The insurance industry in Nigeria: sources and uses of funds

Abstract

The insurance industry has not entered the mainstream of research of the financial sector in the Nigerian economy. Most analyses concentrate on the capital market, giving only scant treatment to the insurance sector. This paper, therefor, attempts an in-depth study of the sector, focusing largely on the sources and uses of funds during the 1960-81 period. The approach to the paper is bath evolutionary and econometric. The latter, based on the technique of the Ordinary Least Squares (OLS), explored the determinants of growth of the insurance industry (sources) and of its investment behavior (use s). The insurance industry tends to grow pari-passu with economic development. This derives from the observed positive and significant relationships between variation in premiums of the insurance industry and that of factors such as the per capita income, the degree of literacy, intensity of energy use, etc, which are themselves proxy indicators of economic development.