Premium income from foreign currency-denominated policies and rate review from motor third-party insurance policies have been seen will drive insurance sector premium growth in the short to medium term period.
According to analysts at Agutso & Co, the industry has benefited from the general drive to reprice premium rates upwards and the persistent naira devaluation as foreign currency denominated premiums are bloated upon translation to naira.
Read also: Nigerian insurance sector gross premium crosses N1trn milestone
Nigeria’s insurance regulator, the National Insurance Commission (NAICOM) said the industry sustained its progressive trend of positive market performance at the close of 2023, recording a milestone growth to close at N1.003trillion at the end of fourth quarter, a 27 per cent growth compared to the N790billion recorded in 2022.
Data released by the Statistics Department of the Directorate of Research, Statistics & Publication at NAICOM showed that the non-life business accounted for 61.3 per cent of all premiums written during the year, amounting to N615.1 billion, while the life segment contributed 38.7 per cent, valued at N388.1billion.
The market also recorded a retention of about 87.7 per cent for the life business, just about 54 per cent for non-life while the aggregate market average retention stood at 66.7 per cent during the same period.
Agutso & Co had said in a summary of its latest report on insurance that, it was expecting increased marketing drive, partnerships and efforts to improve consumer confidence and trust levels have also yielded some gains.
The rating agency has estimated that, from a gross premium of 775.5 billion in 2022, the industry would cross N11 trillion market at the end of 2023, with 30 percent growth.
It noted that its near-term outlook for gross premiums and performance is positive given the expectation that the industry will continue to benefit from the free-fall of the naira and business expansion drive.
“In the first two months of 2024, the naira depreciated by 40.8 percent against the USD, backing our anticipation for higher premiums from foreign currency-denominated policies, especially oil and gas.”
“Furthermore, we expect higher investment income given the contractionary policies of the Central Bank of Nigeria and we believe this will significantly strengthen profitability in the near term.”
NAICOM had said in the recent data that major growth drivers in the non-life segment of the market were Oil & Gas and Fire Insurances, contributing 27.3 percent and 24.1 percent, equal to N167.8 billion and N148.1 billion respectively.
In a direct reflection to the ongoing regulatory measures regarding claims settlement, the Life business recorded about 95 per cent of net claims to the total recorded claims during the year while the market average stood at about 71.4 per cent of the N536.5billion gross claims reported at the close of fourth quarter, 2023.
In a direct reflection to the “no-premium no-cover” policy of the Commission, the outstanding premium continue to decline, posting a 1.6 per cent as outstanding of all the premiums generated in the market during the period.
Statistics also shows that the market recorded total assets of about N2.67trillion and capitalization of N851billion in 2023.
