Inflation and Insurance Companies Performance in Nigeria
Abstract
This study empirically examines the impact of inflation and interest rates on the performance of insurance companies in Nigeria, focusing on the influence of the Consumer Price Index (CPI) and interest rates. The specific objectives are to (1) assess the effect of CPI on insurance companies’ performance and (2) evaluate the impact of interest rates on their financial outcomes. The study tests two null hypotheses: (H??) CPI has no significant effect on insurance company performance, and (H??) interest rates have no significant effect on insurance company performance. A quasi-experimental research design is adopted, utilizing secondary data from the National Bureau of Statistics (NBS), the Central Bank of Nigeria (CBN) Statistical Bulletin, and the CBN Annual Report (2023). The findings reveal that inflation has a significant positive effect on insurance gross premiums, suggesting that insurance firms can adjust premium rates to benefit from moderate inflation. Meanwhile, CPI exhibits a marginally significant positive impact, indicating a weaker influence compared to inflation. The study concludes that inflationary trends critically affect insurance performance, necessitating adaptive pricing strategies and proactive regulatory measures. Key recommendations include (1) adopting dynamic pricing models by Nigerian insurers to align premiums with inflation and (2) strengthening regulatory frameworks by the National Insurance Commission (NAICOM) to enhance financial stability and policyholder protection. These measures aim to mitigate inflation-induced risks and sustain insurance sector growth.
Keywords
Inflation
Insurance performance
Consumer price index (cpi)
Interest rates.
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