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The Nigerian insurance industry has proven to be one of the most resilient and fast growing sectors, surmounting a challenging environment as sector players recorded an improvement in revenue.
The largest and the most liquid insurers collectively grew gross premium income (GPI) by 19.71 percent to N310.36 billion in September 2022 from N259.25 billion as at September 2021, according to data gathered by MoneyCentral.
Their combined net premium income (NPI) increased by 23.98 percent to N219.34 billion in September 2022 from N176.91 billion as at September 2021.
It is important to note that the industry has been on a growth trajectory since the reopening of the economy and relaxation of social distancing rules that invigorated business activities.
Analysts say a lot of companies are thinking outside of the box and introducing innovative and market driven products that are contributing to earnings.
They added that the insurance sector should be the future redeemer of the Nigerian economy, given its growth rate, resilience and yet untapped potential.
The National Bureau of Statistics (NBS) reports that in Q1 2022, the insurance and finance sector witnessed a growth of 23.24 percent higher by 23.70 percent points compared to Q1 2021 and down by 0.90 percent points from the rate recorded in the previous quarter. In real terms, there was a quarter-on-quarter growth of 5.01 percent.
However, low earnings, rising inflation and widespread poverty have continued to weigh on insurance affordability, and with other factors, explains why premium penetration continues to be low compared to peers in Sub-Saharan Africa.
Red-hot inflation and currency devaluation means the replacement cost of assets are high, which balloons claims expenses. Of course, spiraling claims costs and operating expenses led to deteriorating profit margins and a high combined ratio.
The country’s inflation rate accelerated to a new 17-year high of 21.09% in October 2022, marking a 0.32% points increase from 20.77% recorded in September.
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%).
Chairman, Scib Nigeria and Company Limited, Olabode Ogunlana, is of the view that Nigerians need to be sensitized about the benefits of insurance, especially rural dwellers.
“The Nigerian insurance industry should become more marketing-oriented such that school children, university students, workers, both in the public and private sectors, as well as market women, would appreciate the importance of insurance and what it means to the economy,” said Ogunlana.
“The Nigerian insurance industry needs to be more innovative, resourceful and determined,” adds Ogunlana.
Custodian Insurance’s gross premium income was up 11.71 percent to N56.86 billion in September 2022 from N50.87 billion the previous year.The composite insurer saw Non-Life and Life segments jump by 8.08 percent and 15.33 percent to N27.07 billion and N29.78 billion in September 2022 from N25.05 billion and N25.82 billion the previous year.
AIICO Insurance Plc gross premium income spiked by 23.46 percent to N63.51 billion in September 2022 from N51.44 billion as at September 2021. The insurer saw the Non Life segment increase by 46.60 percent to N23 billion in the period under review from N15.68 billion the previous year. Life Business’ premium income rose by 12.35 percent to N41.30 billion as at September 2022.
AXA Mansard’s gross premium income rose by 29.65 percent to N52.47 billion from N42.96 billion the previous year.
Coronation Insurance Plc’s gross premium income increased by 33.86 percent to N13.88 billion in September 2022 from N10.37 billion the previous year. The Non-Life segment moved by 6 percent to N23.56 billion in the period under review from N22.23 billion the previous year. The Life division was up 54.74 percent to N11.88 billion in September 2o22 from N7.67 billion the previous year.
NEM Insurance Plc gross premium income grew by 18.81 percent to N25.36 billion in September 2022 from N21.34 billion the previous year.