Nigerians are not getting value on insurance –TAF

Nigerians are currently getting just 24 percent value on their insurance policies, Mr. Debo Ajayi Chairman & Consulting Actuary¸ TAF Consulting (Nig.) Limited has claimed.

Briefing journalists in Lagos on the need to have more professional actuaries drive insurance, pensions and other businesses in Nigeria, he said Nigeria’s percent average value on insurance is one of the worst in the world.

According to him, this could also explain why insurance penetration in Nigeria is still lagging behind and contributing insignificantly to GDP.

The professional actuaries would also say Nigerian companies return on equity is about 33 percent which is very high.

He said the “low claims ratio of 24 percent shows the industry offers very little value to its clients. Loss ratios vary from 2 percent to 58 percent, most are in the range of 10-30 percent. This is low even when compared to average Loss ratios of other African countries: Nigeria 24 percent, Kenya 59 percent, Tanzania 50-60 percent, Uganda 63 percent for Life and 44 percent for NonLife, South Africa 61 percent, Egypt 73 percent, Mozambique 59 percent and Ethiopia 65 percent” he said.

“This means that for every N100 of premium paid by Nigerians, only N24 goes back to them in benefits and risk coverage. This actually shows that Nigerians make good value judgment in purchasing insurance. Expense Ratio range between 20-30 percent which appears normal but not when premiums are lowered in order to raise claims ratio” he noted.

He also noted that “underwriting Profit of the industry in 2009 was a high 33.29 percent of gross premium. This would translate to Return on Equity (ROE) of about 33 percent which is very high.

Minimum profit was 0.03 percent and maximum was 108.92 percent of premium

In mature markets, underwriting profits is usually within 0-10 percent” he noted.