Investigating the Causal Relationship between Insurance and Economic Growth in Nigeria.

Abstract

The insurance sector's contribution to economic growth in an economy cannot be understated, as recent empirical studies have demonstrated that, in addition to serving the primary functions of managing losses and reducing risks, insurance also has the potential to mobilize domestic savings for investment, which in turn fosters economic growth. This hypothesis served as the foundation for this study, which examined the causal relationship between insurance and economic growth in Nigeria from 1998 to 2020. In order to analyze the data, this study used the autoregressive distributed lag model (ARDL) estimation technique. Real gross domestic product (RGDP) was utilized as a proxy for economic growth, while gross insurance premiums (GIP), life insurance premiums (LIP), and non-life insurance premiums (NLIP) served as the predictive factors for the insurance sector. The findings of the causality test demonstrated that, in both the short- and long-run, there is a causal relationship between economic growth and gross insurance premiums, as well as between economic growth and non-life insurance, while a significant causal relationship exists between economic growth and life insurance premiums only in the long run.