By Anthony Otaru, Abuja
Nigeria’s Insurance industry remains one of the few sectors that have continued to record a steady growth rate year-on-year defiling several operational hurdles in the financial sector occasioned by the macroeconomic volatility, competitive dynamics as well as economic recession courtesy of the impact of the COVID-19 pandemic in 2020, ThisNigeria findings has revealed.
For example, from a premium of N282bn in 2015, the Nigerian insurance industry generated gross premium income of N616.1bn in 2021, N789.7bn in 2022, and a record-breaking N1.003trn as of the end of December 2023.
Also, the assets of the nation’s Insurance industry grew from N827.5bn in 2015 to N2.5trn in 2022 and N1.7trn as of December 2023, respectively.
According to data recently released by the National Insurance Commission (NAICOM) official website, the Nigerian Insurance industry successfully paid a total of N149.1bn to policyholders at the end of the first quarter of 2024 representing 71.8 per cent when compared to N86.8bn reported in the same period of 2023.
The report added that the claims are about 31.7 per cent of all the premiums generated during the period even as the commission attributed the high-claims payment by the industry to increased public enlightenment and growing confidence of stakeholders.
According to the Commission, this is a win-win situation for insurers, policyholders, and society at large as stakeholders’ confidence remains a major determinant of market deepening and sustainability in the Long run, the net claims paid stood at N132.7bn signifying 89.2 per cent of gross claims reported during the period with the Life segment of the market polling an almost perfect point of 92.7 per cent
Also, indications from the global level show that the Non-Life Premium Volume is expected to reach £3.5trn in 2024.
A report by the Swiss Re-Institute Annual World Insurance Sigma Report obtained by ThisNigeria indicates that the Non-life premium volume is forecast to build on the 3.9 per cent growth achieved in 2023 reaching £3.5trn in 2024 and £3.7trn in 2025.
The report equally disclosed that improved profitability across the insurance industry has made bold imprints for the property and casualty insurers, expected to report improved profitability in 2024 with industry-wide return on equity across eight major markets at 10 percent, so far this year, up from six per cent in 2023 Roe of above 10 per cent is forecast into 2025.
Commenting on the findings of the report, the Chief Underwriting Officer of Swiss Re-Corporate Solutions, Kera McDonald said, “Commercial Insurance accounts for almost half of the total property and casualty market. We expect commercial P/C carriers to maintain profitability in 2024, as rate trends have enabled lines like property to stay sustainability priced, the industry has seen a single-digit rate increase for property business written this year. On the casualty side, we observed a trend of general market softening across most long tall lines.”
Other stakeholders who spoke to ThisNigeria on this positive development around Nigeria’s insurance steady growth rate attributed the successes to improved awareness, revaluation of assets, increase in non-life insurance volume, and commitment by stakeholders in the sector.
NAICOM’s Commissioner for Insurance, Mr Olusegun Omosehin, said the insurance industry’s sustained positive performances and market deepening capacity indicate its ability to adapt and grow despite the prevailing macroeconomic challenges.
In his comments on the first quarter, 2024 report NAICOM the boss said that the impressive increase in the report could also be attributed to the regulatory measures and market dynamics
Also, the immediate past Chief Executive Officer of the National Insurance Commission [NAICOM], Mr Olorundare Sunday Thomas confirmed that the Insurance Industry in Nigeria is fully positioned to meet the needs of the insuring populace through insurance solutions and products given its phenomenal growth over the years.
He stated this recently while delivering the 7th distinguished public lecture series at the Federal University, Lokoja (FUL), Kogi State.,
Speaking during the lecture titled: Insurance Solution in Wealth Creation and Sustainability, the former Commissioner for Insurance stated that the insurance industry has continued to maintain a positive trajectory of consistent growth.
He stressed, “From a premium of N282bn in 2015, the Nigerian insurance industry generated gross premium income of N616.1bn in 2021, N789.7bn in 2022 and a record-breaking N1.003trn as at the end of December 2023.”
According to him, it is, therefore, comforting that the insurance industry is now more willing to meet the needs of the insuring populace through insurance solutions and products for sustainability.
He cautioned, “We must therefore, be intentional in being proactive in planning for the rainy days, either as students or staff, the high –level of volatility and uncertainties should create the urge to transfer –our risks.”
The Ex-Insurance Commissioner allayed the fears of the insured over hiccups in indemnity, and some insurance policies like a third party for motor vehicle –owners.
Thomas urged the Vice-Chancellor to consider the introduction of insurance and Actuarial Science as part of the courses of learning in the university and enjoined the management to insure assets of the institutions even as he explained that there’s no need for Civil servants to be afraid of retirement if, beyond the statutory arrangement, personal plans by way of voluntary contributions are made while in service for life after retirement.
In his contribution, the Vice-Chancellor of FUL, Prof Olayemi Akinwumi described the world as increasingly complex and filled with uncertainties.
He said the topic, “Insurance Solution in Wealth Creation and Sustainability”, was not only timely but also pivotal to the understanding of how strategic financial planning could drive sustainable economic growth.
Akinwumi held that in the face of such uncertainties, insurance served as a safety net that allowed individuals and businesses to take calculated risks, innovate, and invest in opportunities that drive wealth creation.
The Vice-Chancellor added that insurance mechanisms were crucial in ensuring the sustainability of these ventures by mitigating potential losses and facilitating recovery in the face of adversity.
On his part, an Insurance Broker and Chief Executive Officer of Arizona Insurance Brothers Ltd, Obiora Bonaventure said that the revaluation of assets has contributed in no small measures to the growth of the industry in recent times.
“Everybody is now bringing up his/her assets to the current value, so such premiums will go up, there is also the issue of increased awareness on the importance of insurance, presently, the way I receive life assurance premium shows that there is a current awareness in the sector,” he said.
He added, “The third party you know is by compulsion, I e, compulsory insurance, presently, the premium has increased from N5,000 to N15,000 although with the correspondent increase in liability. remember when they were paying N5,000 the limit of liability was N1m but now is N3m, so as much as the premium has increased, the Liability has equally increased.”
