Nigerian insurers pay 43% of premium as claims in 13 years

Nigeria’s insurance industry paid out N2.2 trillion on claims to customers for matured benefits and for encountered losses in the last 13 years.

This figure represents 43.8 percent of N5.05 trillion premium generated during the same period.

Yetunde Ilori, director-general of the Nigerian Insurers Association (NIA), commenting on the claims paid in the industry, said: “It shows indeed that the insurance companies are living up to their expectations.”

According to her, the industry is embarking on a campaign that is likely to increase claims payout in the industry because “we want to publish companies’ outstanding claims for their owners to come, complete documentation, and be paid”.

She said it is a testament that insurance industry pay claims, which helps to ease the burden of people in the event of loss or when the unexpected happens.

“People are encouraged to keep insuring their properties in case of general insurance and their dependants in case of life, so that when the need arises, they will have something to fall back on,” Ilori said.

The payment period, which was between 2010 and 2022, also saw the industry record total gross premium of N5.05 trillion, being businesses generated from life and general business segments.

Data from the NIA compiled by Intelpoint, in its report on the Nigerian insurance industry’, shows that from N53.82 billion paid as claims by the industry in 2010, the figure rose to N318.20 billion in 2022, while gross premium rose from N200.38 billion in 2010 to N726.40 billion in 2022.

The average share by each class of business during the period also shows that life business contributed 35.26 percent of the total gross premium, while general business contributed 64.74 percent.

In the general business category classes, oil and gas contributed largest at 18.39 percent; motor business, 14.26 percent; fire, 10.80 percent; general accident, 9.13 percent: marine and aviation, 6.94 percent; miscellaneous, 5.12 percent; and workmen’s compensation, 0.26 percent.

Life business has been the major contributor to the industry’s gross premium since 2010, accounting for at least 30 percent each year between 2014 and 2022.

Life business’ gross premium share peaked in 2020 with 45.06 percent of the industry’s figure.

The breakdown of gross premium for life business in 2022 shows that individual life was the biggest driver, followed by group life.

Each class of business recorded an increase in gross premium in 2021. The gross premium for the industry also recorded its highest year-on-year percentage change in the same year

For non-life business class, oil and gas has been the major contributor since 2014. Motor class led the pack between 2010 and 2013.

On efforts to improve claims payment in the industry, which is geared towards enhancing consumer confidence and increasing market penetration, the National Insurance Commission (NAICOM) is promoting policy of responsiveness among operators in the market.

Sunday Thomas, commissioner for Insurance/CEO of NAICOM, said the Nigerian insurance industry needs to tackle the challenges of unpaid claims, adding that recent efforts by the commission to review status of claims in the books of insurance companies and findings during the onsite examination revealed worrisome number of outstanding claims.

“The commission working with members of the Insurers’ Committee, has taken decisions and incepted measures designed to tame the menace. We call on members of the Boards of insurance institutions to support these measures by putting in place policies designed to tackle the menace, as the Commission will not hesitate to consider other regulatory measures to address it,” Thomas said.

He said the industry launched the Nigerian Insurance Industry Ten Year Strategic Transformation Roadmap, in which the insurance industry will seek to continue its transformation journey along seven key strategic thrusts.

The goals, the NAICOM boss noted, include to transform the regulatory environment to sustain the industry growth, transition to risk-based capital model, promote insurance awareness and adoption, broaden insurance product offerings and improve effectiveness of distribution channels, enhance digitalization of the insurance industry, deepen the industry’s talent pool and capabilities, as well as support Nigeria’s economic transformation and sustainability agenda.

Thomas said the strategic roadmap is expected to revolutionise the insurance sector with a well-coordinated implementation approach, with market penetration expected to move from the current rate of 0.4 percent to 2.1 percent by the year 2033 and which will substantially improve the rating of the Nigerian insurance market in the global insurance map.

“With respect to the performance and potential of the insurance sector, the sector has over the years experienced an average steady year on year growth of 15.1 percent in premium income, however this is far below the opportunities provided by the Nigeria economy,” he added.