Insurance regulator, the National Insurance Commission (NAICOM) is positive that insurance business in Africa’s most populace nation, Nigeria have the potential to grow at a geometric progression given the low level of insurance penetration in the country, which according to the commission is still less than one percent.
According to the Commission, there must be improved market conduct, service delivery, value creation as well as prompt and fair claims settlement, among others for this potential to be explored.
It therefore noted that the implementation of its strategic initiatives is not only expected to increase gross premium income (GPI) but transform insurance into a significant contributor to Nigeria’s GDP.
Sunday Thomas, acting commissioner for Insurance/ CEO of NAICOM who made the remark during the 2019 Insurance Consultative Forum of the Lagos Chamber of Commerce & Industry held in Lagos said the Commission’s strategy and initiative focuses on realization of the desired future of insurance in Nigeria.
Thomas said these include a Safe, Sound & Stable Insurance Industry; Developed and Innovative Insurance Market (Technical Capacity); Disciplined and Customer Centric Market (Protection of Policyholders); Dependable and Trusted Insurance Market; Integrity and Claims Management; Technology-driven Industry – (FinTech, InsurTech, SupTech, RegTech) as well as Effective Legal & Regulatory Framework for the industry.
According to Thomas, NAICOM’s expectation is that there will be availability of innovative products, appropriate pricing or underwriting; efficient processes/ low management expenses; technology driven Prompt and fair claims settlement process, as well as competitive returns on capital.
Nigerian insurance industry is considered as one that is yearning for reckoning and relevance owing to how its manageable challenges hold opportunity for the sector.
The effort by the Nigeria government to ensure the country has an insurance industry that will rank among the twenty largest markets in the world by the year 2020 (though Nigeria is currently ranked 60 in the world) is one that give hope to the industry.
The Government has however undertaken some certain steps and measures towards actualizing this objective, particularly the strengthening of the National Insurance Commission (NAICOM) which derives its regulatory powers from the National Insurance Commission Act, 1997 and the Insurance Act of 2003.
Section 86 of the Insurance Act empowers NAICOM amongst other numerous powers to be responsible for the administration and enforcement of the provisions of the Act, as well as empowering it to register insurance companies and to increase the amount of minimum share capital requirement as circumstances may demand.
This is coupled with the growth potential of the industry and the collective effort of the 59 insurance firms underwriting non-life and life businesses in Nigeria.
A 2018 survey by the Chartered Insurance Institute of Nigeria (CIIN) revealed that out of the about 100 million adult population in Nigeria, about 86.6 million of them do not have any form of insurance cover. This is considered a market opportunity for the insurance companies
The penetration ratio of Nigeria insurance industry stands at 0.4 percent in 2018, one of the lowest in Africa compared with countries like South Africa (17 percent), Kenya (2.8 percent) and Ghana (1.1 percent).
According to industry sources, the low penetration ratio presents huge opportunity for growth and as such the sector is tagged as one in a growth phase.
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