Three reforms in the Nigerian insurance industry have been stalled, limiting the growth of operators.
Although the insurance industry premium grew from N350 billion in 2015, when President Muhammadu Buhari first assumed office, to N726.26 billion at the end of 2022, it is said to be low, given the country’s population and when compared with other markets.
The Consolidated Insurance Bill has not been signed into law by the President.
The expectation of the insurers has been that the 13-year-old Consolidated Insurance Bill, which has passed through legislative processes of the upper and lower arms of the National Assembly, would get the president’s assent, and this they believe would have repositioned the sector for real growth, strengthen regulation and increase industry penetration, currently standing at about 0.4 percent.
The second reform is the enforcement of the different compulsory insurances, including Motor Third Party Insurance, Builders Liability Insurance, Public Building Insurance, Professional Indemnity Insurance, and Group Life Insurance, which had been expected to ignite a new wave of growth in the industry. But the enforcement has not materialised.
A series of insurance sector recapitalisation that had been expected to enhance the capacity and size of the industry to underwrite big-ticket risks, deepen penetration and market retention also failed to see the light of the day. The weak laws governing insurance regulation, which have made enforcement difficult for the industry regulator.
Segun Omosehin, chairman of Nigerian Insurers Association, wished that President Buhari gave assent to the Consolidated Insurance Bill, which, according to him, will change the face of the industry.
He said the industry has been following through with all the processes, noting that the Bill has gone through both arms of the legislators, and just remaining legislative procedures preparatory to presidential assent.
“We are hopeful that it will receive speedy attention so that the industry can begin to tap into the opportunities provided by the new law, ” Omosehin said.
Part of the contents of the proposed bill include proper definition of recapitalisation, which has already been re-established in the Finance Act 2021, and measures to check insurance evaders in a bid to increase insurance penetration and enforcement in the country.
Apart from the industry’s capacity to improve its contributions to the Gross Domestic Product (GDP) and employment creation, it could also provide short and long-term funds for the government for infrastructure development, analysts have said.
Analysts believe that the law, if passed, would change the face of the insurance industry, strengthen it from the weaknesses of the moribund Insurance Act 2003 and place the industry on the global best practices pedestal.
Muda Yusuf, chief executive officer of Centre for the Promotion of Private Enterprise, said for insurance to grow, the Federal Government of Nigeria must increase its budgetary allocations for the sector.
He urged governments at all levels and its agencies to always comply with relevant laws and policies for the growth of the nation’s economy.
“Government should comply with Group Life Insurance in line with National Pension Commission (PenCom) Act 2014; comply with Employers Liability Insurance in line with the Workmen’s Compensation Act 1987; Buildings Under Construction, as provided in section 64 of the Insurance Act 2003,” Yusuf said.
“Other compulsory insurance they should ensure compliance and enforcement include Occupiers liability insurance – section 65 of the Insurance Act 2003; Motor Third Party Insurance – section 68 of the Insurance Act 2003 and Health Care Professional indemnity insurance under section 45 of the NHIS Act199,” he added
The nation’s insurance industry, at the end of fourth quarter 2022, recorded significant growth in key indices including gross premium, and assets on improved market regulation, awareness and consumer confidence.
The National Insurance Commission (NAICOM), in its market report in the fourth quarter 2022, revealed that the industry recorded a gross premium of N726.2 billion, representing a growth of 36.3 percent quarter on quarter and 17.8 percent year on year.
According to the commission, this is a remarkable situation when compared to the real growth (3.5 percent) of GDP over the same period and is attributable to consistent regulatory measures being carried out by the commission.
In terms of market size, total assets of the industry stood at N2. 328 trillion in the fourth quarter, sustaining a positive growth that signifies expansion at the rate of 2.4 percent, quarter on quarter and at 4.4 per cent year on year.
In terms of claims, the industry recorded reports of N318.2 billion claims, representing a 31.2 percent quarter-on-quarter growth, while N244.3 billion was actually paid out to customers, and NAICOM has attributed this to possible attainment because of growing awareness and market expansion as well as consumer’s confidence.
“The outlook of the market growth in terms of assets remains positive. With the increasing measures of market deepening and development, recapitalisation drive still ongoing, regulatory insurance laws and provisions enshrined in the Insurance bill being reviewed and digitisation of the supervisory wide processes would lead to the realisation of the vast potentials in the insurance industry,” NAICOM said.