Insurance industry’s gross premium rose 22% in Q3
The nation’s insurance industry grew its gross premium income by 22 percent in the third quarter of the year, its regulator has said. Gross premium rose to N315 billion from N258 billion in the same period a year earlier, Mohammed Kari, commissioner for Insurance/CEO the National Insurance Commission (NAICOM), which regulates the industry, told journalists at its end- of-year review workshop in Lagos.
The industry is expected to close the year with a significant leap in premium, said Kari, who was represented by Sunday Thomas, deputy commissioner for Insurance, Technical.
Gross claims for the third quarter rose 30 percent to N143, from N110 billion in the same period for 2017, Kari added.
He warned however that the outlook for 2019 might not be as bright, but assured of the commission’s commitment to drive the industry’s fortunes higher.
“We have set for ourselves a clear, unambiguous task: to improve the aggregate number of insurance consumers by enabling individual operators to optimally serve a much larger customer pool with a more varied basket of products,’’ Kari said. “The end game for us is to increase the insurance uptake ratio among the Nigerian populace and we have a number of initiatives in place towards achieving this.”
Kari said that financial inclusion was one of the tools the commission envisaged would help improve market penetration. He explained that the initiative was premised on the fact that getting the mass of the financially excluded to embrace insurance in one form or another will have a positive impact on the industry.
The Central Bank of Nigeria has set a target of raising to 80 percent by year 2020 the rate of financial inclusion in the country, up from about 47 percent eight years ago.
Kari therefore charged the insurance companies to key into the industry’s micro-insurance initiatives for the Nigerian market. “The Takaful (Islamic insurance concept that involves mutual risk transfer arrangement) market is still grossly under accessed by the public; there is therefore the need for aggressive promotion in aid of financial inclusion.”
“In addition, efforts are being made to expand the distribution channels for insurance products because the traditional channels are becoming too restrictive and suboptimal. Whereas Bancassurance has received the most attention, there are other initiatives to reach out to the public.” Bancassurance is the system of selling insurance products through banks under partnerships between banks and insurance companies.
He said the commission has developed a guideline for the creation of State Insurance Producers (SIP). This will involve state governments’ participation in enforcement of compulsory classes of insurance, he said, and that this was expected to enhance compliance and deepening of the market. “States will in the process create employment and enhance their internally generated revenue.”
Tope Smart, chairman, Nigerian Insurers Association (NIA) said the operators were putting initiatives in place to reach the unreached population of Nigerians.
He said that with a 2.5 percent economic growth projection for 2019, and anticipated investment in infrastructure by government, insurers were hopeful to benefit from the insurance components of the plans.
Eddie Efekoha, president, Chartered Insurance Institute of Nigeria (CIIN) said that one of the dominant issues in the industry in 2018 was the Tier- Based Minimum Capital policy. “While I thank the Commission for deeming it fit to withdraw and cancel the policy the time they did,” the fallout was huge.” According to him, the measure “reawakened some of us who were sleeping; it has also wetted the appetite of consumers who now have become more selective, and most importantly, we have built greater capacity for our business.”
He further noted that the growth of the insurance industry depended on developing the retail market, adding that NAICOM’s enforcement of compulsory insurance through the SIP spoke to this. He urged further engagement with agitated parties. “As an industry, we have traded to the limit of corporate insurance, so we must collaborate to grow the retail space.”
Eberechukwu Nwachukwu, managing director, NSIA Insurance, declined to assess performance of the industry in terms of numbers, but admitted that it did achieve some growth in the outgoing year. Such said that growth occurred in terms of level of conversation and engagement, diversity and quality in product offerings, digital technology appreciation, as well as the quality of people the industry was beginning to attract.
On her expectations for the future, she noted that the key driver of insurance is credit, and therefore called on banks and other financial institutions to increase access to credit for the industry . This will attract insurance buying, she said, noting that it has boosted insurance uptake in other markets.
Modestus Anaesoronye