Insurance Premium Tax and the Development of the Nigerian Insurance Sector

This research examines the impact of insurance premium tax and other tax obligations on the growth and development of the Nigerian insurance industry. Nigeria's insurance penetration rate remains one of the lowest in Africa despite the sector's significant potential. Tax obligations including companies income tax, stamp duty, and VAT on services contribute to the high cost of insurance products, potentially reducing affordability and uptake. Using a descriptive design, primary data are collected from 60 insurance industry professionals including actuaries, underwriters, and compliance officers at insurance firms licensed by the National Insurance Commission. A structured questionnaire assesses the cumulative tax burden on premium income, perceived competitiveness of the Nigerian insurance sector relative to regional peers, and views on needed tax reforms. Secondary data from the National Insurance Commission, NAICOM, and FIRS revenue statistics are incorporated. Descriptive statistics and correlation analysis are employed. The study expects to find that the combined tax burden, including indirect taxes, represents a significant proportion of gross premium income, reducing reinvestment capacity and product affordability. Recommendations include exempting life insurance premiums from VAT entirely, reviewing the tax treatment of insurance technical reserves to align with actuarial best practices, and offering stamp duty reductions for microinsurance products targeted at low-income policyholders. Keywords: insurance premium tax, insurance sector, VAT, NAICOM, financial inclusion.