December 18, 2019

Nigerian insurance industry ranks 62nd in the world

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…Accounts for 0.2% of global premium

By Cynthia Alo

The Nigerian Insurance Industry ranks 62nd in the world with $1.64 billion premium representing 0.2 percent of premium collected globally in 2018.

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The Nigerian Stock Exchange (NSE) disclosed this in its 2019 report.

The report stated: ‘’When compared to other jurisdictions, the insurance industry is relatively small and ranked 62nd in the world with a total premium volume of $1.64 billion dollars.

‘’The total Nigerian insurance market accounted for only 0.2 percent of the global premiums in 2018.’’

On penetration and density index, the report stated: “Nigerian insurance industry currently stands at 0.3 percent which is relatively low compared to other jurisdiction, while total density of the insurance sector is currently at $6.2 and lags behind its African counterparts.”

However, the report noted that the insurance penetration of 0.3 percent, is less than one tenth of that of India with similar GDP per capita, stressing that this is a significant un-tapped potential.

The report further stated that the total amount raised by the insurance industry through the capital market in the last five years amounts to  N36 billion from 2015 to 2019, while total amount raised  during the first and second recapitalization equals to N8.1 billion and N280 billion,   where bank recapitalization stood at N654 billion.

Meanwhile, on the post recapitalization impact analysis from 2002 to 2018, the report showed that the  insurance sector maintained a steady growth in gross premium income and asset base , averaging 14 percent and 18 percent respectively.

Speaking at the recent Nigerian Stock Exchange (NSE)  Insurance Sector Forum organized by NSE in Lagos, Chief Executive Officer, NSE, Oscar Onyema said that it is expected that recapitalization and consolidation, should present new opportunities in private equity  deals as well as increase public offerings.

He said: ‘’An estimated capital of N200billion is expected to be injected into the Nigerian insurance industry post-recapitalization with a 400 percent increase in the minimum capital required for life, 333 percent for non-life, 360 percent for composite and 200 percent for re-insurance.

“While I am optimistic that this directive by the industry regulator would enhance performance, bring about efficiency, innovation and profitability, the industry needs significant support to unleash its growth potential.

‘’At the NSE, we see close parallels between this recapitalisation and that of the banking sector in 2005. The massive growth in the banking sector can be attributed to successful capital raised  through the capital market.”

Also speaking at the event, Director General, Nigerian Insurers Association, NIA, Mrs. Yetunde Ilori said that the recapitalization will strengthen the capacity of the indigenous companies.

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According to her, this is the right time for the  industry to increase its share capital to strengthen its capacity and operation adding, ‘’We need to change our business models, we need to look at how we can make money, and this would include cutting costs.’’

On his part, Executive Director, Wapic Insurance, Mr. Bode Ojeniyi said that one of the issues the industry faces is premium flight.

According to him, with the capital increase, the industry will witness increase in her premium income.