Examining The Role of the Insurance Business in Financial Inclusion in Nigeria

Abstract

This study investigated the role of the insurance business in financial inclusion in Nigeria for the period 2000-2021. The study adopted an ex-post-facto research design using secondary data from the World Bank and Central Bank of Nigeria updated to 2021. The dependent variable was financial inclusion proxied by the ratio of total bank deposits to the total population while the independent variables were insurance penetration rate, insurance density, dependency ratio, and income level. The data were analyzed using Econometric procedures while the model was estimated using the Error Correction Model technique. The findings revealed that insurance penetration, dependency ratio, and income level had negative effects on financial inclusion in Nigeria for the period studied. However, only the insurance penetration rate and income level significantly decreased the financial inclusion drive in Nigeria. The findings further revealed that insurance density increased financial inclusion significantly over the period studied. Insurance penetration, insurance density, dependency ratio, and income level jointly accounted for up to 88.04% of the changes in financial inclusion in Nigeria. The study concluded that with less than 1% insurance penetration, and an increasing dependency ratio coupled with low-income level, increased financial inclusion may not be achieved shortly and recommends that the insurance industry should strive to increase the insurance penetration rate through micro-insurance schemes and encourage insurance policies that are savings inclined to enhance financial inclusion in Nigeria.