EKSU Journal of the Management Scientists

The Contribution of Fire Insurance to Nigerian Economy (1990 - 2020)

Abstract

This study assessed the contribution of fire insurance to the Nigerian economy from 1990 to 2020. It was aimed at examining the effect of fire insurance premium income and claim expenditure on the Nigerian gross domestic product. The study was motivated by the incessant fires in Nigeria which has resulted in an increase in fire insurance premium income in recent times. The research design for the study was ex post facto, while the study population was made up of all insurance companies providing fire insurance cover as of 2020. Data were obtained from Nigeria Insurance Digest, Central Bank of Nigeria statistical bulletin and the National Bureau of Statistics for the study period. Analysis of data was carried out using co-integration and ordinary least square regression. A long-run relationship between fire insurance premium income, claim expenditure and GDP was established while a positive significant relationship was observed between fire insurance premiums and GDP. Claim expenditure had an insignificant relationship with GDP. This study implies that fire insurance serves as a risk diversification tool that has had a positive impact on the Nigerian economy. It is concluded that fire insurance is of importance and its pull of premiums and financial intermediation role boosts economic activities in the country. It is recommended that fire insurance should be encouraged among individuals and businesses in Nigeria.