The largest Nigerian insurers are leveraging innovative products to magnify revenue, but the country’s penetration rate is still one of the lowest in the world.
The Nigerian insurance industry recorded 20.61 percent increase in gross premium income to N418.66 billion in the 2019 financial year from N347.10 billion in 2018.
Over the past six year, the country’s GPI has largely been driven by products such as third party motor insurance, employer’s liability insurance, group life insurance, builders’ liability insurance, healthcare professional indemnity insurance, and occupiers’ liability insurance.
Analysts are of the view that insurers can do better and deliver higher returns in form of bumper dividend to shareholders and share appreciation but a myriad of challenges have relegated the industry to the background.
These changes include poor regulatory enforcement, weak corporate governance & risk management framework and general inefficiencies within the Industry.
Experts say the greatest hindrance to growth remains lack of innovative products as the industry is becoming just like a dinosaur that gets irrelevant with time.They added that banks have been able to deploy latest and sophisticated technologies that has helped bolster efficiency and profitability
Nigerian insurance industry penetration rate is just 0.3 percent, which is less than one tenth of that of India with similar GDP per capita, according to a report by the Nigerian Stock Exchange (NSE). The report also stated that Nigerian Insurance Industry ranks 62nd in the world with $1.64 billion premium representing 0.2 percent of premium collected globally in 2018.
A breakdown of the GPI figures show FBN Insurance Limited’s gross premium income increased by 46.81 percent to N44.94 billion in December 2019 from N30.611 billion as at December 2018.
Aiico Insurance Plc, the largest listed insurer by total asset saw GPI increase by 35.022 percent to N50.02 billion in the period under review as against N37.04 billion as at December 2018.
NEM Insurance Plc’s GPI was up 30.67 percent to N18.35 billion in December 2019 from N14.04 billion as at December 2018.
Wapic Insurance Plc’s GPI increased by 29.81 percent to N15.86 billion in the period under review from N12.21 billion the previous year.
Custodian and Allied Investment Plc’s GPI increased by 28.54 percent to N47.20 billion in December 2019 from N36.72 billion as at December 2018.
Consolidated Hall Mark Insurance Plc’s GPI was up by 27.60 percent to N8.31 billion in December 2019 from N6.51 billion the previous year.
Industry operators in collaboration with the regulator have embarked on various initiatives to deepen insurance penetration. These initiatives includes:the insurance industry roadmap, financial inclusion, and micro insurance, bancassurance.
Experts expect the insurance industry will be on sound footing after the recapitalization exercise, and they added that with solid capital bases, insurers can take on more risk and magnify earnings.
There are negative prognoses that the lockdown imposed by government to curb the spread of the coronavirus pandemic will hurt insurers’ premium income as business activities were paralyzed.
That means Nigerian Insurers’ will have to adjust pricing to compensate for mounting claims and rising expenses.
If companies downsize due to Covid-19 shocks, the number of people that are unable to take a cover will spike, compounding the woes of an industry reeling from low penetration.