Fitch Rat­ings pos­i­tive on Nigeria’s in­sur­ance mar­ket

Daily Trust - - BUSINESS - From Chris Agabi, La­gos with agency re­port

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.

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