Based on the Nationwide Insurance coverage Fee (NAICOM) in its newest report, the whole belongings of the Nigerian insurance coverage business grew to N2.33 trillion within the fourth quarter of 2022.
The sector generated a complete premium of N726.2 billion, representing 36.3 % progress quarter-on-quarter (QoQ) and 17.8 % year-on-year (YoY) in gross premium revenue. Based on the report, the asset determine represents constructive progress representing a 2.4 % quarter-on-quarter and 4.4 % annualized enlargement of the sector’s belongings.
The breakdown of the market dimension when it comes to the whole belongings of the sector was N1.22 trillion, whereas the non-life insurance coverage enterprise amounted to N1.12 trillion. As in earlier intervals, non-life enterprise continued to dominate, contributing about 57.4 % to the life enterprise share at 42.6 %.
Within the report, NAICOM acknowledged that insurance coverage claims recorded in the course of the fourth quarter amounted to N318.2 billion, a rise of 31.2% over the earlier quarter.
At 71.3 %, the typical premium that every one insurance coverage firms had been capable of withhold was barely one level decrease than within the earlier quarter and 4 factors decrease in comparison with the identical interval on an annual foundation. On a market foundation, Motor maintained its main place as the very best retention portfolio with a retention fee of roughly 93.5%. Whereas oil and fuel recorded the bottom insurance coverage retention fee in Nigeria with premium retention of 36 % in 2022.
A part of the NAICOM report reads, “The oil and fuel portfolio sadly remained a difficult nook of the market because of the nature of its large capital {and professional} necessities.”
Within the oil and fuel sector, insurance coverage enterprise has lengthy been taken overseas by oil multinationals preferring to make use of their dwelling nation captive companies over Nigerian insurers. However because of the Nigerian Oil and Gasoline Trade Content material Growth Act (NOGICD) of 2010, which initially required oil and fuel firms in Nigeria to make sure that native insurers insure no less than 10 % of the chance and the remainder overseas. Later this elevated to 45 % after which to 70 %.
The regulation has undoubtedly contributed drastically to the expansion of indigenous insurance coverage capability within the Nigerian oil and fuel business. So from the 5 % insurance coverage retention fee that was generally recorded up to now, the business at the moment has 36 %. And the market is predicted to learn as a lot as 70 % from the regulation.
Whereas these figures are commendable, trying on the previous state of the insurance coverage business, a number of enhancements nonetheless have to be made. Insurance coverage penetration ranges in Africa stay typically low and are one of many lowest insurance coverage penetration charges on this planet at lower than 3%. Nationally, a rustic like Nigeria nonetheless has an extended method to go, particularly when in comparison with its counterpart like South Africa.
In its report on the insurance coverage business for 2022, Augustus and co revealed that solely 0.5% of Nigerians have insurance coverage protection. There are totally different stories, however we agree on one factor: the insurance coverage penetration fee in Nigeria continues to be lower than 1%. That is unsatisfactory when contemplating the greater than 200 million residents of which the nation boasts. Then again, South Africa with a inhabitants of about 60 million has an insurance coverage penetration fee of 13.7% from 2020.
Underlying these shortcomings are long-standing challenges together with a weak regulatory framework, a scarcity of expert personnel, a weak threat administration framework, a scarcity of expert personnel, inadequate entry to data know-how and a low lifestyle.
The insurance coverage business in Nigeria is numerous, with insurance coverage firms providing a variety of insurance coverage services, together with life insurance coverage, motor insurance coverage, property insurance coverage, marine insurance coverage, and medical insurance. However with greater than half of the inhabitants dwelling under the poverty line, the thought of insurance coverage continues to be unthinkable and a luxurious for a major variety of Nigerians.
The significance of elevated insurance coverage penetration is essential as it’s important for selling monetary safety, financial stability, threat administration, job creation and funding within the nation. So Nigeria must do extra to offer extra protection within the close to future.
