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Analysis of Reinsurance Transactions and Gross Premium Income of Non-Life Insurance Companies in Nigeria: An ARDL Approach

Author

Listed:
  • Olajide Solomon Fadun

    (University of Lagos)

  • Sunday Adekunle Aduloju

    (University of Lagos)

  • Taiwo Olarinre Oluwaleye

    (Ekiti State University)

Abstract

The study examined the relationship between reinsurance premiums ceded and gross premium income and the effect of reinsurance premiums accepted on the gross premium income of Nigerian non-life insurance providers. This study is a longitudinal research design. We engaged secondary data extracted from the Nigeria Insurance Association (NIA) Digest’s report for all the non-life insurers from 2007–2021. The data was analysed using descriptive statistics and auto-regressive distributed lag (ARDL). The results revealed that reinsurance premium ceded has a significant positive relationship with gross premium income, and reinsurance premium accepted has a significant positive effect on the gross premium income of Nigerian nonlife insurance providers. It was also confirmed that reinsurance premium ceded and reinsurance premium accepted have a short- and long-run effect on the gross premium income of Nigerian non-life insurance providers. This study established that reinsurance transactions significantly positively affect the gross premium income of Nigerian non-life insurance firms. Therefore, this study recommends, among others, that Nigerian non-life insurance providers should improve their underwriting capacity, especially for high-risk sectors like oil and gas, marine, and aviation, as well as other sectors, to increase their gross premium income.

Suggested Citation

  • Olajide Solomon Fadun & Sunday Adekunle Aduloju & Taiwo Olarinre Oluwaleye, 2023. "Analysis of Reinsurance Transactions and Gross Premium Income of Non-Life Insurance Companies in Nigeria: An ARDL Approach," EuroEconomica, Danubius University of Galati, issue 3(13), pages 75-89, December.
    • Handle: RePEc:dug:journl:y:2023:i:3:p:75-89
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