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Microinsurance and Its Untapped Economic Development Potentials in Nigeria

Received: 30 October 2016     Accepted: 25 November 2016     Published: 3 January 2017
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Abstract

This study highlights the potential contributions of microinsurance business to the growth and development of the Nigerian economy. It noted the low levels of insurance coverage where only 1% of the adult population is insured and insurance penetration of 0.68%. The contribution of insurance to GDP is put at a paltry 0.72% and poverty is so high that about 70% of the population live on less than $1.00 a day. The paper therefore examines the fundamental issues that bedevil the Nigerian economy and the insurance industry and the impact of the issues on the country’s economy. The inadequacy of data and relative newness of the microinsurance arrangement encouraged documentary review in this study, with extensive employment of secondary sources of information. Using a descriptive research design and employing tables, graphs, charts and percentages to analyze the data, the study shows that development of microinsurance business in Nigeria has the potential to undo some of the country’s economic woes, and ensure more insurance penetration and financial inclusion. It shows there are developmental gaps in the operation of insurance business in Nigeria which microinsurance business arrangement can effectively fill. The study therefore recommends, amongst other things, extensive information dissemination about microinsurance products, development of tailored microinsurance products for the target market of poor and low income earners and the employment of appropriate channels, like mobile network operators, market and farming associations etc, as payment platforms to disseminate information and collect premiums.

Published in Journal of Business and Economic Development (Volume 2, Issue 1)
DOI 10.11648/j.jbed.20170201.13
Page(s) 22-30
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Financial Inclusion, Insurance Penetration, Economic Growth, Nigerian Economy, Insurance

References
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[3] Acha, I. & Ukpong, S. M. (2012). Micro-Insurance: A Veritable Product Diversification Option for Micro-Finance Institutions in Nigeria, Research Journal of Finance and Accounting, 3 (8), 78-85.
[4] Shembekar P, and Joshi M. (2016). A Study on Prospects and Problems of Micro-insurance with Reference to Nagpur Rural. Research Journal of Social Science and Management (7)
[5] Biener, C. & Eling, M. Geneva Pap Risk Insur Issues Pract (2012) 37: 77. doi: 10.1057/gpp.2011.29.
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[8] Ali, M. M. (2000). ‘Provision of microinsurance for microfinance clients’ Micro finance News letter issue No 7, page 2 January–March 2000.
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[13] Banerjee, A. (2008). Technology Indispensable in Marketing Microinsurance Accessible in Asia Insurance Review, online portal of 31 InfoTech. Retrieved on 20/2011/2012 by 11.00am (www.asianinsurancereview.com).
[14] Linnerrooth-Bayer, J. and Mechler, R. (2006). Insurance for assisting adaptation to climate change in developing countries: A proposed strategy, in E. Gurenko (ed). Climate policy, Special Issue on Insurance and Climate Change, 6: 621-636.
[15] Jutting, J. and Ahuja, R. (2003). Are the poor too poor and Demand Health Insurance? Journal of Micro Finance 6 (13): 26-30.
[16] Isimoya, O. (2014). Business Ethics in Insurance Industry in Nigeria. International Journal of Management and Sustainability, 3 (6): 341-359.
[17] Churchill, Craig (2006). What is Insurance for the poor? P. 12.
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[19] Acha, I. A. (2012b). Microfinance Banking in Nigeria: Problems and Prospects, International Journal of Finance and Accounting, 1 (5), 106-111.
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[22] Oxford Business Group (2010). The reports: Nigeria 2010, pages 14 and 206.
[23] World Bank Development Indicators Database (2010).
[24] EFInA Access to Finance in Nigeria 2010 survey.
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[26] Brown, Warren, and Craig Churchill (2000). ‘Providing Insurance to low-income households: Part I and II, Aucroenterprise Best Practices Project, Development Alternatives Inc.
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[29] CGAP News (2008). The Consultative Group to Assist the Poor. Washington D. C. USA. Website: http://www.cgap.org/.
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Cite This Article
  • APA Style

