The Nigerian insurance industry continues to pursue various targets with minimal result in 2021. OMOBOLA TOLU-KUSIMO writes on the low and high points of the regulator, the National Insurance Commission (NAICOM), and operators.
Insurance in Nigeria remains fragile and realising the potentials of the fragmented sector has been difficult.
The number of uninsured Nigerians is among the world’s largest within prospective insurance markets.
According to the National Insurance Commission (NAICOM), this is as a result of its inability to enforce the compulsory insurance laws and lack of cooperation among insurance operators in the country.
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But all hope is not lost for the industry regulator as it believes the battle to grow the sector’s potential can be achieved.
In the course of the year, the Commissioner for Insurance, Sunday Thomas, had in January this year, said the commission would move with its plans on different policies and initiatives to deepen insurance penetration thereby ensuring that more Nigerians and assets are insured.
Most importantly, he was optimistic that the N1 trillion target set for using the Market Development and Restructuring Initiative (MDRI) goals will be met.
This is not minding the challenges before the regulator in whipping the operators into line, ensuring that all claims including COVID-19 and #EndSars are paid.
Other objectives for the commission this year, Thomas said, include consolidating the sector’s capital, Human Capital Development, Financial Inclusion, Bancassurance initiative, Life Annuity, New Insurance Law, African continental free trade agreement, Improving efficiency in the supervisory processes, among others.
Low points
Further findings from sources in the industry who spoke on condition of anonymity revealed other low points of the industry during the year as ineffective enforcement of ‘No Premium, No Cover’; lack of enforcement on insurance of all building under construction that are more than two floors and all public buildings including schools, offices, hotels, hospitals, shopping malls etc.; motor insurance; inconclusive recapitalisation; among others.
As a result of lack of enforcements, trillions are being lost to insurance businesses, going by pension business alone that has generated over N13 trillion assets within 17 years by the pension sector which was cut out from insurance industry.
Presently, the insurance industry can only boost of about N500 billion, despite targeting N1 trillion since 2010.
According to the National Bureau of Statistics, insurance penetration to our Gross Domestic Product (GDP) remains at 0.3 percent.
Similarly, out of about 12 million registered vehicles, only 2.5 million have genuine insurance cover according to the Nigeria Insurers Association (NIA).
‘No Premium, No Cover’
Despite the hype on the enforcement of ‘No Premium, No Cover’ by the regulator, findings show that some brokers are still not remitting premiums as when due to insurance companies.
The brokers rather withhold premiums collected from insured in the bank to yield interest for themselves, thereby causing delays in claims payment by insurers when the need arise.
This is against the ‘No Premium, No Cover’ policy put in place by the regulator.
The “No Premium, No Cover” rule is expected to ensure that no insurer grants cover without fully receiving the premium or a premium receipt from the relevant broker.
Recapitalisation
The Nigerian Insurance Industry ranks 62nd in the world with $1.64 billion premium representing 0.2 percent of premium collected globally in 2018, according to the Nigerian Stock Exchange (NSE) in its 2019 report.
The report stated: ‘’When compared to other jurisdictions, the insurance industry is relatively small and ranked 62nd in the world with a total premium volume of $1.64 billion dollars. The total Nigerian insurance market accounted for only 0.2 percent of the global premiums in 2018.
On penetration and density index, the report stated: “Nigerian insurance industry currently stands at 0.3 percent which is relatively low compared to other jurisdiction, while total density of the insurance sector is currently at $6.2 and lags behind its African counterparts.”
However, the report noted that the insurance penetration of 0.3 percent, is less than one 10th of that of India with similar GDP per capita, stressing that this is a significant un-tapped potential.
The report further stated that the total amount raised by the industry through the capital market in the last five years amounts to N36 billion from 2015 to 2019, while total amount raised during the first and second recapitalisation equals to N8.1 billion and N280 billion, where bank recapitalisation stood at N654 billion.
The Chief Executive Officer, NSE, Oscar Onyema said that it is expected that recapitalisation and consolidation, should present new opportunities in private equity deals as well as increase public offerings.
He said: ‘’An estimated capital of N200 billion is expected to be injected into the Nigerian insurance industry post-recapitalisation with a 400 percent increase in the minimum capital required for life, 333 percent for non-life, 360 percent for composite and 200 percent for re-insurance.
“While I am optimistic that this directive by the industry regulator would enhance performance, bring about efficiency, innovation and profitability, the industry needs significant support to unleash its growth potential.
Source: The Nation
