By Nike Popoola

Monday, 25 Oct 2010

In the last ten years, premiums received by the nation’s insurance companies increased year-on-year, writes Nike Popoola. Between 2000 and 2009, the insurance sector received total premiums of N839.8bn from all the businesses underwritten by life and general insurance companies.

Statistics from the Nigerian Insurers Association revealed that the industry received N27.7bn, N33.1bn, N44.5bn and N55.9bn premiums in 2000, 2001, 2002 and 2003 respectively.

The sector also raked in total premiums of N69.4bn, N76.3bn, N82.3bn and N100.6bn in 2004, 2005, 2006 and 2007 respectively.

The premiums received by the Nigerian insurance industry rose by 33.5 per cent from N150bn in 2008 to N200bn in 2009.

The Commissioner for Insurance, National Insurance Commission, Mr. Fola Daniel, said NAICOM had the objective of attaining an industry’s gross premium of N1.1tn by 2012.

He said, “We are aiming at an increase in insurance contribution to the Gross Domestic Product from the current 0.72 per cent to over three per cent with an increase in insurance premium per capita from the current N1, 200 to N7, 500 by 2012.”

During the period under review, the life insurance segment raked in premiums of N5.1bn, N6.4bn, N8.3bn and N10.1bn, which were 18.6 per cent, 19.4 per cent, 18.6 per cent and 18.1 per cent of total premiums received between 2000 and 2003.

The breakdown further showed that between 2004 and 2007, the life business segment got N12.2bn, N12.9bn, N12.7bn and N15.8bn, which were 17.6 per cent, 17 per cent, 15.5 per cent and 15.7 per cent respectively of the total businesses underwritten by life insurance companies.

The premium from life business rose from N29.3bn in 2008 to N39.1bn in 2009.

Between 2001 and 2008, the industry recorded an average growth rate of 42.77 per cent, while life insurance grew by 19.4 per cent and general business recorded 23.37 per cent growth.

Daniel also said that NAICOM was driving the industry’s growth through the enforcement of six out of the sixteen compulsory insurance policies under its Market Development and Reconstructing Initiatives.

The products include Employment Liability Insurance, Group Life Insurance, Builder’s Liability Insurance, Occupiers Liability Insurance, Health care Professional Indemnity Insurance and Motor Third Party Liability Insurance.

The commission said it inaugurated the MDRI project to facilitate the reduction of insurance gap from 95 per cent to 30 per cent.

According to NAICOM, it is also aimed at protecting policyholders and facilitating growth that will make Nigeria the 15th country in the world in terms of premium income by 2020 and generate employment.

The President, Chartered Insurance Institute of Nigeria, Mr.Sunny Adeda, observed that there had been a big jump from the income received year –on-year He said, “It is quite progressive, if you look at all the impact of the compulsory insurance policies and other efforts being put together now, coupled with the local content advantage, you will notice that the premium will be doubled in the next twelve months, that is my belief.”

The Managing Director, African Alliance Insurance Company Plc, Mr. Alphonsus Okpor, observed that the premium the industry received before it went through its last recapitalisation was low, but had been rising faster since consolidation ended.

He attributed the rise to increase in the capital base of the insurance companies and renewed confidence in the sector by investors.

According to him, “The insurance companies are now underwriting bigger risks and more foreign investors have been investing in the companies, which is enhancing the industry’s premium.”

The Managing Director, Sovereign Trust Insurance Plc, Mr. Wale Onaolapo, noted that though the industry’s premium had continued to rise, it would be better to have a geometric increase.

He, however, expressed optimism that the initiative of NAICOM to enforce the compulsory insurance policies under the MDRI project would impact more on the sector’s premium.

Onaolapo said, “NAICOM is targeting N1.1tn income and a lot is being done to achieve this target, if the economy bounces back and people have more money to spend, I believe that this will impact positively on the sector’s premium.”

Source: Punch