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Insurers groan as premium growth lags behind liabilities

•Axamansard, Aiico, Royal Exch., 10 others affected
•Nem, Wapic, Guinea, 6 others in cleaner positions

By Rosemary Onuoha

THE insurance industry, during the nine months period ended September 2017, witnessed marginal growth in gross premium written while claims expenses went up significantly.This development may have put the badly affected underwriters in financial stress.

While industry gross premium grew by 9.7 percent to N199.6 billion from N181.9 billion in the corresponding period of 2016, claims expenses increased by 30.3 percent to N80.9 billion from N62.1 billion in 2016.

About 13 insurance companies had adverse ratio of premium to claims, where gross premium income declined massively while claims rose astronomically. The affected companies are African Alliance Insurance, Equity Assurance, Cornerstone Insurance and Consolidated Hallmark Insurance.

Others are Sovereign Trust Insurance, Prestige Assurance, Regency Assurance, Axamansard, Lasaco Assurance, Aiico Insurance, Staco Insurance, Royal Exchange Assurance and Mutual Benefits Assurance.

About nine others had better balance in favour of premium income. They include, Nem Insurance, Wapic Insurance, Guinea Insurance and Unity Capital.

Others include Law Union &Rock Insurance, Custodian & Allied Insurance, Linkage Assurance, Standard Alliance and Niger Insurance.

Analysts are of the opinion that claims expenses outpaced gross premium income on the basis that as industry premium increased, liabilities increased more.

Companies’ performance breakdown

African Alliance gross premium nosedived by 60.5 percent to N5.1 billion from N12.9 billion, however, claims expenses rose astronomically by 30.1 percent to N6.9 billion from N5.3 billion.

Equity Assurance  gross premium plummeted by 33.3 percent to N2.6 billion from N3.9 billion, claims expenses however inched higher by 6.7 percent to N1.6 billion from N1.5 billion.

Cornerstone Insurance gross premium declined by 12.7 percent to N6.2 billion from N7.1 billion, even when claims expenses rose by 22.9 percent to N4.3 billion from N3.5 billion.

Consolidated Hallmark Insurance gross premium recorded moderate decline of 8.2 percent to N4.5 billion from N4.9 billion while claims expenses skyrocketed by 61.5 per cent to N2.1 billion from 1.3 billion.

Better ratios in some companies

For companies that recorded increase in gross premium while claims expenses went down, Nem Insurance topped the chart as its gross premium income climbed by 23.3 percent to N11.1 billion from N9.0 billion even as claims expenses declined by 47.7 percent to N784,935 million from N1.5 billion.

Wapic Insurance gross premium edged up by 21.9 percent to N7.8 billion from N6.4 billion while claims expenses went down by 9.5 percent to N2.3 billion from N2.1 billion.

Guinea Insurance gross premium increased by 14.3 percent to N759.082 million from N664 million while claims expenses dropped by 65.3 percent to N21,970 million from N63,289 million.

UnityKapital gross premium went up by 11.1 percent to N2.0 billion from N1.8 billion while claims expenses declined by 14 percent to N367,389 million from N428,226 million.

Law Union and Rock Insurance gross premium climbed by 9.4 percent to N3.5 billion from N3.2 billion while claims expenses declined by 0.03 percent to N611,058 million from N611,235 million.

Custodian and Allied gross premium went up by 5.8 percent to N27.2 billion from N25.7 billion while claims expenses declined by 1.6 percent to N6.1 billion from N6.2 billion

Linkage Assurance gross premium went up by 3.0 percent to N3.4 billion from N3.3 billion while claims expenses declined by 4.8 percent to N697,493 million from N733,001 million.

Standard Alliance gross premium inched up by 2.6 percent to N3.9 billion from N3.8 billion even as claims expenses declined by 9.1 percent to N1.0 billion from N1.1 billion.

For companies that recorded increase in both gross premium income and claims expenses, Niger Insurance came top on the chart as its gross premium jumped by 54 percent to N7.1 billion from N4.6 billion claims expenses went up by 23.8 percent N2.6 billion from N2.1 billion.

Sovereign Trust followed with gross premium increase of 51.0 percent at N7.4 billion from N4.9 billion while claims expenses rose by 51.1 percent to N1.3 billion from N860,602 million.

Prestige Assurance gross premium climbed by 50 percent to N3.0 billion from N2.0 billion while claims expenses went up by 105.7 per cent to N449,957 million from N218,784 million

Regency Alliance gross premium climbed by 46.4 percent to N4.1 billion from N2.8 billion while claims expenses jumped by 182.1 percent to N1.3 billion from N460,798 million

Axa Mansard gross premium income went up by 33.7 percent to N22.6 billion from N16.9 billion while claims expenses outpaced it with 71.8 percent to N12.2 billion from N7.1 billion.

Lasaco Assurance gross premium went up by 18.4 percent to N5.8 billion from N4.9 billion while claims expenses climbed higher by 57.1 percent to N2.2 billion from N1.4 billion.

Aiico Insurance gross premium climbed by 11.9 percent to N23.5 billion from N21.0 billion while claims expenses went up by 37.9 percent N14.9 billion from N10.8 billion.

Staco Assurance gross premium climbed by 9.1 percent to N4.8 billion from N4.4 billion while claims expenses went up by 135.9 percent to N1.3 billion from N551,061 million.

Royal Exchange Assurance gross premium went up by 5.6 percent to N11.4 billion from N10.8 billion even as claims expenses inched higher by 8.3 percent to N3.9 billion from N3.6 billion

Mutual Benefits Assurance gross premium went up by 7.1 percent to N10.5 billion from N9.8 billion while claims expenses skyrocketed by 106.3 percent to N3.3 billion from N1.6  billion.

Meanwhile, reinsurer, Continental Reinsurance gross premium climbed by 23.4 percent to N21.6 billion from N17.5 billion while claims expenses rose by 23.5 percent to N10.5 billion from N8.5 billion.

Stakeholders’ reaction

Managing Director/Chief Executive Officer of Custodian and Allied Insurance, Mr. Toye Odunsi, said that claims expenses were driven by increases in industry premium.

Odunsi stated: “The insurance industry benefited from the slight increase in the foreign exchange rates because it meant that assets which were denominated in dollars when converted to naira, increased sums insured thereby increasing the volume of business in the industry. On the other hand as the assets increased and the premiums increased as well, so did the liabilities also. For motor vehicles the prices went through the roof, so also the cost of repairs and the cost of spares.

“Going forward, with the reduction in inflation, there is a very good possibility that the industry will also benefit because it increases the disposable income in people’s pockets. That is what pushes insurance because once you have some funds in your pocket, you can easily buy insurance,” Odunsi said.

Managing Director of Nem Insurance Plc, Mr. Tope smart, said that insurance clients increased during the period as the economy improves.

Smart said, “In comparison with last year the economy has grown. About this time last year, there was recession, but now things have changed. Due to the growing economy, the insurance sector equally has increased in terms of clients.

“However, the performance of companies on an individual basis is determined by the capacity of such an insurance company, their resources and what each has to offer which play a major role in determining what an insurance company gets from the system,” he said.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.