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ABSTRACT
This study examined the effect of regulation on both life insurance penetration and non-life insurance penetration in Nigeria. Five regulatory variables were used in the study namely; regulatory quality, liquidity ratio, monetary policy rate, capital and taxation which combine both implicit tax and explicit tax. The implicit taxes are taxes that are in the form of fees required for professionalism in the insurance sector and other fees charged for their participation in the sector. The explicit taxes are taxes on their earnings before sharing to each stakeholders of the firm.
The study used data from the statistical bulletin of the central bank of Nigeria from 2012 to 2023 and employed the fully modified OLS as method of estimation technique. Other tests that were carried out are the descriptive statistics, correlation analysis, unit root test and the cointegration test. The variance inflation test, series residual test of normality and the correlogram test for serial correlation were used for the study as diagnostic test for the model estimated.
Findings from the study indicates that the Nigerian economy regulation to a large extent significantly affect insurance penetration and that regulation has significant effect on non-life insurance penetration in Nigeria. Based on this findings, the following recommendations were made; Nigerian government should ensure that the business environment particularly regulations through monetary policies and guideline are such that will encourage and engender insurance firms to increase their drive for introducing new insurance product that will capture those not currently in any form of insurance cover, regulation should be used to deepen the use of insurance products in Nigeria and tax should be used constructively to encourage the driving efforts for more customers by insurance firm through tax holidays and reduction in regulatory fees for firms that are able to bring into the industry new insurance products that are able to on-board new users of insurance product in Nigeria.
