Fourteen years after insurance coverage sector regulator mandate to remodel into N1trillion market from N164 billion, the taeget was lastly achieved in This autumn 2023. Ebere Nwoji explains what made it doable.
Latest announcement by the Nationwide Insurance coverage Fee (NAICOM), that the insurance coverage sector on the shut of enterprise final 12 months (This autumn 2023 ) achieved a premium earnings of N1.003 trillion is a cheering information to the sector operators and a realisation of goal set by the regulator for operators 14 years in the past.
It was certainly a realisation of operators’ dream of remodeling the insurance coverage market from N164 billion annual premium then to a trillion Naira market.
NAICOM had in earnest seek for an initiative that may unveil the Nigerian insurance coverage business to the world for patronage and funding alternatives, launched an initiative tagged Market Growth and Restructuring Initiative( MDRI).
It was a medium time period plan of the fee focused at driving insurance coverage penetration in Nigeria.
The fee deliberate the launch and implementation of the initiative in two phases saying the primary part would span between 2009 to 2012 whereas the second stage would span from 2012 to 2017.
The goal by the then NAICOM Chief Govt Officer, Fola Daniel, was that by way of the profitable implementation of the 2 phases of the initiative, Nigeria insurance coverage sector would be a part of the distinguished membership of worldwide insurance coverage markets that pleasure themselves in a number of trillions of their forex by way of premium earnings era which positions the sector in different climes as guardian physique of the banking sector.
MDRI targets
A few of the targets of the initiative in keeping with NAICOM, have been to make sure the deepening of the insurance coverage market and transferring the business’s gross premium type the then N164 billion stage to NI.1 trillion 2012.
The initiative, in keeping with NAICOM, additionally has the targets of making 50,000 jobs in Nigeria by way of the insurance coverage company system, combat towards faux insurance coverage establishments and guarantee enforcement of obligatory insurances.
NAICOM, had for the reason that launch of the MDRI with the aforementioned targets been struggling to hit this a lot dreamt trillion Naira premium earnings however had remained removed from its achievement till This autumn final 12 months when the business’s premium hit N1.003 tn mark.
This autumn 2023 report
In a assertion titled, “Market Efficiency at a Look-This autumn -2023,” launched by the Directorate of Analysis, Statistics and Publications, the Fee mentioned, “The insurance coverage business of Nigeria has sustained its progressive development of constructive market efficiency on the shut of 2023 fourth quarter, recording a milestone progress to shut at N1.003 trillion, representing about 27 per cent progress in comparison with the N790 billion recorded in 2022.
The fee gave a breakdown of how the premium was generated saying the non- life enterprise accounted for 61.3 per cent of all premiums written throughout the 12 months whereas the life section contributed 38.7 per cent, valued at N388.1 billion.
The assertion additional mentioned the market additionally recorded a retention of about 87.7 per cent for the life enterprise, nearly 54 per cent for non-life whereas the combination market common retention stood at 66.7 per cent throughout the identical interval.
In response to NAICOM, main progress drivers within the non-life section of the market have been oil & gasoline and hearth insurances, which contributed 27.3 % and 24.1 % respectively. Motor insurance coverage contributed N114.8 billion, common accident generated N59.1 billion , marine N69.1 billion .
Web motor insurance coverage premium stood at N100.3 billion, hearth N75.3 billion, common accident 39.0 billion marine 33.5 whereas oil and gasoline stood at N54.6 billion .
The fee mentioned in phrases of market efficiency percentages, motor insurance coverage polled 66.5 %, hearth polled 46.9 %, common accident 6.7 %, marine 30.9 % oil and gasoline 25.5 % .
Speaking by way of claims settlement for the interval, the Fee mentioned, “Direct reflection to the continued regulatory measures relating to claims settlement, the life enterprise recorded about 95 per cent of internet claims to the full recorded claims throughout the 12 months whereas the market common stood at about 71.4 per cent of the N536.5billion gross claims reported on the shut of fourth quarter, 2023.”
The Fee additional famous that in a direct reflection to its “no-premium no-cover” coverage, the excellent premium has continued to say no, because the business posted simply 1.6 per cent excellent of all of the premiums generated out there throughout the interval.
