CONTRIBUTION OF INSURANCE COMPANIES TO THE GROWTH OF SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA

ABSTRACT

This study investigates the contribution of insurance companies to the growth of small and medium-scale businesses (SMEs) in Nigeria. The research aims to evaluate the relationship between insurance mechanisms (insurance claim, insurance indemnity, insurance retention ratio) and SME growth indicators. Using a quantitative approach, the study analyzes secondary data obtained from financial reports, industry databases, and regulatory agencies. Descriptive statistics, correlation analysis, unit root tests, cointegration analysis, and error correction modeling (ECM) are employed to explore the dynamics between insurance variables and SME development. The findings reveal significant positive relationships between insurance mechanisms and SME growth indicators, highlighting the role of insurance in mitigating financial risks and fostering business resilience. However, further analysis indicates the absence of long-term equilibrium relationships among the variables, suggesting the need for tailored insurance products and enhanced regulatory frameworks to support SME growth. The study concludes with recommendations for policymakers, insurance companies, and other stakeholders to enhance insurance awareness, improve regulatory frameworks, develop tailored insurance products, foster public-private partnerships, and support risk management practices to promote SME development in Nigeria. Overall, this research contributes to the understanding of the role of insurance companies in driving economic growth and prosperity through SME empowerment