Actuarial Modelling of Demographic Dividend and Its Implications for Insurance Market Expansion in Nigeria

This study models Nigeria's demographic dividend potential and derives actuarial implications for insurance market expansion over the period 2025 to 2050. The demographic dividend arises when a declining dependency ratio, driven by falling fertility and rising working-age population share, creates favourable conditions for savings accumulation, capital formation, and market development. Nigeria is at an early stage of its demographic transition, and the eventual dividend, if supported by appropriate policy and financial sector development, could unlock substantial insurance and pension market growth. This study constructs a cohort-component demographic projection model calibrated to 2018 NDHS and NPC projection parameters, generating age structure forecasts under high, medium, and low fertility scenarios to 2050. Insurance demand projection models link demographic structure to life, health, and pension insurance product demand using current penetration rates by age cohort and scenario-based financial inclusion growth assumptions. Findings reveal that the working-age population share will peak between 2035 and 2045 under the medium scenario, creating a window of maximum insurance demand expansion. Life insurance premium income could grow five to eight times its current level by 2040 if age-specific penetration rates improve modestly alongside income growth. North West and North East demographic trajectories diverge significantly from national trends due to higher fertility persistence. The study contributes an original actuarial demographic-insurance demand model for Nigeria and recommends demographic-informed market entry strategies for insurers.

Keywords: demographic dividend, insurance market expansion, population projection, actuarial modelling, Nigeria.