It additional mentioned that throughout the interval beneath evaluation, whole property of the sector stood at about N2.67trillion whereas capitalisation stood at N851billion in 2023.
Giving a break down of claims fee by varied lessons, the fee mentioned motor insurance coverage class paid gross claims of N32.1 billion and internet claims of N31.0 billion, hearth insurance coverage class paid gross claims of N61.5 billion and internet claims of N41.3 billion, common accident paid gross claims of N22.3 billion and internet claims of 17.0 billion, marine class had a gross claims of N16.9 billion and internet claims of 12.0 billion whereas oil and gasoline class had gross claims of N157.1 billion and internet of N54.6 billion.
By way of market measurement and market capitalisation, NAICOM mentioned non -life had N1.669 billion property, life had N1.00 billion bringing the market mixture to N2.673 billion.
Market capitalisation smart non -life has N670.2 billion, life has N180.9 billion bringing the combination to N851.0 billion.
By way of excellent premium, for non -life, excellent premium stood at simply 2.5 % of the full premium, life 0.2 % bringing the combination of excellent premium for the business within the interval beneath evaluation to 1.6 %.
Fola Daniel Responds
In a short phone chat with the previous Commissioner for Insurance coverage, Mr Fola Daniel whose regime in NAICOM set the trillion Naira premium market goal, mentioned although he has not learn the NAICOM’s 23 fourth quarter report and couldn’t converse on speculations; however careworn that it was an achievement price celebrating.
“I’ll have fun it whether it is true. Actually I’ve not learn it myself and I’m not in NAICOM and can’t converse primarily based on hypothesis but when I learn it and it’s true, it’s an achievement price celebrating,” Daniel mentioned.
Two years in the past when THISDAY contacted him on his emotions on the truth that between 2009 when the goal was set and 2021 the business was nonetheless at N500 billion premium margin and his recommendation on methods to realise the dream, Daniel had mentioned, “The trillion -Naira objective stays achievable with speedy fueling of the financial system, concentrate on agricultural sector, the exploration of hitherto mineral assets and a rising inhabitants , the attainment of business trillion -Naira can be a actuality quite than a mirage.”
He mentioned he believed that the regulator and the business gamers have been extra decided than earlier than to take the business to the trillion- Naira measurement, including that it was doable if all stakeholders play their anticipated roles diligently.
“The potential of the Nigerian insurance coverage market are phenomenal,if considered from the demography, financial assets and different measurable parameters.The basics are sturdy to assist sustainable progress of the business,” he mentioned.
NAICOM Reforms
Talking on the event, Commissioner for Insurance coverage, Sunday Thomas mentioned varied reforms launched into by his administration has efficiently taken the business to a brand new panorama.
Thomas mentioned NAICOM had taken some main reforms that contributed to the trillion naira premium earnings achievement.
“As an example late December 2022 the Fee had introduced 200 per cent improve in third celebration motor insurance coverage from N5000 to N15000, saying it could take impact from January 1, 2023.This got here after over 20 years of non improve within the obligatory Motor Third Occasion insurance coverage coverage, “he mentioned.
NAICOM equally raised the claims and price of insurance coverage on all lessons of motor insurance coverage, together with bikes.
It additionally arrange seven level transformation agenda for the sector.
In doing this, Thomas mentioned over the subsequent decade (2024-2033), the business would search to proceed its transformation journey alongside the next seven strategic thrusts with the target of attaining the corresponding targets.
He listed the agenda as: remodeling the regulatory atmosphere to maintain the business progress transition to risk-based capital mannequin, selling insurance coverage consciousness and adoption, broadening insurance coverage product choices and enhancing effectiveness of distribution channels
Others are; enhancing digitalisation of the insurance coverage business, deepening the business’s expertise pool and capabilities and supporting Nigeria’s financial transformation and sustainability agenda.
Thomas mentioned NAICOM beneath his management had remained resilient and centered on implementing initiatives that might foster growth of the Nigerian insurance coverage business and align its fortune with that of the nation because the Africa largest financial system.