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Insurers Grow Premium Income on Gradual Economic Recovery

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There has been an improvement in the premium income of the largest insurers who rode on the wave of economic recovery following the relaxation of social distancing measures.

The combined gross premium income of these listed firms increased by 48.50 percent to N114.01 billion in March 2022 from N96.82 billion the previous year.

Their combined net premium income followed the same growth trajectory as it was up 15.82 percent to N73.15 billion as at March 2021.

AIICO Insurance Plc, the largest listed insurer by total asset, saw gross premium written spike by 25.25 percent to N24.66 billion as at March 2022.

Analysis of segment performance shows premium income from Life Business was up 20.97 percent to N14.71 billion in the period under review, while revenue from Non-Life Business increased by 24.46 percent to N8.75 billion as at March 2022.

AXA Mansard’s net premium income spiked by 38.70 percent to N11.57 billion in the period under review from N11.57 billion in 2022 from N8.34 billion as at March 2021.

NEM Insurance Plc net premium income increased by 27.13 percent to N5.45 billion in March 2022 from N4.28 billion the previous year.

Some saw an increase in premium across segments as the launch of innovative products has yielded fruits.

Analysts attribute top-line impressive performance to uptick in demand for insurance protection (stemming from the increased risk awareness among consumers due the pandemic) and the upward policy repricing in the non-life segment.

The improvement in revenue is congruent with insurance industry rebound from the pandemic shock in 2021.

The Nigerian insurance sector grew by 15.68 per cent in the first quarter of the 2022 financial period, according to figures obtained from the National Bureau of Statistics, NBS, on the country’s Gross Domestic Product.

The Nigerian economy grew by 3.98% yoy in the last quarter of 2021. Compared to 5.01% yoy in Q3-2021 and 0.11% yoy in Q4-2020, the performance of the economy in Q4-2021 represented a mixed stance, according to latest report by the statistics body.

However, the industry lags peers in penetration on the continent and across the globe while its contribution to the economy is worrisomely poor.

In ranking terms, the Nigerian insurance industry underperformed significantly, contributing a minuscule 0.02% to world premiums. This ranked the Nigerian insurance industry 81st (previously 71st) out of 88 countries profiled by the Swiss Re Institute in  2021. A comparison with peer countries across SSA and BRICS markets tells a similar narrative.

The sector’s insurance penetration (GPW as a % of GDP) was relatively unchanged—printing at 0.3% in 2021 compared to South Africa (13.6%), Brazil (4.0%), Morocco (3.9%), India (3.8%), and Kenya (2.5%).

One of the factors limiting the industry’s growth over time has been the lack of trust (particularly with respect to claims settlement) and low awareness of insurance benefits to the Nigerian populace.

Of course, the industry is beset by a myriad of challenges such as lack of trust for the claims process and a dearth of knowledge about the benefits of insurance.

High unemployment and poverty are also responsible for low penetration as over 5o percent of a population of 200 million people live on less than $1.98 a day.

The Minister of Finance, Budget and Planning, Zainab Ahmed, has urged insurance operators to address the low contribution of the sector to the country’s Gross Domestic Product.

While commissioning the National Insurance Commission’s portal in Abuja, Ahmed noted that the sector, which had huge potential, contributed just 0.88 per cent to the country’s GDP in 2021.

“The current insurance penetration, a measure of the contribution of insurance to the Gross Domestic Product of 0.88 per cent for 2021, is very low. This indicates a low insurance sector development contribution to the national economy,” said Ahmed.

“However, this also shows that there are abundant opportunities for growth in the market. There is a need, therefore, to develop new innovative products based on data and customer preferences and introduction of new channels of distribution beyond the traditional channels to reach new segments of the market,” summed Ahmed.

Industry experts have suggested ways to bolster penetration.

The President, African Insurance Organisation, Tope Smart, has urged underwriters in the continent to boost penetration through advocacy.

We believe it is our mission to improve insurance penetration via solutions that improve access to insurance, the reputation of the African insurance industry and insurance awareness in Africa.

“As part of measures to address this challenge, I appeal to different markets to scale up its advocacy initiative by collaborating with various organs of government to advance the course of Insurance as this will lead to increased penetration.”

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