Between 2017 and 2022, listed insurers in Africa’s largest economy earned total gross premium income of N1.72 trillion as they have remained resilient amid a turbulent macroeconomic environment, according to data gathered by MoneyCentral.
Interestingly, premium income has been growing steadily in these periods, as Life and Non-Life underwriters earned N162.39 billion in 2017; N193.10 billion, 2018; N270.89 billion, 2019; N310.86 billion in 2020; N358.78 billion, 2021, and N427.53 billion in 2022.
Annuity business remains the major driver of life premiums, due to the growing number of retirement benefits as permitted by the Pension Reform Act 2014.
The Non- Life business was strengthened by an uptick in the Oil and gas, Motor, Fire, Aviation, and Engineering segments.
Despite the challenging operating environment, insurers have cling to their strategy for long-term growth and sustainable strong performance and focus on identifying new growth areas in their markets.
Inflation soared to 21.82 per cent in January 2023 as the country struggled to grapple with persistent fuel and naira crises, and that is on top of currency depreciation, the negative impact of the Russian and Ukraine war on the price of grains.
Deteriorating consumer purchasing power and high unemployment dampens the appetite to take up an insurance cover as there is positive correlation between macroeconomic conditions and performance of the insurance sector.
According to Swiss Re, the Nigerian insurance sector ranks 63rd globally (out of 88 countries profiled) in terms of gross premium income and the sector contributed about 0.03% to global premiums in 2019.
According to several reports, Nigeria, the largest Africa economy with a GDP of $443 billion as of 2020 and the most populous African country with a population of 200 million only has an insurance penetration of less than 1 percent.
The country’s insurance penetration which is less than 1 percent lags South Africa’s penetration of 16.99 percent; Namibia, 6.69 percent; Lesotho, 4.76 percent; Mauritius, 4.18 percent; Zimbabwe, 4.09 percent; Kenya, 2.83 percent; Swaziland, 2.44 percent; Togo, 1.98 percent; Seychelles, 1.82 percent; Rwanda, 1.74 percent, and Mozambique, 1.58 percent.
Analysts at Afrinvest Securities say the low insurance penetration and density in Nigeria presents an attractive young and growing population.
“Weak insurance penetration presents an attractive investment case, growing middle class,” said analysts at Afrinvest Securities.
“This size of the market remained unchanged largely due to little awareness & understanding of insurance products, lack of trust especially with regards to claim settlement, socio-cultural & religious beliefs of Nigerians, weak enforcement of compulsory insurance policies, slow pace of innovation amongst industry participants and high poverty rate,” said the analysts.
Between 2017 and 2022, Custodian Investment Insurance has realised N314.39 billion in gross premium income and premium income rose by 11.78 percent to N74.03 billion as at December 2022.
In the last five years, AIICO Insurance Plc, the largest insurer by revenue in Nigeria, earned N317.34 billion as gross premium income spiked by 21.83 percent to N85.29 billion as at December 2022.
AXA Mansard Plc has realised N23.09 billion in revenue in the last six years, while gross premium income increased by 24.63 percent to N69.44 billion as at December 2022.
Between 2017 and 2022, Mutual Benefit Assurance earned N124.19 billion in gross premium income, while the top line (revenue) was up 28.64 percent to N33.61 billion as at December 2022.
NEM Insurance made N118.91 billion in gross premium income in the last six years as gross premium income increased by 19.06 percent to N31.49 billion as at December 2022.
Analysts at Afrivest Securities are of the view that the Bancassurance model would significantly improve insurance awareness, raise premiums, deepen penetration and ultimately, boost financial inclusion.