The Determinants of Insurance Penetration in Africa

Abstract

This study examines the factors influencing the level of insurance penetration in African nations from 2010 to 2023. The study investigates the impact of important economic factors on insurance penetration in selected African nations using secondary data and an expo-facto research approach. The study model includes inflation rate, exchange rate, insurance premium, and economic growth as explanatory variables. The study offers a thorough examination of insurance penetration in Africa using descriptive analysis, correlation analysis, unit root test, co-integration analysis, and panel error correction models. The study shows a significant relationship between insurance penetration and economic factors. Inflation and insurance premiums have positive impacts on penetration, but exchange rate fluctuations and economic growth have a negative impact. The findings highlight the intricate nature of insurance market dynamics in Africa and indicate potential consequences for regulators, insurers, and consumers. Recommendations are given to improve insurance penetration through legislative measures, product innovation, consumer awareness, and data accessibility. This study enhances comprehension of insurance market growth in African nations and provides guidance for promoting financial resilience and risk reduction throughout the continent.

Keywords: Economic Factors, Insurance Market Dynamics, Insurance Penetration