Nigeria has emerged one of the top insurance markets in Africa, ranking third with overall premium income of N386 billion (over $1billion).
However, South Africa continues to dominate the continent’s insurance market, with its Life and Non- Life Insurance Premiums dominating the sector with market size of over $1billion each in 2014. Immediate past President of African Insurance Organisation (AIO), Mrs Lamaia Ben Mohmoud, at the recently concluded 43rd African Insurance Organisation’s Conference and General Assembly in Marrakech, Morocco, said African insurance premium volume in 2014, totalled $69billion showing a slide from $72 billion level in 2013.
In a recent African insurance market survey published in the maiden edition of the African Insurance Barometer, Life Insurance accounted for about two third of the 2014 total insurance premium on the continent with the remainder being generated from Non-Life Insurance. According to the publication, in Life Insurance, South Africa’s share of the total market was 87 per cent, and 40 per cent in Non-Life Insurance. “Insurance premiums accounted for 2.8 per cent of African GDP in 2014. With the exception of South Africa and Namibia – where insurance penetration levels reached 14 per cent (Life 11.3 per cent, Non-Life 2.7 per cent) and 7.3 per cent (Life 5.1 per cent, Non-Life 2.2 per cent) respectively,” the African Insurance Barometer stated.
The publication disclosed that in 2014, African Life insurance premiums stood at $45.8 billion, translating into a Life insurance penetration rate of 1.9 per cent, significantly below the global average of 3.4 per cent. It added that at an inflation adjusted real growth rate of 1.6 per cent, African Life insurance also grew much slower than global Life insurance premiums, which increased by 3.4 per cent in 2014. According to the publication, with the exception of South Africa, Africa’s Life insurance markets are small with only five other countries reaching a market size of more than $500 million in 2014.
…Targets N16trn asset base by 2020
The Director-General of the Nigeria Insurers Association (NIA), Sunday Thomas says the industry is set to achieve a premium volume of N6trillion and total market asset base of N16trillion by 2020.
Sunday Thomas, Director-General, Nigeria Insurers Association (NIA)
The industry, Thomas said, was expected to move from current employment of about 10,000 to generate not less than 300,000 jobs and increase penetration (contribution to GDP) of 15 per cent from the current inconsequential 0.3 percent.
He hoped that the achievement of a density (Premium per Capital) of $ 256 was realistic in the next four years. Other expectations include reduction of insurance gap from 94 per cent to less than 30 per cent, inculcation of insurance culture among the citizenry and full adoption and implementation of solvency focused and risk- based supervision.
These expectations are coming just as the Federal Government announced new steps to address the current poor performance of insurance in the country.
Minister of Finance, Mrs Kemi Adeosun, said that in line with the move to diversify the economy, government sees the sector as strategic tool that should be effectively utilised towards the attainment of the goal. She said there is a link between insurance market development and economic development, adding that the commonly used index of measuring the development of insurance in an economy is market penetration which is the ratio of total insurance premiums to the gross domestic product (GDP).
The minister noted that insurance contributes less than one per cent to the GDP, but to reverse the ugly situation, she said the government was committed to identifying the challenges and taking steps to address the current poor performance of insurance in the country. “It is on this premise that in February, I inaugurated the Consolidated Insurance Bill Review Committee to make the bill conform with the ideals of contemporary insurance practice as well as facilitate public awareness and consumer protection. We are optimistic that the work on the bill and its eventual passage into law would positively change the face of insurance regulation and practice in our country,” she said.
Adeosun called on the Nigerian insurance industry to fully cooperate with the review committee so as to come up with a draft that would be the impetus for rapid growth for the sector and the nation.