Impacts of Climate Change, Environmental Degradation, and Regulatory Compliance on Insurance Industry Dynamics in Emerging Economies

Abstract

Purpose

This study investigates the impact of temperature variability (TMP), ecological risks (ENV), and regulatory measures (REG) on the insurance industry (INS) in Lagos, Nigeria. It examines how climate change, environmental issues, and evolving policy regulations impact insurance operations and risk management.

Methodology

A quantitative research design was adopted, utilizing survey data collected from 150 insurance professionals across life, non-life, and reinsurance companies. The data were analyzed using descriptive statistics, chi-square tests, and multiple regression analyses to assess the influence of TMP, ENV, and REG on the performance of the insurance industry.

Findings

Results indicate that temperature variability (TMP) significantly increases insurance claims at the 1% significance level, suggesting a need to revise risk assessment and pricing models. Ecological risks (ENV) exert a statistically significant negative effect at the 5% level, emphasizing the importance of adaptive risk management strategies. Regulatory measures (REG) have a positive and significant effect at the 5% level, promoting compliance, innovation, and operational stability.

Conclusion

This study provides real-world evidence of the relationship between environmental change, regulation, and insurance performance in a developing economy. It offers valuable insights for sustainable insurance in climate-sensitive regions. The results indicate that policymakers and insurers should incorporate climate risk into their financial planning, underwriting, and operational strategies. Stronger regulations and adaptive risk management can make the industry more resilient.