Insurance Sector Recorded N400bn Premium in 2018
off of Nigeria Air.
Hadi Sirika, former minister of state for aviation had said the fund for the take of the national carrier project had been provided in the 2019 budget passed by the National Assembly recently.
Sirika had said President Muhammadu Buhari had directed that the Viability Gap Funding (VGF) be provided for the Nigeria Air Project which was suspended eight months ago.
He had said: “President Muhammadu Buhari had directed that the Viability Gap Funding (VGF) for the project be provided for in the 2019 Appropriation; which the National Assembly has graciously done. I assure the general public, and more importantly, the prospective partners and investors, that Nigeria Air project is fully alive and on course.”
It was gathered that the VGF is $155 million.
Sirika had on Monday, March 25, said plans were underway by the federal government to revisit the national carrier project. The Nigerian insurance sector, in 2018, grew its total premium from N363 billion in 2017, to N400 billion in 2018.
This represented a 10 per cent growth in the volume of business written by the industry operators. But it was below the decade old target of N1 trillion.
Disclosing this at the 48th Annual General Meeting of the umbrella body of insurance underwriters, the Nigeria Insurers Association(NIA). Held in Lagos, President of the association, Mr Tope Smart, said during the year under review, the insurance industry contended with a lot of negative factors. He highlighted these to include poor operating environment which the insurance sector like every other sector of the economy waded through in the year under review. In addition, he identified poor power outage, which according to him continued to be a major challenge to businesses in Nigeria,
He further noted that failure to abolish or amend the CITA 2007 remained a huge burden to the insurance companies.
Section 16 of the company income tax requires insurers to pay tax on every claims that is up to 25 percent of their gross premium which they saw as double taxation.
Highlighting other negative factors that affected the insurers and the economy in general during the year, Smart, said “Growing herdsmen/farmers’ clashes across the country, insurgency and armed banditry in the north, rising cases of kidnapping, armed robbery and other violent crimes as well as communal clashes in some states all combined to negatively affect the bottom line of many insurance companies.”
He however said the association was working closely with the National Insurance Commission (NAICOM) to promote the business of insurance and increase its contribution to national Gross Domestic Product (GDP).
“Some of these initiatives include the insurance industry rebranding project, regulation on micro insurance, collaboration on financial inclusion, bancassurance guidelines and others which will impact positively on the business of insurance companies,” he explained.
The NIA chairman, noted that the circular issued by NAICOM on the new capitalisation for insurance and reinsurance companies, was part of the regulator’s initiative towards promoting the insurance industry.
The regulator, had on May 20th, announced a new capital regime for the industry, saying that with effect from June 2020, insurance firms underwriting life business should increase their operating capital from the present level of N2 billion to N8 billion, those into General business are expected to increase theirs from N3 billion to N10 billion, composite firms would raise their capital base from N5 billion to N18 billion, while reinsurance firms would move from N10 billion to N20 billion.
Smart, however, noted that the association has started engaging NAICOM with a view to defining the components of the new capital level as well as the incentives and palliatives that members will enjoy to ensure that as many companies as possible scale through.
He urged the association members to contact the secretariat if they face challenges and also for updates, “on our part we will continue to update you as we make progress in our engagements with the commission.”