The Performances of insurance industry and the Nigerian economic growth

Abstract

This research analyzed the insurance industry and economic growth in Nigeria between 1980 and 2015. Secondary data ranging from real gross domestic product, the premium of the insurance business, claim expenditure of insurance industry and inflation rate were utilized and sourced from Central Bank of Nigeria (CBN). The Ordinary Least Squares (OLS) multiple regression techniques, Descriptive statistics, Augmented Dickey-Fuller (ADF) test of stationarity and ARDL Bound Test Co-Integration were adopted for the model in the Study. The findings revealed that the premium of the insurance industry (PMI) impacts negatively on economic growth both in the extended and short run period. The claim expenditure of the insurance industry (CEX) revealed a progressive relationship with economic growth in the long run and a negative relation with growth in the short run. We therefore conclude following the Keynesian theory of aggregate demand which states that, ‘’if we will have to wait till the long run, we will all be dead’’, that insurance industry in Nigeria has not impacted positively on economic growth of Nigeria within the period under review and its operations and investment have not been prominent and contributory to the growth and development of Nigeria. Based on these outcomes, we recommend amongst others, that more investment ought to be made towards the insurance industry in Nigeria especially in terms of proper policy formulation by the government that would channel funds and encourage competition among the players in the industry and invariably contribute to the growth of the economy.