Insights into the Nigerian Insurance Industry: Trends and Opportunities
The Nigerian insurance industry shows promising growth potential with low penetration rates but increasing awareness and regulatory support. Despite challenges, there has been significant growth in premiums and a shift towards a more diverse professional workforce. A comparison with similar economies highlights areas for development and increased penetration. The industry's performance from 2010 to 2017 reflects notable increases in gross premiums, life insurance contributions, and total assets, signaling a growing market.
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WIP THE FURTURE OF AND OPPORTUNITIES IN THE INSURANCE INDUSTRY WOLE OSHIN: Group Managing Director, Custodian Investment Plc.
A snapshot of the Nigerian Insurance Industry 601 Insurance Brokers Insurance Regulator NAICOM ~ 25,000 Agents Re-insurers 2 companies N10bn Capital requirement Life insurance 15 companies N2bn Capital requirement Non- life insurance 29 companies N3bn Capital requirement Composite Insurance 13 companies N5bn Capital requirement Takaful Insurance 2 companies 57 Loss Adjusters 3 Actuarial Firms Source: NCRIB, NIA Digest, 2017
Insurance in Nigeria: Present The insurance penetration in Nigeria is less than 1 per cent. On the other hand, the industry s premium as a percentage of GDP is 0.33 per cent, ranked 87th in the world as at 2018. Regulatory drive for financial inclusion to drive insurance growth Steady premium growth from NGN 100bn in 2007 to NGN 345bn in 2018 (245% growth) Increased public awareness via industry campaigns to deepen insurance penetration More diversified professional workforce now attracted to the industry Source: NIA, NAICOM, pwc, Sigma
Nigerian insurance industry compared with similar economies The statistics below shows the immense potential growth that lies within the insurance industry in Nigeria. Insurance Density: Premiums per capita in USD 842.5 762.5 840 Nigeria still on the development path as compared to select countries 346.3 332.1 345 The depth of insurance in Nigeria, as 59.7 54.7 40.5 22.8 74 42 39 measured by the insurance premium 7.8 6.2 23 16 6 Nigeria South Africa Brazil India Kenya Egypt relative to GDP is 0.3% post-rebasing, which is abysmally low in comparison with other Insurance Penetration: Premiums as a % of GDP major African countries (Kenya: 2.37%, and 14.69 14.27 South Africa: 12.89%). 12.89 South Africa has the highest insurance penetration and density in Africa. 4.04 3.49 3.44 3.9 3.9 3.7 2.98 2.37 2.8 0.68 0.64 0.63 0.33 0.29 0.27 Nigeria South Africa India Brazil Kenya Egypt 2015 2016 2017 Source: Swiss Re Reports
Industry Performance (2010 -2017) 1/2 Gross Premium NGN Bn Investment Income NGN Bn CAGR 10% CAGR 28% 162 127 134 109 80 70 55 66 40 45 44 42 39 39 203 189 187 185 182 178 163 146 17 12 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 Life insurance contribution to Total Gross premium increased from 27% in 2010 to 44% in 2017. Total gross premium grew by 96% from 2010 to 2017. Non- Life Life Source: NIA digest
Industry Performance (2010 -2017) 2/2 Total Assets NGN Bn Profitability NGN Bn CAGR 24% CAGR 9% 1087 44 986 895 795 751 662 25 591 573 11 11 11 10 10 6 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 The Industry Profitability has consistently increased over the years from 2011 to 2017. Improved underwriting capabilities, focus on strategic classes and insurance penetration is expected to further growth. Source: NIA digest
Strengths/Opportunities Improved industry financial performance over the years Low Insurance penetration Compulsory products Sale of products through alternative distribution channels e.g. Telcos, Car Shops, Travel Agencies etc. Vastly untapped markets creates opportunities for growth Attracts FDI from global investors
Weaknesses Scarcity of human capital in certain specialized areas e.g. Actuaries. Challenges in the enforcement of compulsory insurances. The industry is highly fragmented and competitive, thereby affecting the pace of growth in overall market size. 4 Negative perception of the industry and lack of trust still persists 1 3 2
Insurance in Nigeria: Future The future would be IMPACT OF NEW CAPITAL shaped by the implementation of the It will encourage Mergers and Acquisitions. Cut-throat pricing and competition as a result of cash flow underwriting would stop. new guidelines on insurance which was released on 20th May, Insurance funds will become strategic in government goal setting and planning through disaster recovery mechanisms & long-term project financing (infrastructure funding etc.) 2019. All Insurance Confidence and trust would be restored in the industry. companies have a deadline of June 2020 to increase their Paid-Up Regulatory oversight and alignment with new ways of doing business would be introduced Capital from =N=2billion Diversified human capital would be attracted to the industry: Data Analysts, Actuaries, Investment Analysts etc. to =N=8billion for Life, =N=3billion to =N=10billion for Non-Life, Composite Technology would become central to operation because of the efficiency it brings to customer satisfaction and experience. The use of data analytics in assessing risks would become commonplace, thereby entrenching a risk/reward structure. Insurance Companies It will introduce creativity in product development. =N=5billion to =N=18billion and =N=10billion to =N=20billion for Reinsurance Companies. Post-consolidation, various reports from analysts have projected between 25-30
THANK YOU Contact Us! 16A, Commercial Avenue, Sabo, Yaba, Lagos. Tel: (+234) 1 2707206-7, 2793740, 27937401 0700-CUSTODIAN, (+234) 1 2774000-9 Fax: (+234) 1 2707203 P. O. Box 2101, Lagos. Email: enquiries@custodianinsurance.com; carecentre@custodianinsurance.com Website: www.custodianplc.com.ng
