Fitch Ratings positive on Nigeria’s insurance market

Global rating agency, Fitch Ratings Inc., has tipped Nigeria’s insurance market to grow significantly, following the country’s economic growth pattern.

Fitch Ratings recently stated in a new report that it believed that the Nigerian insurance market was ripe for further consolidation as insurers seek to increase scale and investor interest developed.

Fitch expected foreign investors seeking an entry point to the market to continue to do so through acquisitions of existing insurers, or partnerships with local banks.

Thorough due diligence will, however, remain a challenge to the acquisition of existing insurers, despite improvements in corporate governance.

Fitch believed that consolidation in the industry, combined with technological improvements in administration and distribution, could lead to a reduction in operational costs.

Insurers that succeed in reducing costs could rapidly gain market share by passing on most of the benefits to consumers.

The rating agency maintained that the insurance industry was poised to benefit from continued significant economic growth and favourable demographic factors in the country.

Moreover, it noted, insurance coverage is currently low with a weak insurance culture among consumers and market growth could be stimulated by improved consumer awareness and enforcement of minimum compulsory insurance cover as required by law.