Insurance is the business of undertaking liability, and as such, liability to pay for damage or to make reimbursement in regard to loss, damage and or injury involving life(s), or property arising from the occurrence of a particular event. Despite the growth in number of companies and insurance agencies, the insurance penetration level has stagnated at 3.01%. Development of the county both on the economic and social dimensions is significantly challenged by the low insurance penetration. The main purpose of the research study was to assess the effect of regulatory frame work on insurance penetration. How regulation of insurance prices affects insurance penetration in the county. The effect of price regulation on the penetration of insurance in Nigeria. How regulation of claims settlement enhances penetration of insurance. The effect of insurance product approvals on insurance penetration, and how regulations of distribution channels affect insurance penetration in Nigeria. The study was based on stakeholder’s theory, utility theory, claims settlement theory and the theory of distribution channels.  The study employed census method since all the managers were interviewed.  All ethical issues pertaining to data collection were observed. Authorization letter from the university and a research permit from National Commission for Science, technology & innovation (NACOSTI) was obtained.  Data was analyzed using descriptive statistics and inferential statistics. Descriptive statistics involved the use of frequencies, percentages, means and standard deviation. Inferential statistics involved the use of logistic regression. The results of the analysis indicated that, price regulations, insurance claims settlement process, insurance distribution channels and regulations on insurance products are all significantly associated with the odds of insurance penetration in Nigeria. Recommendations were drawn from the findings of the study as follows; the government needs to regulate prices on insurance products. Second, the insurance claims settlement process needs to be regulated. Third, the insurance distribution channels need to be regulated to increase efficiency. Lastly, there is need to regulate insurance products as a way of enhancing insurance penetration. The study recommends that further assessment of regulations of other insurance aspects such as customer care, consumer education, and enhanced regulatory framework be investigated.



1.1 Background of the study

According to Banks (2014) Insurance is an arrangement or business practice of indemnifying property, life, group of lives, against loss or damage occasioned by defined unforeseen events including fire, calamity, demise, incapacitation, or such like contingencies, in respect of a payment commensurate to the risk involved.  He further defined insurance in the context of a contract between two parties with one party (insured) transferring a risk to the other party (Insurer) so that in the event of loss as spelled in the terms and conditions of the contract, the insured will be compensated commensurately. According to the Insurance Act Chapter 487 Laws of Nigeria (Insurance Act, 2015) insurance is defined as the undertaking of liability of business by the way of insurance (including reinsurance in case of any loss in regards with life and personal injury or any damage, such as liability for payment or compensating the damage when a specified event happens. 

The salient element about insurance within the business context is that it has the capacity to safe guard an organization or business against the loss of its key men. Key men are special persons in a business who are critical in product development or top scientist in organizations.  Insurance also provides the balance between money which is the organizational objective and health of the employees because healthy work force is health productivity. Insurance is critical in a business because it provides funds for research in marketing, population perceptions and impacts of entry of new products and players.

The insurance landscape globally is both incrementally and, more importantly, fundamentally changing and with such trends there arises the challenges of accurately predicting how the future will look like in the light of entry of new businesses, tough environments for investments and regulations as some of the challenges insurers are grappling with and especially in the backdrop of financial crisis (Klynveld Peat, Marwick Goerdeler [KPMG] 2014).  

Over and above the aforementioned, the insurance industry at large has far extensive challenges to respond to; changes in demographics, shifts in consumer behaviors, revolution in the digital platform (new and continuing social trends causing a transformation in how businesses is being conducted, a shift from the traditional business models, the way people are interacting, and emerging markets’ that threaten to disrupt the already developed market) have the potential significantly to shape the future of the industry in the long stretch (Price Waterhouse  Coopers[PWC] 2012) of particular concern are the impact the whole insurance value chain is witnessing and will continue to experience; how insurance products are distributed, insurance intermediation, risk profiling and management. At the core of this transformational impact is an intricately interconnected energetic marketplace; consumers (both individual consumers and businesses) characterized and driven by overly demanding needs (simplicity of processes, transparency and speed in their transactions) preferences, and expectations as well as an increasing consumption power.