Individual policy, annuity drive life insurance portfolio growth

The increasing desire to protect personal wealth and secure dependants against unexpected future events are driving uptake of individual life insurance policies as well as annuity.

Nigeria’s insurance industry recorded gross premium written of N1.173 trillion at the end of third quarter 2024, with life business contributed N364 billion, equal to N31.1 percent.

Data from the National Insurance Commission (NAICOM) shows that out of the total life premium, individual life business was 41.8 percent, annuity N31.8 and group life insurance 26 percent.

Chika Onwunali, partner at Premium Debate said, “It’s not a surprise that individual life insurance and annuity are leading the table because retirees annuity offer a lot of opportunity for life insurance growth”.

He said that this could even get better if life insurance companies can put their house in order, build capacity for risk management with actuarial experts.

Onwunali said, “Even with increasing economic challenges, need for life insurance, health, and personal protection for dependants have become even more important, he said.

Desmond Shekete, speaking on performance of life insurance companies in Nigeria had noted that life insurance is a unique product that requires expertise, which only actuarial experts have.

He expressed regret in the failure of one of the life insurance companies in the market recently on mismatch of annuity funds with other classes of business, pointing that professionalism is key in growing life insurance company.

Shekete said life insurance remains the goldmine of the insurance industry, noting that it is through individual life business that the long expected penetration can come.

Industry analysts see a heightened focus by individuals to secure their future and that of their immediate families, which is propelling growth in life business and annuity portfolio.

An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You get a fixed amount of money for the rest of your life in return for a lump sum payment or a series of instalments.

Victor Owotorose, senior manager, Business Development, AIICO Insurance speaking on ‘Understanding Annuity Business’ stressed the importance and benefits of annuity to the clients and the growth of insurance industry.

Annuities, he stated are insurance contracts that promise to pay you regular income immediately or in the future.

The uptake for retiree life annuity as a retirement option under the Contributory Pension Scheme (CPS) rose by 16.6 percent in one year, from N595.22 billion in the third quarter of 2022 to N697.148 billion at the same period in 2023.

In terms of monthly pensions, pay out by life insurance companies rose to N32.10 million in the third quarter of 2023, as against N5.95 million that was paid in the same period in 2022.