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Insurers Profit Surges Most Since 2015 Amid Rising Claims

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The most liquid and capitalised insurers in Africa’s most populous nation had their most profitable run since 2016, overcoming rising claims inflation emblematic of an unfavorable underwriting environment.

The combined profit of the largest listed insurers surged by 250 percent to N32.67 billion in December 2o22, according to data gathered by MoneyCentral.

And that compares with a 68.25 percent reduction in net income in 2021 financial year to N9.33 billion, 134.01 percent sure in 2019 to N23.73 billion, a 19.97 reduction in net income to N10.14 billion for the year ended December 2018, a 12.67 dip at the bottom line to N14.51 billion in 2017, and 60.12 percent uptick in net income in 2016.

Some insurers such as Mutual Benefit, Coronation Insurance Plc, Linkage.

Assurance returned to profit, thanks to a significant fall in net fair value loss on financial assets and investment income as sector players enjoyed juicy yields due to the central bank’s hawkish stance aimed at taming red-hot inflation.

It is important to note that the record profit surge which indicates these firms are still in business is validated with insurance stocks  year to date gains of 1.12 that underperforms the NGX All Share Index.

Aside from underperforming the broader index of, investors had already dumped shares over to abysmally poor dividend payments and poor regulation as the regulator has been postponing the deadline for recapitalisation the market expects will transform a sector whose penetration is low.

An analyst who spoke with MoneyCentral said that a strong premium income growth also helped absorb mounting obligations in the face of unprecedented rising inflation.

Of course, insurers’ premium income is growing on the back of improved economic activities and a review of premium rates.

Agusto & Co., Agusto & Co. Limited, a pan-African credit rating agency and business information provider has said that the country’s insecurity gaps, infrastructural shocks and aftermath of the #EndSARS protest had emphasised the benefits of insurance products, particularly fire and general accident policies.

It stated, “One of the most notable highlights of the industry in 2022 was the increase in third-party motor insurance policy rates by the National Insurance Commission, the apex regulator, on 22 December 2022.

“NAICOM raised the new premium for private motors to N15,000, staff buses to N20,000, commercial trucks/general cartage to N100,000, commercial tricycles to N5,000 and commercial motorcycles to N3,000. These policies previously had a basic rate of N5,000.”

In addition to the new premium rates, it added, NAICOM announced that the comprehensive motor insurance policy premium rate should not be less than five per cent of the sum insured after all rebates or discounts.

Although the policy had received some criticisms, Agusto & Co. stated that it would cushion the rising loss rates from the associated business line and support a boost in GPI in FY 2023.

It added that Nigeria’s political environment would define the financial year 2023 for insurance operators.

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