Out of the N490.800 billion gross written premium generated in the insurance industry in 2019, oil and gas business contributed the highest with N94.049 billion, followed by annuity (N88.145 billion) and group life (N71.715 billion).
The three classes of business made up 51.7 percent of total industry premium, according to data from the Nigerian Insurers Association (NIA).
The NIA data showed that premium from general business stood at N260.6 billion, while life business contributed N230.230 billion.
Industry experts say the growth in premium from these classes of business were as result of increased capacity of the insurance companies, improved regulation helping to drive premium retention particularly in oil and gas.
Motor business was another major source of premium, contributing N44.906 billion within the same period, while fire insurance business brought N41.33 billion, followed by premium from general accident insurance (N32 billion) and N25.034 billion from marine and aviation.
Daniel Braie, managing director/CEO, Linkage Assurance Plc, said many companies had grown their capital over time, trained their manpower for these big-ticket risks, particularly oil and gas.
According to him, the industry has also attracted a lot of foreign investments that have brought in huge funds that are increasing market liquidity to underwrite big-ticket risks in key classes of the business like oil and gas, marine and aviation.
He attributed the increased retention to improved regulations and support from the National Insurance Commission (NAICOM) that has ensured implementation of the National Content Law, which made it compulsory that local capacity is exhausted before any business is taken offshore.
The Nigerian Oil and Gas Industry Content Development provides the framework for the growth of indigenous participation in respect of all operations and transactions carried out in or connected with the Nigerian oil and gas industry, including insurance.
Braie said the enforcement of the Pension Reform Act 2014 had led to improved performance in group life insurance and annuity business.
Mayowa Adeduro, managing director/CEO, Tangerine Insurance, said the rising premium in specialised risks like the oil and gas was a function of growth in capital.
He said, “You know that a lot of companies have increased their capital, and to utilise those funds they had to deploy them into big ticket risks like oil and gas.
“We are hoping that the risk-based capital being promoted by the regulator, NAICOM, would streamline all of these and players can know where to deploy their funds more appropriately.”
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Idu Okwuosa-Okeahialam, managing director/CEO, Access Pension Fund Custodian, said the enforcement of certain provisions of the Pension Reform Act 2014 was helping the growth of life insurance companies.
According to her, the PRA 2014 is driving growth in annuity, which is one of the available options for a retiree to deploy his or her Retirement Savings Account (RSA) balance at the point of leaving employment.
“There is also the compulsory group life insurance for employers to procure for their employees as provided in the PRA 2014,” Okwuosa-Okeahialam said.
“The Act stipulates that every employer, to which this applies, must maintain a life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee.”
According to the guidelines, the employer is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to the contributions to be made by the employer to each employee’s Retirement Savings Account.
The policy provides cover to the insured against death and the insurance cover is mandatory for all employees as long as they are in employment, the pension expert noted.
As of the end of 2019, the total industry assets stood at N1.4 trillion, with 55 insurance companies and about 6,033 employees in the industry.
This is as insurance penetration stood at 1.8 percent of the total population, equal to 3,600,000, while sector contribution to GDP is 0.3 percent.
