Nigerian Insurance industry ready for further consolidation says Fitch

The Nigerian insurance market is ripe for further consolidation as insurers seek to increase scale and investor interest develops according to a new report by Fitch Ratings.

Fitch expects foreign investors seeking an entry point to the market to continue to do so through acquisitions of existing insurers, or partnerships with local banks. Thorough due diligence will remain a challenge to the acquisition of existing insurers, despite improvements in corporate governance.

Fitch believes that consolidation in the industry, combined with technological improvements in administration and distribution, could lead to a reduction in operational costs. Insurers that succeed in reducing costs could rapidly gain market share by passing on most of the benefits to consumers.

The insurance industry is poised to benefit from continued significant economic growth and favourable demographic factors in Nigeria. Moreover, insurance coverage is currently low with a weak insurance culture among consumers and market growth could be stimulated by improved consumer awareness and enforcement of minimum compulsory insurance cover as required by law.