The Nigerian insurance coverage sector is anticipated to witness appreciable progress within the medium to long run, regardless of an interruption in 2020 because of the COVID-19 pandemic.
In particular phrases, gamers within the smaller life insurance coverage phase of the market are anticipated to develop their collective premiums by 4.8% to N179.81 billion in 2020. It is a downwardly revised forecast because of the nation’s weakened financial situation. In the meantime, the life insurance coverage phase is anticipated to develop its premiums to as a lot as N207.96 billion by 2024.
Alternatively, the non-life insurance coverage phase of the market (which is considerably bigger), is projected to develop its premiums by a revised 2.9% to N248.85 billion in 2020. Within the medium time period, progress within the non-life phase is anticipated to achieve N321.53 billion in 2024.
It ought to, nonetheless, be famous that these projected growths should not going to come back about simply, primarily on account of Nigerians’ basic lack of enthusiasm for insurance coverage. In response to Fitch Options, premiums progress will proceed to be restricted on account of anticipated low common earnings by the insurance coverage companies.
Widespread poverty was recognized as a significant component making it not possible for lots of Nigerians to entry insurance coverage covers. However then once more, some rich Nigerian are identified to keep away from spending on insurance coverage covers. This basic lack of enthusiasm is thought to hamper progress within the Nigerian insurance coverage sector. The report, subsequently, referred to as for extra motion to be taken in the direction of educating Nigerians in regards to the significance/advantages of each life and non-life insurance coverage.
“With a market supported by the nation’s regular financial system and huge inhabitants, Nigeria’s insurance coverage sector will get pleasure from a interval of progress and growth over the medium and long run, albeit interrupted by a slower tempo of progress in 2020 because of the results of the coronavirus pandemic. The outlook for premiums progress, nonetheless, continues to be restricted on account of low common earnings and widespread poverty, which can weigh on insurance coverage affordability. As even the extra prosperous middle-class shoppers are inclined to keep away from buying insurance coverage, which hampers the expansion of obligatory fundamental insurance coverage traces comparable to motorized vehicle insurance coverage, Nigeria’s potential client base must be educated extra about the advantages of each life and non-life insurance coverage protection to help extra sturdy progress within the sector.
“In spite of Nigeria’s large population, only a small proportion purchases life insurance. Life premiums currently account for 41.9% of overall insurance spending in the country. Low incomes and a lack of understanding of the benefits of life insurance remain the most important obstacles facing life insurers. However, a recovering economy, coupled with rising employment and incomes, will drive demand for life insurance products over the forecast period,” a part of the report mentioned.
In view of the aggressive and regulatory landscapes, Fitch Options famous that the insurance coverage sector in Nigeria is replete with principally small gamers. The extremely fragmented nature of the market makes it very aggressive, although only some actually command a higher proportion of the market share. In complete, there are roughly 57 insurance coverage firms in Nigeria and the report forecasted that the quantity may shrink within the coming years on account of doable mergers/acquisitions.
Observe that the Nationwide Insurance coverage Fee, NAICOM, had lately revised its capital necessities for varied segments of gamers within the insurance coverage. You may sustain with that growth by clicking right here.
Within the meantime, international gamers have been displaying severe curiosity within the Nigerian insurance coverage sector. A typical instance is the French insurance coverage agency – AXA which has stakes in Nigeria’s AXA Mansard Insurance coverage Plc. Different examples are South Africa’s Outdated Mutual Ltd and Sanlam Rising Markets (Proprietary) Ltd. As Nairametrics reported, Sanlam lately took over full possession of FBN Insurance coverage Ltd after FBN Holdings Plc divested all its stakes within the insurance coverage agency which was one in all its many subsidiaries.