Financial Inclusion and Insurance Uptake in Nigeria

Abstract

This study examines the relationship between financial inclusion and insurance uptake in Nigeria, focusing on the roles of access to formal financial services, income level, and financial literacy over the period 2010–2024. Despite notable progress in financial inclusion driven by digital finance and national awareness initiatives, insurance penetration in Nigeria remains below 3% of the adult population. The study adopts an ex-post facto research design and utilizes secondary data sourced from the World Bank Global Findex (2021), EFInA Access to Financial Services Survey (2023), the Central Bank of Nigeria (2024), and the National Insurance Commission (2024). Data were analyzed using the Ordinary Least Squares (OLS) estimation technique, supported by diagnostic tests for stationarity, multicollinearity, heteroskedasticity, and autocorrelation. Descriptive findings indicate a substantial expansion in access to formal financial services, while insurance uptake remains persistently low, largely due to low-income levels and limited financial literacy. Empirical results show that access to financial services, income level, and financial literacy exert positive and statistically significant effects on insurance uptake, jointly explaining approximately 82% of the variation in insurance participation. These findings suggest that while financial inclusion promotes insurance adoption, its effectiveness is significantly enhanced when complemented by higher income levels and improved financial literacy. The study concludes that increasing insurance penetration in Nigeria requires an integrated policy approach that combines inclusive financial access with economic empowerment and consumer education. It recommends the expansion of digital financial services, targeted financial literacy programmes, income-enhancing policies, and measures to strengthen public trust in insurance institutions.

Keywords: Financial Inclusion, Insurance Uptake, Financial Literacy, Income Level, Nigeria, Financial Services.