The Nigerian insurance industry, despite its relative size, has proven to be one of the most resilient and fastest growing sectors in the Nigerian economy.
In the recent past, especially, the last five-years, it defied several economic recessions and the effects of the global COVID-19 pandemic, at a period when other sectors of the economy pointed south.
The market as measured by the industry gross premium income (GPI) has maintained a steady growth throughout the period of 2017 to the current financial year.
Interestingly, the market recorded expansion in 2020 during the pandemic when the real GDP actually contracted (-1.9%) as was the case with most economies around the world.
The industry’s remarkable experience is even better situated when pictured relative to other jurisdictions in a similar and/or emerging insurance markets.
In 2021 for instance, while the annual rate of premium growth in Nigeria stood at 19.7 per cent, it was 12 per cent in Tanzania, 18.5 per cent for Egypt and about 7.6 per cent in the emerging Insurance market of Malaysia.
The market has proven resilience not only with regards premium generation but the capacity to retain businesses which signifies sound financial stability and carriage capacity.
In tandem with the GPI growth, it recorded a positive trajectory in business retention from N265.5billion to N441.2billion (66.2%) over the period of 2017 to 2021. The retention growth was highest for the Marine & Aviation, growing at 169.7 per cent over the period while General Accident Insurance retention lagged at about 24.6 per cent over the same period.
This signifies the growing retention capacity by Insurers as the aggregate five year retention ratio of the industry stood at 72.1 per cent as the portfolios of Motor (93.1%) and Life business (91.8%) led the market.
Even in 2020, the industry recorded a retention ratio of about 71.6 per cent, higher than the advanced climes of Australia (69.4%) and Turkey (70.9%) and indeed the developing market of Egypt (58.1%), among others.
In 2022, retention experience in the first half was no different from the previous years. The Life business retention was 93 per cent, while non-life recorded a ratio of 55 per cent as the industry average stood at about seventy-One (70.5%) per cent.
All Nonlife classes stood at an above average position except for the Oil & Gas (40.1%) even as it declined further compared to its retention capacity in the corresponding period (42.3%) of 2021.
So, the industry is growing and that growth must be sustained to build a strong insurance sector, able to contribute immensely to the nation’s Gross Domestic Product(GDP).
Gross Premium Income Growth
Insurance industry, comprising of over 60 underwriting companies reaped N2.8 trillion gross premium income between 2017 and the second quarter of the current year.
A breakdown of the data sourced by NATIONAL ECONOMY from the National Insurance Commission(NAICOM) showed that insurance sector made N372.4 billion premium income in 2017, went up by 14.5 per cent in 2018 to N426.2 billion.
In 2019, it was N508.2billion, grew to N514.6 billion in 2020 and jumped to N616.6 billion in 2021 financial year.
However, as at the second quarter of 2022, the gross premium income had stood at N369.2 billion, with market observers expecting the industry to grow its premium income for 2022 to N700 billion.
Claims Payment Growth
Within the period under review, insurers equally paid N1.4 trillion gross insurance claims to policyholders within these periods.
The claims paid, according to findings, translates to 50 per cent of the premium income made within the period under review.
Similarly, in the claims payment category, the industry recorded N186.4billion gross claims in 2017, paid N252.2 billion in 2018, compensated policyholders who suffered insured risks in 2019 to the tune of N225.2 billion, while in 2020, the industry paid N247.2 billion even as the industry paid N 336.8 billion in the 2021, which is the last financial year.
However, by second quarter of the ongoing year(2022), the industry reported N174.8billion gross claims, cumulatively, amounted to N1,4trillion within those years.
Speaking at the 2022 seminar for insurance journalists in Lagos, assistant director, Statistics department, NAICOM, Mr. Umar Baba, while speaking on this development, noted that, the Nigerian insurance industry, despite its relative size, has proven to be one of the most resilient and fastest growing sectors in the Nigerian economy.
According to him, “During the period, the rate of growth was put at 14.2 per cent for 2017, 14.5 per cent in 2018 and, 19.2 per cent, 1.2 per cent and 19.7 per cent for 2019. 2020 and 2021 respectively. It is apparent that the trend maintained a steady rise except in 2020 of which it took a v-shaped recovery thereafter, rebounded to about 20 p[e in 2021.
“In 2022, the GPI stood at N223.8 billion in the first quarter, which was 6 per cent growth on YoY and, N369.2 billion in the second quarter, indicating a 65 per cent QoQ growth and at about 20 per cent YoY, apparently outpacing the real economic growth which grew at just about 3.5 per cent during same period.”
Major drivers during the period of 2017 – 2021, he said, were the special risk insurance of marine & aviation at about one hundred and seventy (169.6%) per cent, Miscellaneous Insurance at 98.4 per cent and Life Insurances at 71.3 per cent.
In 2022 however, he pointed out that, Fire Insurance (32.5%) and Life business (24.5%) recorded highest rates at the end of H1 period, Year-on-Year(YoY).
The insurance market, he stated, has continued to grow in gross claims reported reflective of the increasing policyholder enlightenment, market confidence from both demand and supply sides, and indeed effects of regulatory measures meant to ensure for claims settlement.
Similarly, at his investiture as the new Nigerian Insurers Association( NIA) chairman, Mr. Olusegun Omosehin, is optimistic of a brighter future for insurance industry, judging from the growth in premium income as well as promptness in claims settlement in the last five years or so, while urging operators to conduct their businesses professionally, increase awareness of their respective products and services while leveraging on technology and innovation to boost insurance acceptance in the country.
At a different forum last weekend, the managing director/CEO, NSIA Insurance Limited, Mr. Moruf Apampa, had stated that insurance has a brighter future, which he said, lies in the retail market, urging operators to deepen the retail insurance market to increase insurance penetration and contribution to the nation’s Gross Domestic Product(GDP).
Available data has shown that the industry sustained a higher growth rate than most other sectors of the economy and, always higher than the real GDP growth.
Consequently for the need to sustain and improve on the current trend, experts said the market deepening drive which is already yielding results, must be unrelenting; thus, sustaining the current rapid rate of insurance market growth and ensuring for economic growth, safety, stability, inclusion and development in Nigeria.