The Nigerian insurance industry witnessed increased growth in terms of gross premium income and penetration this year on the back of technology adoption and increased consumer confidence.
The operators and the regulator attributed the growth to the adoption of technology and insurtech partnerships, which did not only enhance product distribution but also increased customer experience and data generation.
The National Insurance Commission (NAICOM) instituted this year a ‘NAICOM Portal’ that enhanced policy upload by operators and data generation for critical analysis and policy decisions.
NAICOM described the portal as one of the initiatives of the commission being pursued to deepen the insurance market and increase penetration to the level that is consistent with the nation’s economy.
“The commission, in July 2009, embarked on a comprehensive computerisation effort tagged project e-regulation that was meant to transform its operational procedures and the conduct of its regulatory responsibilities by providing a robust, world-class ICT infrastructure to help implement an automated business process internally and for industry wide supervision via an integrated platform,” Sunday Thomas, commissioner for Insurance, said.
He said prior to the development of the portal, the processing of applications required that applicants physically drop their applications at the commission with their attendant challenges of delays in processing times, wasted manpower hours due to back-and-forth in application processing as well as ineffective application tracking system.
A number of insurers, on the other hand, recorded improved partnership that enables them sell insurance via the USSD platforms and as well as other virtual assistant mechanisms that are also boosting customer experience.
Consumer confidence also saw a leap when NAICOM’s regulatory hammer fell on two insurance companies, Niger Insurance and Standard Alliance Insurance, for their inability to meet claims obligation and solvency concerns.
Today, the insurance consumer is better off as claims payment has seen an upward trend from across the players, since it has become almost impossible for any insurer to intentionally want to deny or repudiate a genuine claim, without getting appropriate penalty from the regulator.
For Thomas, the statistics of the insurance market performance for the year revealed some quality improvements in the market indicators including growth, claims settlement and profitability.
“The market statistics of the third quarter 2022 has revealed some quality developments in the industry performance indicators in terms of growth, retention, claims management experience and profitability, at levels of which the industry could be ruled as profitable, sound and stable,” the commission said.
“In cognisance also to the on-going digitisation and market deepening measures of the commission, the outlook remains strongly positive.”
Edwin Igbiti, chairman of Insurance Industry Consultative Council, said the insurance industry is one of the most resilient and fast-growing sectors in Nigeria.
“You will agree with me that there has been growth in the industry despite the numerous economic recessions, the effects of the COVID-19 and the #ENDSARS protests, which resulted in millions of claims,” Igbiti said.
NAICOM, in its Bulletin of the Insurance Market Performance, said the industry’s gross premium rose 14.9 percent to N532.7 billion year-on-year in the third quarter, while total assets stood at N3.2 trillion in the same period.
According to the commission, though the operational environment remains challenging due to global and domestic economic challenges, consumer confidence in the insurance industry remained high as affirmed by the relevant retention situation.
“Life business retention for the period was 94 percent, while non-life recorded a ratio of 55 percent as industry average stood at 71.4 percent,” it said.
In terms of share of the market volume, the non-life segment sustained its market dominance at 58.4 percent of the total premium generated.
Insights in the segment show oil and gas was the leading driver at 30.8 percent, followed by fire insurance (21.3 percent).
Motor insurance accounted for 14.6 percent, while marine and aviation, general accident and miscellaneous had 11.8 percent, 11.2 percent and 10.3 percent respectively.
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Life business recorded 41.6 percent of the market production as its share contribution gradually closed up. The share of annuity in the life insurance business was about 25.5 percent, while individual life was at 41.2 percent of the premium generated during the period.
According to the commission, the insurance claims component defines the essence of insurance business as a whole and indeed a major factor in consumer confidence building.
The NAICOM data show that claims of N242.6b billion were paid out in the third quarter, 2.3 percent lower compared to the corresponding period of 2021.
The insurance market remained profitable during the period, recording an overall industry average 54.5 per cent, compared to 46.7 percent in the corresponding period of 2021.
Muda Yusuf, chief executive officer of Centre for the Promotion of Private Enterprise, said recently that insurance could really do much in the economy, if given the needed attention by the government.
He therefore called on the Federal Government to set aside a minimum of 2 percent annual non-debt expenditure for insurance premium.
He said for the Federal Government to meet its insurance obligation as the highest spender, at least a minimum of 2 percent must be set aside for insurance premiums annually from the non-debt expenditures.
