Nigeria’s insurance industry ranks 62 globally

Nigeria’s insurance penetration at 0.31 per cent is reported to be less than one tenth of that of India with similar Gross Domestic Product (GDP)  per capital.

If compared to other jurisdictions, the Nigerian insurance industry is relatively small and ranked 62nd in the world with a total premium volume of $1.64 billion, according to a report by the Nigerian Stock Exchange (NSE).

According to report released at an insurance sector forum tagged “Recapitalisation: Panacea for Insurance Industry Growth,” held on Monday at the Nigerian Stock Exchange building in Lagos, the total Nigerian insurance market accounted for only 0.2 per cent of the global premium in 2018.

“Penetration rate measured as a percentage of GDP of the Nigerian insurance industry currently stands at 0.3 per cent which is relatively low compared to other jurisdictions. Total density of the Nigerian insurance sector (I.e a measure of industry gross premium per capita) is currently at $6.2 and lags behind its African counterparts. “Nigeria’s insurance penetration at 0.31 per cent is less than one tenth of that of the India with similar GDP per capita which suggests significant un-tapped potential,” it noted.

The Chief Executive Officer, NSE , Mr. Oscar Onyema, while speaking at the forum, said that the reality and headwinds faced by operators in the sector were quite formidable. He explained that many licensed insurers were largely undercapitalised, thus limiting their ability to take on big ticket in-country risks, as is often required in the oil & gas, marine and aviation sectors. “As at Q3 2019, the insurance sector contributed less than o e per cent to the Gross Domestic Product (GDP) of Nigeria. Having a penetration rate of 0.31 per cent and an insurance density of 6.2 per cent, the Nigerian insurance industry still lags behind its African counterparts – with South Africa having a penetration rate of 14.7 per cent, Kenya 2.8 per cent, Ghana 1.1 per cent and Egypt 0.6 per cent.

“The insurance industry presents perhaps the most remarkable investment case of any industry in Nigeria and despite present challenges, it presents numerous opportunities for enhancing the economic fortunes of this country. Foreign investors, recognizing these opportunities have acted accordingly with the likes of AXA, Prudential, Liberty, Swiss Re, SUNU Group, Saham Group, taking strategic positions in the industry. “An estimated capital of N200 billion is expected to be injected into the Nigerian insurance industry post-recapitalization with a 400 per cent increase in the minimum capital required for life, 333 per cent for non-life, 360 per cent for composite and 200 per cent 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. “At the NSE, we see close parallels between this recapitalisation and that of the banking sector in 2005. The immense growth seen in banking industry in large part can be attributed to successful capital raised through the capital market.

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