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Analysis of the impacts of insurance claims settlement on economic growth: The case of Nigeria

Author

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  • Olajide Solomon Fadun

    (Department of Actuarial Science and Insurance, Faculty of Management Sciences, University of Lagos, Akoka Lagos, Nigeria)

Abstract

Insurance plays an essential role in stimulating economic growth. Insurance is an intangible product, and prompt claim settlement proves that insurers fulfill their promises to the insureds. This paper analyses the impacts of insurance claims settlement on economic growth. It examines the effect of insurance claims' settlements on a nation's economic growth, using Nigeria as a case study. The research utilised an ex-post facto design, using 28-year time series data (1992 – 2019). Gross Domestic Product (GDP) and Nigeria's insurance companies' claims settlement are the dependent and independent variables used for the study, respectively. The Long-run co-integration result revealed that INCLM (Insurance claims) has an insignificant negative effect on GDP. The coefficient shows that a percentage increment in INCLM (Insurance claims) would result in a 1.22 decrease in GDP. The results indicate that insurance claims settlement has an insignificant negative effect on economic growth. This implies a negative relationship between insurance claims settled by insurance companies and economic growth in Nigeria. The finding is surprising as one expects that settlement of claims by insurers should positively impact economic growth. The implication is that the relationship between insurance claims settlement and economic growth varies depending on several factors, including country-specific factors and the performance of the country's insurance industry.

Suggested Citation

  • Olajide Solomon Fadun, 2023. "Analysis of the impacts of insurance claims settlement on economic growth: The case of Nigeria," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 5(3), pages 51-59, July.
    • Handle: RePEc:adi:ijbess:v:5:y:2023:i:3:p:51-59
    DOI: 10.36096/ijbes.v5i3.424
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    References listed on IDEAS

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    1. Adedokun Lateef Adetunji & E. Chuke Nwude & Sergius N. Udeh, 2018. "Interface of Insurance and Economic Growth: Nigerian Experience," International Journal of Economics and Financial Issues, Econjournals, vol. 8(4), pages 16-26.
    2. David Okelue Ugwunta & Uche Boniface Ugwuanyi, 2019. "Insurance Development and Economic Growth: An Examination of the Non-Bank Financial Institutions in Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(2), pages 16-26, April.
    3. Valentina Peleckienė & Kęstutis Peleckis & Gitana Dudzevičiūtė & Kęstutis K. Peleckis, 2019. "The relationship between insurance and economic growth: evidence from the European Union countries," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 1138-1151, January.
    4. Maurice Kugler & Reza Ofoghi, 2005. "Does Insurance Promote Economic Growth? Evidence from the UK," Money Macro and Finance (MMF) Research Group Conference 2005 8, Money Macro and Finance Research Group.
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