DOES INSURANCE PROMOTE ECONOMIC GROWTH: EVIDENCE FROM NIGERIA

Olajide Solomon FADUN; Peter SILWIMBA

Olajide Solomon FADUN Department of Actuarial Science & Insurance, University of Lagos, Lagos Nigeria https://orcid.org/0000-0003-0882-6248
Peter SILWIMBA Risk Department, National Savings and Credit Bank, Lusaka, Zambia https://orcid.org/0000-0001-6663-1866

Keywords: Insurance, Insurance premiums, Life insurance, Non-Life Insurance, Economic growth, GDP

Abstract

Insurance plays an essential role in economic growth. This study analyses the contribution of insurance to economic growth in Nigeria. The research utilised an ex-post facto design, using 28-year time series data (1992 - 2019). The study's dependent and independent variables were gross domestic product (GDP) and insurance (life and non-life) premiums. The long-run co-integration result indicated that non-life premium (NLP) positively impact GDP. The coefficient shows that a percentage increment in NLP results in a 5.63 increase in GDP. The long-run co-integration results suggested that life premium (LP) positively impacts GDP. The co-efficient also shows that a percentage increment in LP results in a 4.25 increase in GDP. The results revealed a significant positive contribution of insurance to economic growth. It indicates a significant positive impact of insurance (life and non-life) premiums on economic growth in Nigeria. The results suggest that insurance contributes positively to a nation's economic activities and promotes economic growth. The government should formulate and implement economic policies to stimulate insurance activities, enforce statutory insurance and sound corporate governance.