Insurance sector still lags behind – Agusto & Co

The Nigerian insurance industry has remained resilient amidst an increasingly competitive domestic market and heightened regulatory oversight, a report has shown.

But while the report stated that the industry’s Gross Premium Income (GPI) grew by 19 per cent over prior year, it revealed that insurance penetration ratio was still below one per cent and lags behind the BRIC countries with Brazil having 3.65 per cent; Russia at 1.29 per cent; India at 3.82 per cent and China at 2.98 per cent.

This was revealed in a latest report on the sector released by panAfrican credit rating agency, Agusto & Co. in Lagos.

However, the National Insurance Commission (NAICOM) has repositioned to reverse this trend with N1 trillion industry premium incomes in 2017 and increased traction of the Market Development and Restructuring Initiative (MDRI).

This year, the Nigerian insurance industry marked its first financial year since the implementation of International Financial Reporting Standards (IFRS).

Insurance operators faced difficulties in implementing the IFRS due to shortage of skilled human capital as well as technology gaps. As at January 15, 2014, only 44 out of the 59 insurance operators had their 2012 financial accounts approved by NAICOM.

Agusto & Co. estimated that composite underwriters (though only 8 insurers) contributed about 42.9 per cent of gross premium income (GPI), while non-life underwriters (composed of 22 insurers) accounted for 43 per cent of Industry’s GPI.

The market share by composite insurers was supported by firms’ ability to underwrite both general and life insurance business.