Abstract
The Nigerian insurance sector faces persistent challenges with low market penetration, currently stagnating at less than 1% of GDP, despite the critical role of Commercial General Liability Insurance in mitigating business risks and fostering economic stability. While premium income and claims settlement efficiency are widely regarded as key drivers of insurance adoption, their actual impact on market penetration remains empirically underexplored in Nigeria. This study investigates the effect of Commercial General Liability Insurance on insurance market development in Nigeria. Using ex-post facto and descriptive research designs, the study analyzed secondary data from 2012 to 2023 sourced from the Central Bank of Nigeria, World Bank, and NAICOM. Ordinary Least Squares (OLS) regression was employed to test the hypotheses. The findings revealed that premium income from CGLI had a non-significant negative effect on market penetration (Coeff. = -0.000000724, p = 0.2124), while claims settlement efficiency showed a non-significant positive relationship (Coeff. = 6.270190, p = 0.2163). The study concluded that isolated improvements in premium pricing or claims processing are insufficient to expand market penetration. Instead, holistic strategies integrating consumer education, regulatory reforms, and innovative product design are needed to address underlying barriers. It was also recommended that regulatory bodies and insurance firms should collaborate to design policies and products that align with consumer needs and Nigeria’s economic realities for enhanced market development.
References
Adebayo, O. (2022). Commercial general liability insurance in emerging economies: The Nigerian case study. Journal of African Insurance Studies, 15(2), 45-62. Brown, M. and Lee, K. (2023). Claims settlement and insurance market growth: A comparative analysis. Journal of Financial Economics, 45(3), 112-130. Eze, P. (2024). Insurance market development in Nigeria: Challenges and opportunities. African Economic Review, 28(1), 112-130. Eze, P. and Mohammed, D. (2023). Insurance penetration and economic resilience in emerging markets. West African Economic Review, 18(2), 45-63. Garcia, F. and Müller, H. (2021). Liability insurance and financial sector development in advanced economies. Global Insurance Insights, 7(1), 78-95. Ibrahim, M. (2021). Claims processing efficiency and insurance market growth: Evidence from West Africa. International Journal of Insurance Research, 9(3), 78-95. Ogbuigwe, M., John, E. & Aluya, S. (2024). Cashflow management and investment performance: A panel data analysis of Quoted Industrial Goods Firms in Nigeria. International Journal of Humanities Social Science and Management, 4(5), 613-627 Ogbuigwe, M., Aluya, S. & John, E. (2025). Effect of Cash Conversion Cycle on Financial Performance of Listed Consumer Goods Firms in Nigeria. International Journal of Humanities Social Science and Management, 5(1), 170-185 Okafor, G. (2023). Premium income dynamics in developing insurance markets. Emerging Markets Finance Journal, 17(4), 201-218. Okafor, G. and Ibrahim, S. (2020). Claims processing efficiency and policyholder trust in Nigeria. African Journal of Insurance Studies, 12(4), 201-218. Okonkwo, R. and Adeleke, A. (2021). The role of liability insurance in Nigerian economic stability. Lagos Business Review, 25(1), 34-52. Smith, J. (2023). Insurance penetration in sub-Saharan Africa: A comparative analysis. Journal of Financial Development, 12(2), 34-52. Smith, T. and Johnson, L. (2022). Global trends in commercial liability insurance and market development. International Journal of Risk Management, 15(2), 89-107.
