Determinants of Insurance Sector Development in Nigeria
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Insurance market in Nigeria like other developing African countries have remained small, less pervasive, and underdeveloped with evidence from the abysmally low density and penetration rates. These casts doubt on insurance sector development in Nigeria to question whether the issues are related to dynamics in macroeconomics, demographic, and institutional factors affect the sector. The determinants of insurance sector development in Nigeria for the period 1987 to 2020 follows a multiple regression framework through ARDLbounds cointegrationtesting. The Error Correction Model (ECM) results show the speed-of-adjustment to equilibrium-level following a short-term distortion had negative coefficients of0.02725;p=0.000<0.01and 1.08206; p=0.014<0.05 for non-life insurance density and penetration, respectively.Non-life insurance demand is positive and significantly influenced by trade openness, real interest rates, population growth, and financial development in the long run, according to long-term estimates. Non-life insurance premiums are reduced by inflation and the age of the population. This study recommends that GDP per capita be grown further through quick investment and social spending, greater exports, and a decrease in unemployment, while interest rates and inflation levels should be checked (monitored) through monetary policy activities of the apex financial institution.
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