16 Insurance firms’ claims up 25.38% to N40.52bn in H1

The Nigerian Insurance Industry continues to record increased claims payment even after the country exited a recession in 2017.

 

For the first six months through June 2018, net claims paid by 16 operators quoted on the floor of the bourse amounted to N40.52 billion, a 25.53 growth over the preceding year.

 

This mean that these firms are meeting obligations to policy holders as at when due, but they should try by all means to grow premium income in order to achieve an appropriate mix between claims and premium incomes.

 

Mounting 0bligations can be attributed to awareness on the part of customers, incidence of fire, flood, theft, accident and macroeconomic shocks.

 

However, insurers are spending less on claims expenses to generate each unit of premium as average cumulative loss ratio otherwise known as claims ratio fell to 44.68 percent in June 2018 from 45.60 percent the previous year.

 

The claims ratio is the percentage of claims costs incurred in relation to the premiums earned.

 

Loss ratio help assess the health and profitability of an insurance company. Favourably, a business collects premiums higher than amounts paid in claims. High loss ratios may indicate that a business is in financial distress.

 

Drilling down the figures of insurers shows Mutual Benefits Plc’s net claims expenses grew by 71 percent to N4.05 billion in the period under review from N2.37 billion the previous year.

 

The firm is paying more to generate each unit of premium income as loss ratio increased to 55.89 percent in June 2018 from 35.60 percent the previous year.

 

Aiico Insurance Nigeria Plc’s net claims expenses increased by 29 percent to N11.43 billion in the period under review from N8.87 billion the previous year. However, loss ratio fell to fell to 79.38 percent in the period under review from 82.95 percent the previous year.

 

AXA Mansard’s net claims expenses rose by 39.0 percent to N6.31 billion in June 2018 from N4.55 billion the previous year while loss ratio reduced to 66.0 percent in June 2018 from 69.62 percent the previous year.

 

Cornerstone insurance’s net claims fell by 21 percent to N1.78 billion in June 2018 as against N2.26 billion the previous year. Loss ratio reduced to 60 percent in the period under review as against 80 percent the previous.

 

Experts are of the view that there could be a reduction in claims expenses since inflation rates are falling and the economy is gradually recovering.

 

Rising claims expenses and acquisition and maintained costs have continued to erode profitability, hence resulting in lower stock price on the floor of the exchange.