By Ekerete Ola Gam-Ikon
The observance of the transition of the insurance industry in Nigeria to a Trillion Naira market by Gross Written Premium as of December 31, 2023, according to the National Insurance Commission (NAICOM) is noteworthy and historic.
Like the journey of a thousand miles, the insurance industry in Nigeria has arrived at this point through the buying decisions of certain individuals and organisations and their bold commitments to maintaining relationships with their insurers.
Whether by embracing the value of insurance or by compliance with the laws, these individuals and organisations have continued to make significant contributions to the growth and development of the insurance industry in Nigeria by continuously paying premiums annually.
*Identifying the Highest Insurance Premium Payers by Class of Insurance*
As certain Classes of Insurance have been acknowledged to contribute more to the overall Gross Written Premium recorded by the insurance industry in Nigeria, so have certain organisations been identified as the leading Contributors to the remarkable results attained.
In terms of General (Non-Life) Business, most of the Gross Written Premium have come from the Oil and Gas sector, and expectedly from one of largest conglomerates in Africa, NNPC Limited!
The premium paid to the insurance industry annually is in trillions of Naira when converted from foreign currency. However, most of them are retained in foreign currency because the assets are so valued and risks are placed abroad.
Other organisations within the Oil and Gas industry, often in joint ventures with NNPC, also pay sizeable premiums to the insurance industry for several insurance coverages, especially the International Oil Companies (IOCs).
The next Class of Insurance that rakes in significant Gross Written Premium for the insurance industry in Nigeria is Fire Insurance.
From the large manufacturing plants across the country, owned by multinationals and producing fast-moving consumables, construction materials, and health care solutions, just to mention a few, their Fire Insurance contracts account for the premiums received by the insurance industry in Nigeria.
When you attempt to take a guess of the organisations that account for the premiums for Fire Insurance, you will be dead right as they are in our faces, minds and bellies virtually everyday.
General Accident is the other Class of Insurance that accounts for the increasing premiums from organisations including the Ministries, Departments and Agencies (MDAs) of the Federal Government.
For example, the Group Personal Accident Insurance policies of the Nigeria Police Force and other paramilitary organisations account for tens of billions of the premiums paid to the insurance industry annually.
Also included under the General Accident Insurance Class are Builders Liability Insurance for construction of buildings of two floors and above, and Occupiers Liability Insurance for public buildings. These are expected to generate huge premiums when compliance with the laws are increasingly met.
Before you wonder why Motor Insurance has not been mentioned, let me restate that despite the huge number of vehicles seen on our roads, only about 30 percent of registered vehicles in Nigeria have genuine Motor Insurance policies according to data provided by both National Bureau of Statistics (NBS) and Nigerian Insurers Association (NIA) over the years.
For Marine and Aviation, understandably, their insurance coverages are denominated in foreign currency and when converted to Naira, the local market only has limited capacity to retain them while most of the premiums, accordingly go abroad.
Regarding the Life category, Individual Life trumps Group Life Assurance Class in terms of overall Gross Written Premium recorded, even in 2023.
However, Group Life Assurance is set to outpace Individual Life in terms of premiums when more organisations comply with the law entrenched in the Pension Reforms Act 2014, which requires that all organisations with a minimum of 3 employees should have Group Life Assurance policy for them.
It is becoming the reasonable approach to human capital management in a non-monetary manner and more organisations would adopt it to address the harsh economic situation until real improvement happens.
Currently, the single largest Group Life Assurance policy in terms of Gross Written Premium is that put in place by the Office of the Head of Service for all Federal Civil Servants, and the premium paid annually is in billions of Naira.
It is expected that the contribution of the Group Life Assurance policy will increase astronomically when more organisations in the Private Sector comply with the law and accord their employees the benefits of the policy.
*Future Growth Opportunities for the Insurance Industry*
Notwithstanding the challenges of low awareness and public apathy against insurance in Nigeria, it is anticipated that the insurance industry will experience more growth attributable to digital technology and insurance inclusion.
The aggressive actions of insurtech firms propelled by regulatory initiatives and penetrative activities of micro-insurance and takaful companies anchored on the regulatory drive for financial (insurance) inclusion have engaged the interests of Nigerians and they are considered as the next big avenues for deepening the insurance penetration rate in Nigeria.
Remember, this is not about what the insurance operators can get from the rest of us but how we can make insurance work for us in Nigeria.
It will amaze you when we examine how the insurance industry in Nigeria applies all these premiums that are paid or contributed by individuals and organisations.
From investments in diverse sectors to payment of claims according to the Classes of Insurance we have discussed here, so much is happening that we can engage to our advantage.
Have you noticed that I have not mentioned Agricultural Insurance? This Class of Insurance is in its infancy and so, very much under observation while discussions and actions on Cyber Insurance and Climate Insurance are just starting.
The ball, like they say, is in our court, and we should play to win, now and continuously.
I remain…
Assuredly Yours,
Ekerete Ola Gam-Ikon
+234-802-585-0344
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