    Frank Bassey Ime, Acha Ikechukwu. (2017). Microinsurance and Its Untapped Economic Development Potentials in Nigeria. Journal of Business and Economic Development, 2(1), 22-30. https://doi.org/10.11648/j.jbed.20170201.13

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    ACS Style

    Frank Bassey Ime; Acha Ikechukwu. Microinsurance and Its Untapped Economic Development Potentials in Nigeria. J. Bus. Econ. Dev. 2017, 2(1), 22-30. doi: 10.11648/j.jbed.20170201.13

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    AMA Style

    Frank Bassey Ime, Acha Ikechukwu. Microinsurance and Its Untapped Economic Development Potentials in Nigeria. J Bus Econ Dev. 2017;2(1):22-30. doi: 10.11648/j.jbed.20170201.13

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  • @article{10.11648/j.jbed.20170201.13,
      author = {Frank Bassey Ime and Acha Ikechukwu},
      title = {Microinsurance and Its Untapped Economic Development Potentials in Nigeria},
      journal = {Journal of Business and Economic Development},
      volume = {2},
      number = {1},
      pages = {22-30},
      doi = {10.11648/j.jbed.20170201.13},
      url = {https://doi.org/10.11648/j.jbed.20170201.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20170201.13},
      abstract = {This study highlights the potential contributions of microinsurance business to the growth and development of the Nigerian economy. It noted the low levels of insurance coverage where only 1% of the adult population is insured and insurance penetration of 0.68%. The contribution of insurance to GDP is put at a paltry 0.72% and poverty is so high that about 70% of the population live on less than $1.00 a day. The paper therefore examines the fundamental issues that bedevil the Nigerian economy and the insurance industry and the impact of the issues on the country’s economy. The inadequacy of data and relative newness of the microinsurance arrangement encouraged documentary review in this study, with extensive employment of secondary sources of information. Using a descriptive research design and employing tables, graphs, charts and percentages to analyze the data, the study shows that development of microinsurance business in Nigeria has the potential to undo some of the country’s economic woes, and ensure more insurance penetration and financial inclusion. It shows there are developmental gaps in the operation of insurance business in Nigeria which microinsurance business arrangement can effectively fill. The study therefore recommends, amongst other things, extensive information dissemination about microinsurance products, development of tailored microinsurance products for the target market of poor and low income earners and the employment of appropriate channels, like mobile network operators, market and farming associations etc, as payment platforms to disseminate information and collect premiums.},
     year = {2017}
    }
    

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    T2  - Journal of Business and Economic Development
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    AB  - This study highlights the potential contributions of microinsurance business to the growth and development of the Nigerian economy. It noted the low levels of insurance coverage where only 1% of the adult population is insured and insurance penetration of 0.68%. The contribution of insurance to GDP is put at a paltry 0.72% and poverty is so high that about 70% of the population live on less than $1.00 a day. The paper therefore examines the fundamental issues that bedevil the Nigerian economy and the insurance industry and the impact of the issues on the country’s economy. The inadequacy of data and relative newness of the microinsurance arrangement encouraged documentary review in this study, with extensive employment of secondary sources of information. Using a descriptive research design and employing tables, graphs, charts and percentages to analyze the data, the study shows that development of microinsurance business in Nigeria has the potential to undo some of the country’s economic woes, and ensure more insurance penetration and financial inclusion. It shows there are developmental gaps in the operation of insurance business in Nigeria which microinsurance business arrangement can effectively fill. The study therefore recommends, amongst other things, extensive information dissemination about microinsurance products, development of tailored microinsurance products for the target market of poor and low income earners and the employment of appropriate channels, like mobile network operators, market and farming associations etc, as payment platforms to disseminate information and collect premiums.
    VL  - 2
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Author Information
  • Department of Banking, Finance and Insurance, University of Uyo, Uyo, Nigeria

  • Department of Banking, Finance and Insurance, University of Uyo, Uyo, Nigeria

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