Impact of Environmental Risks on Insurance Business Performance; Econometric Evidence from Nigeria from 1996-2019

The broad objective of this study is to examine the impact of environmental risks on insurance business performance using ordinary least square technique. Result reveals Real and Effective Exchange Rate positively and significantly affect the Financial Performance of Insurance Companies in Nigeria. Broad money supply negatively and non-significantly affects the Financial Performance of insurance Companies in Nigeria. Inflation rate negatively and non-significantly affects the Financial Performance of Insurance Companies in Nigeria. Interest rate negatively and significantly affects the Financial Performance of Insurance companies in Nigeria. Credit to the Private Sector positively and non-significantly affects the Financial Performance of Insurance Companies in Nigeria. It was concluded that environmental risks in Nigeria strongly affect the countries financial development and play a significant role in the development of the financial system and economic growth. Business environment help to provide growth in the financial outlet, development in money and capital market and create increase in the level of insurance indemnification of policy holders at the event of loss. Based on the above conclusion, it was recommended that Government should endeavor to regulate the activities of exchange rate fluctuations so as to enhance suitable environment where insurance intermediation will thrive. Financial development such as increase in brood money supply and sectional allocation of commercial bank credit to the private sectors will be encouraged so as to increase the financial performance of insurance in Nigeria. Monetary authorities should endeavor to combat constructively the effect of inflation, regulate inflation rate so that private sectors will patronizes insurance sector policies effectively. Insurance industries should create more awareness about insurance business and pay genuine claims without undue delay. Also regulate interest rate so that private sectors will patronize insurance sector policies effectively. Conducive environment of business will enhance financial liberalization and GDP expansion Through private sector credit. Therefore, the government should ensure that the financial systems are safe for attraction of foreign investors. This will attract foreign direct investment and promote local content initiatives