IMPACT OF INSURANCE MARKET IN FINANCIAL SECTOR DEVELOPMENT IN NIGERIA

IMPACT OF INSURANCE MARKET IN FINANCIAL SECTOR DEVELOPMENT IN NIGERIA
 
CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
Insurance is one of the cornerstones of modern day financial services sector. In addition to its traditional role of managing risk, insurance market activity, both as intermediary and as provider of risk transfer and indemnification, may promote growth by allowing different risks to be managed more efficiently, promoting long term savings and encouraging the accumulation of capital, serving as a conduit pipe to channel funds from policy holders to investment opportunities, thereby mobilizing domestic savings into productive investment (Skipper, 1997 and Arena, 1998). According to Vayanos and Hammound (2006) a thriving insurance sector is not only evidence of an efficient financial service sector, but it is also a key barometer for measuring a healthy economy. During the last decades, there have been faster growth in insurance market activity in both developing and transition economies given the process of financial liberalisation and financial integration (Brainard, 2008), which raises questions about its impact on economic growth.
The financial sector of any nation plays a pivotal role in driving economic growth and stability, and Nigeria is no exception. In recent years, the insurance market has emerged as a significant player in the country's financial landscape, exerting a profound impact on its overall development. This impact goes beyond the realm of safeguarding against unforeseen risks; it extends to the broader scope of financial sector development, encompassing aspects such as capital formation, investment opportunities, and economic stability. The influence of the insurance market on Nigeria's financial sector has been profound, driving a transformative wave that has altered the dynamics of financial institutions, investment practices, and the overall economic landscape. In this comprehensive exploration, we delve into the intricacies of this relationship, analyzing how the insurance market's evolution has influenced financial sector development in Nigeria. This analysis covers a broad spectrum of factors, from regulatory changes and market dynamics to the role of insurance in encouraging economic growth, ultimately shedding light on the significant strides that have been made in Nigeria's financial sector due to the ever-expanding insurance