Insurance Penetration and Economic Growth in Nigeria: An Empirical Investigation

The insurance sector serves as a critical pillar of the financial system by managing risk, mobilising long-term savings, and channelling funds into productive investment, yet Nigeria's insurance penetration rate remains among the lowest globally relative to its economic scale. This study empirically investigates the relationship between insurance penetration and economic growth in Nigeria using annual data from 2005 to 2023 sourced from the National Insurance Commission and the Central Bank of Nigeria. The study measures insurance penetration as total premium income as a percentage of gross domestic product and disaggregates the analysis by life and non-life segments to capture differential growth effects. The empirical methodology employs an autoregressive distributed lag model to test for cointegration and short-run dynamics between insurance depth and real gross domestic product growth. The theoretical framework draws on the risk management hypothesis and the financial development-growth nexus literature. The study contextualises its analysis within the National Insurance Commission's Market Development and Restructuring Initiative and the recent recapitalisation exercise for insurance companies completed in 2023. Existing literature from comparable African economies confirms a positive growth effect from deeper insurance markets, though the evidence for Nigeria is thin and often uses outdated data. This study updates the empirical record and evaluates whether recent regulatory reforms have begun to shift the growth trajectory of the sector. Findings carry implications for the National Insurance Commission, the Finance Act implementation, and investors in the Nigerian insurance industry. Keywords: insurance penetration, economic growth, National Insurance Commission, risk management, financial development