Theory and determinants of regulatory effectiveness in a formal microinsurance context: The insurers’ perspectives

Abstract

Using a 60-item questionnaire with an 8-point Likert scale, we conducted a survey (solely amongst insurers) to investigate possible determinants of regulatory effectiveness (RE) in the Nigerian microinsurance sector. This survey was further triangulated with key industry reports, coupled with respondent-provided qualitative validation and real scenario-based instances, to soundly justify the responses/opinions of survey participants. In this paper, RE was measured by the level of achievement on regulatory mandates (RM), as opined/justified by informed respondents. This research was conducted to re-sensitize/guide governments, regulators, researchers and other stakeholders on what fosters/impedes RE and the need to sustainably manage these determinants, in order to promote formal microinsurance development (FMID). Our result revealed that the severity of determinants’ impact (in their current/snapshot state) on five aggregated RM was in the following decreasing order: “level of corruption”, “clarity of mandate”, “national culture”, “technology”, “regulatory flexibility/innovation”, “organisational structure”, “participation/consultation”, “organisational culture”, “regulatory autonomy” and lastly, “resources” has the least negative impact. The “socio-political legitimacy” had no impact on the five RM, while “support-from-development-partners” in its current/snapshot state is the only recorded determinant exerting a positive impact on all the five RM (as aggregated). Consequently, the study guides relevant stakeholders to assiduously work towards managing these determinants (especially, the most severe ones such as “level-of-corruption”, “clarity-of-mandate”, etc.) in order to enhance RE and FMID.