Insurance and Economic Growth in Europe.A Theoretical and empirical analysis”.Empirica, 35(4).
Henderson G and Milhouse V.H (1987).International Business and Cultures: A Human Relations Perspectives, Cummings and Hathaway, New York.
Irukwu, J.O (1999).Accident and Motor Insurance in West Africa(Law and Practice Heinemann).
Irono and Akoji (2003) “Financial Liberalization and Economic Growth: Lessons from the South African Experience”, International Journal of Applied Economics, 4(2)
King, R & Levine, R (1993). Finance and growth: Schumpeter might be right. The QuarterlyJournal of Economics 108(5)681-737
Kugler M, Ofoghi R (2005). “Does insurance promote economic growth? Evidence from the UK”, Working Paper, division of Economic, University of Southampton
Leland, H.E., Pyle, D.H., (1977). “Informational asymmetries, financial structure, and financial intermediation”.Journal of Finance.
Levine, R. (2004). Finance and growth: theory and evidence. NBER Working Paper No. 45
Lim C, Haberman S (2003). “Macroeconomic variables and the demand for life Insurance in Malaysia”.Faculty of Actuarial Science and Statistics, FASS Business School, City University, London.
Marcus Hagedorn& Ashok Kaul, (2002). “An Adverse Selection Model of Optimal Unemployment Insurance,” Computing in Economics and Finance 2004, Society for Computational Economics.
Merton, R.C., (1989). On the application of the continuous-time theory of finance to financial intermediation and insurance. Geneva Papers on Risk and Insurance Theory 14,
McKinnon, R.I. (1973), Money and Capital in Economic Development, Washington, DC: Brookings Institution.
Nwankwo G.O and Jones R.P (2000) Ground Work for Commerce; Book for West Africa Edition, Africa University Press
Nwite, S. C. (2004): Element of Insurance. Enugu, Nigeria; Immaculate Publication, Ltd
NAICOM, (2010) Guidelines for the Insurance Sector Reform and Consolidation, Published by National Insurance Commission, Sept. 30, 2005, zone 5, PMB 457, Garki Abuja.
Nduka (2005).Low income earners need more insurance policies. Dateline insurance
        Journal, 1(7)23-35
Obasi N (2010). Policies, Challenges, Reforms and Nigerian Disposition to Insurance Contracts,theFronteira Post.
Omar O.E (2005). “The Retailing of Life Insurance in Nigeria”: An Assessment of Consumers’ Attitudes, Journal of Retail Marketing Management Research, (1), (2005), 41-47
Outreville, J. Francois, (1990). “The economic significance of insurance markets in developing countries”, The Journal of Risk andInsurance.
Osipitan, T. (2009). Legal regulation of insurance business in Nigeria: problems and prospects.Chartered Insurance Institute of Nigeria Journal 11(1)69-82
Outreville, J. Francios, (1996), “Life Insurance Markets in Developing Countries”, The Journal of Risk and Insurance, 63(2): p263 – 278.American Risk and Insurance Association
Oluoma, R. O. (2010). Elements of insurance. Lagos: Impressed Publishers

CNS Team.



    Hey You!

    Don't Miss These Opportunity! Enter Your Details Below!


    Tags: , , , ,

    Comments are closed.

    %d bloggers like this: