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While the most liquid and capitalised insurers are meeting their obligations to policyholders promptly, it appears scotching inflation has ballooned claims payments as their combined ratio is rising to the detriment of profit margins.
F0r the year ended December 2022, listed firms incurred N142.54 billion in claims expenses, which is 10 percent higher than 2021’s N129.58 billion, according to data gathered by MoneyCentral.
The average industry claims ratio stood at 38.55 percent in the period under review from N47.36 billion the previous year.
AIICO Insurance paid total claims of N44.96 billion as at December 2022, which represents 14.14 percent increase from 2021’s N39.39 billion. Claims ratio fell to 64.28 percent in the period under review from 68.07 percent the previous year.
AXA Mansard’s claims expenses were up 36.09 percent to N33.09 billion as at December 2022 from N24.31 billion the previous year. Claims expenses moved to 71.62 percent from 65.47 percent.
Mutual Benefit Assurance Plc claims expenses were up 17.49 percent to N12.69 billion in December 2022 from N10.80 billion the previous year. Claims ratio reduced to 42.89 percent in 2022 from 48.12 percent the previous year.
Custodian Insurance Plc claims expenses were up 12.84 percent to N20.17 billion as claims 48.44 percent from 49.36 percent.
Analysts had warned that inflationary pressures will result in higher property and motor vehicle claims and that the trend is likely to continue this year if the central bank continues to cling to its aggressive monetary policy.
While sector players are no longer beset by obligations arising from the ENDSARS (losses incurred due to destruction to properties during protestation against police brutality, it is expected that they will be burdened by a spike in construction costs due to the volatility in price.
Nigeria’s headline inflation rate rose to 21.82 percent on an annual basis in January 2023, according to the National Bureau of Statistics (NBS).
According to the NBS Consumer Price Index (CPI) and Inflation Report for January 2023, which was released on Wednesday in Abuja.
The Monetary Policy Committee of the Central Bank of Nigeria has voted to increase the benchmark interest rate by 100 basis points to 17.5 per cent.This is the fifth time the CBN would increase the interest rate despite advice from manufacturers and some key stakeholders.
The Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission NAICOM, Mr Olukayode Sunday Thomas, charged insurers to make prompt settlement of claims their utmost priority so that the industry retains its integrity and widens its service delivery scope.
He tasked the new leadership to deploy the principle of self-regulation not only to ensure swift claims settlement but other issues capable of demarketing the industry and impeaching the integrity of the regulator.
He reckoned that while the sector was beginning to experience improvement in terms of patronage and claims payout, the perception of the industry by the majority of the public was still not what it should be.
“This is unacceptable and it is high time we change the narrative collectively as an industry. We must all see this business as an interest that we must all protect and I again challenge the new leadership of the NIA to take on this task,” he stated.