Determinants of Insurance Demand in Nigeria: An Empirical Analysis Using Panel Data

This study empirically investigates the macroeconomic and institutional determinants of insurance demand in Nigeria using panel data from 36 states and the Federal Capital Territory over the period 2014 to 2023. Existing literature on insurance demand in sub-Saharan Africa identifies income, education, urbanization, and financial sector development as primary drivers, yet country-level analyses of Nigerian insurance demand remain largely cross-sectional and aggregate in nature, limiting their explanatory precision. This research constructs a panel dataset combining state-level income per capita, adult literacy rates, banking sector penetration, urban population density, and insurance premium density sourced from the National Bureau of Statistics, NAICOM, and CBN state-level publications. Dynamic panel regression using the Generalized Method of Moments (GMM) estimator is applied to control for endogeneity and unobserved heterogeneity across states. Preliminary analysis anticipates that per capita income, financial sector access, and literacy rate are positive and significant determinants of insurance demand, while findings on the income elasticity of demand for life versus non-life insurance categories are expected to reveal significant differences. The study contributes a state-level analytical framework that is absent in the existing literature and provides NAICOM and state insurance desks with geographically differentiated demand estimates for targeted market development programming. Keywords: Insurance Demand, Panel Data, GMM, Nigeria, Macroeconomic Determinants.