The growth expected in total gross premium income (GPI) reported in the Nigerian insurance industry was muted at N520 billion in 2021 when compared to the figure in 2020, which was N592.3 billion, according to the 2022 Insurance Industry report by Agusto and Co, a credit rating agency and provider of industry research and knowledge in Nigeria & Sub-Saharan Africa.
The report entitled: The Nigerian Insurance Industry – More resilient than expected despite headwinds, notes that muted growth was a result of the outbreak of the COVID-19 pandemic in 2020. It added that the industry paid out net claims of N196 billion, up by 20 per cent year-on-year (representing 37.6 per cent of GPI) in 2020 which was worsened by the violence that trailed the #EndSARS protest in October 2020.
“Consequently, modest profitability indices are expected in full-year (FY) of 2021 and to a lesser extent in FY 2022 due to higher claims, an aftermath of the protests as well as inflationary pressures on the industry.”
Nevertheless, Agusto & Co. notes that the violence that trailed the #EndSARS protest has also emphasised the importance of insurance products, particularly with the absence of a robust social security system in Nigeria.
The violence that trailed the protest could be a catalyst for insurance uptake in the near term, given that the insurance penetration rate has remained less than one per cent in Nigeria”, the report says. The research and rating agency explains that the persistent Naira devaluation has reduced the financial strength of the industry’s capital since the last recapitalisation exercise in 2007 and anticipates a resumption of the recapitalisation exercise in the short term.
“Overall, Agusto & Co. expects a modest performance by the industry in the near term. Performance would be supported by enhanced bancassurance which would allow insurance operators to leverage the more structured data and client base of the banking industry to deepen their reach in the retail market”, the report said.
