Industry Competitiveness Using Firm-Level Data: A Case Study of the Nigerian Insurance Sector

Abstract

With reforms to pioneer the Nigerian insurance sector toward a more competitive level, such had been envisaged to drive her participatory contribution to national development since over the years her huge economic potential has been relatively tapped minimally. Thus in view to ascertain empirically the height of competitiveness so far achieved, this work therefore seeks to analyze the Nigerian insurance sector market performance with the focus to perform market power studies. Thereby adopting the concentration measure as well as the Panzar-Rosse methodology using random effect panel estimation for the period 1999–2008, the study established the level of competitiveness in both the life and non-life (General Business) insurance sub-sectors. Having computed a ten insurance firms’ concentration ratios alongside deriving the value of the Panzar-Rosse H-statistic for both sectors, the non-life sub-sector was evident to be more competitive relative to the life sub-sector. Hence, it is envisaged that further attempts to engender competitiveness in either of the sub-sectors would include efforts to ensure all participating firms are enlisted on the Nigerian Stock Exchange in order to enhance their prowess of contributing to national development.