Underwriting Performance and Insurance Sector Development in an Emerging Economy: Evidence from Nigeria.
The insurance sector’s development is critical to fostering economic stability and sustainable growth. This research investigated the effect of underwriting performance on the Nigerian insurance industry’s development. The research followed an ex-post facto design with a time-series orientation and quantitative methods of analysis, including descriptive statistics, correlation analysis, and autoregressive distributed lag (ARDL) estimation.
The result revealed that in Nigeria, underwriting performance indicators significantly affect insurance penetration in the short and long term (p < 0.05). Specifically, gross written premium, net premium and underwriting profit have overall significant effects on insurance penetration with underwriting loss showing short-run effect within the period investigated.
This study contributes theoretically by extending utility theory to insurance sector development in Nigeria through the inclusion of underwriting performance indicators. This link insurer operational efficiency with policyholders’ welfare optimisation, thereby bridging the micro-foundations of insurance demand and macro-level development measured by insurance penetration. The results imply that insurers should prioritise disciplined underwriting by optimizing premium pricing, strengthening risk selection, and sustaining underwriting profitability to enhance insurance penetration.
Keywords: Underwriting Performance, Insurance Sector Development, Insurance Penetration, Gross written premium, Net premium, Underwriting Profit.
