Imoseme Marian IZEDOMI

The place of the insurance industry in modern financial markets has become more significant, especially in sub-Saharan African (SSA) countries. This central role of the insurance sector has heightened evaluations of how the sector interplays with other aspects of the economy, especially in the drive for sustainable development. In this study the relative effects of insurance sector development and carbon emissions on economic growth in SSA is examined. The study focuses on the roles of different insurance sector factors and how these factors explain the effects of carbon emissions on economic growth in the region. On this basis, the study also assessed the existence of the Environmental Kuznets Curve (EKC) hypothesis for SSA countries and the directionp of causality among the environmental, economic and insurance variables. Insurance development is measured as insurance penetration, insurance density, and insurance premium size, while carbon emission is measured by the tons of CO2 emissions and augmented by greenhouse gas emissions. A panel of nineteen (19) selected SSA countries is employed in the study for the period 2000 to 2023. The study also evaluated the underlying dynamic interactions between insurance and the economy. Hence, the Pooled Mean Group (PMG) estimation technique is used in the empirical analysis to estimate the long-run and short-run relationship amongst the variables for the panel analysis. The study finds that while insurance penetration and density significantly improve economic growth in the long run, the positive effect of gross premium payment is found to be only evident in the short run. There is also evidence that the Environmental Kuznets Curve hypothesis (EKC) exists for the selected Sub-Saharan African countries. In the same vein, while insurance sector development is found to significantly moderate the relationship between carbon footprint and economic growth, granger causality is shown to exist only from economic growth to insurance sector development in SSA. The findings from the study imply that insurance sector development directly improves economic growth in SSA and indirectly promotes growth by mitigating climate change effects. It is therefore recommended that insurance take-up needs to be prioritized by policy makers in SSA by deepening green insurance policies in the long run.