Insurance Penetration and Manufacturing Sector Growth: A Time Series Evidence from Nigeria

This study examined insurance penetration and manufacturing sector growth in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical Bulletin from 1990-2023. Manufacturing sector growth was modeled as the function of insurance penetration insurance density and insurance premium. The study used unit root test, cointegation test and vector error correction model to examine the dynamic effect of insurance penetration on manufacturing sector growth. The ECM equation showed that Insurance Penetration has a negative and insignificant relationship with manufacturing sector growth. A unit increase in Insurance Penetration consequently means that manufacturing sector falls by 0.09. The findings suggest that Insurance Density have not been beneficial to growth of manufacturing sector. A unit increase in Insurance Density consequently means that manufacturing sector falls by 3.2. A unit increase in Insurance Premium leads to a decrease in manufacturing sector growth by 0.14 units. 61.3% of total variation in manufacturing sector growth was explained by insurance penetration. The study concludes that insurance does not affect growth of manufacturing sector positively within the time covered in this study. We recommend that Policies such as mandatory insurance cover for real assets should be implemented as this can enhance real investment of the insurance sector and the insurance firms should increase allocation to investments with proper diversification in order to enhance their investment positions and contribution to growth of the real sector in Nigeria.