Favourable environment buoys investment in insurance sector

Favourable business environment buoyed by settling democracy, market reforms, security of investment, improvement in payment systems, growing telecommunications sector and growth opportunities are the factors driving fresh investments in the nation’s insurance sector, analysts have said.

The resultant effect is the growing interests of foreign investors’ particularly private equity firms, which are taking positions to tap from the growth opportunity opening up in the retail market.

Post-2007 when the industry commenced major reforms targeted at increasing insurance penetration in Africa’s most populace black nation with opening in retail insurance, agricultural insurance, takaful insurance, compulsory insurances among others, the local market have seen collaborations from players outside Nigeria.

Though the industry regulator, the National Insurance Commission (NAICOM) says it has closed doors to new licenses, new investors including Old Mutual of South Africa, Asset and Resources Management (ARM), NSIA of South Africa and Sanlam of South Africa are among investors that have bought into existing companies.

Yemi Soladoye, managing director, Riskguard Africa Limited, said the nation’s insurance industry has moved from evolution stage to revolutionary stage, and growth is now on geometric progression.

Soladoye stated that it is not only investment in underwriting, donor agencies and global investment partners like e the GIZ of Germany, World Bank, IFC, AFDB have all shown interest in the Nigerian market.

According to him, industry regulation post 2007 has concentrated on what he calls “building blocks for insurance development” which was at dormant stage pre-2007. “Today there is more or less security of investment given what NAICOM, CBN and other regulators are doing indicating that we are gradually benchmarking international standard in our financial system.”

Offong Ambah, group chief executive officer, Old Mutual West Africa, said “The Nigerian economy is developing at a fast pace and offers significant growth opportunities.

“We believe that the prospects for growth in Africa are strong due to the growing political stability and improved governance, a growing population with strong consumer demand, more workers entering the formal economy for the first time and an emerging middle class keen to protect their wealth and assets. There is also a strong domestic GDP growth in a number of countries and an under-penetrated financial services sector.”

Owolabi Salami, chief responsibility officer, ARM Life, stated that the new investment in the industry will no doubt redefine service delivery, product development and in the long run produce new set of market leaders.

“You should as well expect changes in distribution channels, which again corroborates with Yemi Soladoye’s position that future market leaders will emerge in the next four years, and it will be those who invest today on retail products, agency marketing, expansion, branch network, e-insurance, telemarketing, vendor marketing, among other growth areas.

By: Modestus Anaesoronye