EFFECT OF LIFE ASSURANCE PATRONAGE ON THE NIGERIAN ECONOMY
This study examined the effect of life assurance patronage on the Nigerian economy. The research employed ex-post facto research design. The period covered was 1981 to 2017. Ordinary least square method (OLS) of the classical linear regression model was used for the analysis of the data with the aid of electronic view (E-view) statistical software. This result indicates that each component of the explanatory variables such as life Insurance patronage and Life insurance asset had variant impact on capital formation proxy of gross domestic product. It is interesting to note that the regression equation is significant at 5 percent level of significant and show a high degree of influence on the independent variable as shown by the co-efficient of determination R2. Among other things the key findings of the study revealed that life assurance patronage has a significant effect on capital formation in Nigeria, life insurance investment has a significant positive effect on financial development, and life assurance patronage has a significant effect on household poverty reduction in Nigeria. The study recommended that life assurance companies in the industry should embark on public education on their products so that people will have better perception about their activities.
1.1 Background of the Study
of the Problem
The performance of Nigerian insurance industry has been one of sub-optimal performance. The significance of life insurance patronage to the growth of the insurance industry in Nigeria cannot be overstated, but despite the role played by the insurance industry to individuals, businesses and economic development of the nation at large, it is well known that Nigerians have poor attitude towards ownership and patronage of life insurance policies. When compared with the developed foreign countries, the Nigerian insurance industry has achieved only a little because of the low investment in life insurance products.
Several researches cut across the different products being marketed by the insurance companies identified poverty, low per capita income, lack of trust and confidence in insurance institution and lack of awareness of insurance as being responsible for the poor patronages of life insurance services in Nigeria.
Previous studies on the relationship between insurance and economic growth in Nigeria were done by Eze and Okoye (2013), Mojekwu, Agwuegbo and Olowokudejo (2011), Akinlo (2013), Amoke (2012), Yinusa and Akinlo (2013), Akinlo and Apanisile (2014) and Olayungbo (2015). All these studies have used the total insurance premium in their analysis of the relationship between insurance and economic growth in Nigeria. Hence, this study contributes to the existing literature by examining separately the effects of life insurance patronage on economic growth in Nigeria.
It is against this backdrop that this study seeks to examine the effect of life assurance patronage on the Nigerian economy.
1.3 Objectives of the Study
The major aim of this study is to evaluate the effect of life assurance patronage on the Nigerian economy. While other specific objectives are:
a. To examine the effect of life assurance patronage on capital formation in Nigeria.
b. To find out the effect of Life insurance asset on financial development.
c. To investigate the effect of life assurance patronage on household poverty reduction in Nigeria.
d. To identify the current challenges to the growth of the insurance industry in Nigeria.