AIICO, AXAMansard, NEM lead Q1’24 as insurers pay policyholders N40.439bn 

• Claims payments up 19.40%

• Economic downturn linked to increased claims

Cynthia Ezekwe

Top insurance firms in Nigeria turned up the heat in the first quarter of 2024, coughing up N40.439 billion in claims, representing a 19.40 percent increase over the same period in 2023.

A recent analysis of financial reports in the insurance sector by Business a.m., showed that Nigeria’s top insurance companies hauled in N193.694 billion in gross premiums in the first quarter of 2024, marking a 87.66 percent increase from the previous year. This lucrative haul was not just pocketed by the insurance firms, but also disbursed as claims expenses at 20.88 percent of the gross premiums earned.

AIICO Insurance, a leading provider of life and general insurance services in Nigeria, shelled out the largest chunk of claims in the first quarter of 2024, disbursing N13.412 billion. However, a detailed look at the figures revealed that this was a 5.7 percent decline from the N14.224 billion paid out during the same period in 2023.

AXA Mansard, a titan in the Nigerian insurance industry, threw its weight around in the first quarter of 2024, dishing out N12.495 billion in claims, a 23.38 percent increase from the N10.127 billion paid out in 2023. This saw AXA Mansard muscle its way to the second position among insurers in terms of claims expenditure in the reviewed period, as compiled by Business a.m.

NEM Insurance left its mark in the first quarter of 2024, dishing out N4.957 billion in claims, a  44.52 percent surge over the N3.430 billion disbursed in 2023. Consolidated Hallmark Insurance Plc was not far behind, recording N3.931 billion in claims during 2024, a 285.77 percent leap from the N1.019 billion paid out in 2023.

Entering the first quarter of 2024, Prestige Assurance Plc found itself  among the top insurers on the claims payment ladder, dishing out N1.575 billion in claims, albeit a decline from the N2.331 billion it  paid out in the same period in 2023. Not to be outdone, Sovereign Trust Insurance Plc barreled in with N1.476 billion in claims payments in Q1 2024, a 94.72 percent jump from the N758 million it had settled in Q1 2023.

Financial reports revealed that Coronation Insurance Plc entered the insurance claims payment ring in the first quarter of 2024, shelling out N1.468 billion in claims, a 53.72 percent increase from the N955 billion it reported in the same period of the previous year. Tailing Coronation was Veritas Kapital Insurance Plc, which reported N1.125 billion in claims payments during 2024, marking a 9.76 percent rise from the N1.025 billion settled in the corresponding period of 2023.

The financial numbers told a tale of triumph for AIICO Insurance, as the company garnered 54.64 percent increase in gross premiums in Q1 of 2024, pummeling its previous record of N31.740 billion set in 2023. Yet, in a show of both strength and responsibility, 27.33 percent of the gross premiums were deployed to settle claims during the same quarter.

AXA Mansard’s financial might was on full display in Q1 of 2024, as the insurance titan delivered an 87.96 percent increase in its gross premiums, shattering the N34.391 billion record it set in 2023 with an impressive N64.640 billion in gross premiums.  The company also demonstrated its commitment to customer service by allocating 19.33 percent of its gross premiums to net claims payments during the quarter.

In Q1 of 2024, NEM Insurance recorded a significant increase in its gross premium written, with a total of N29.032 billion. This amount is 147.78 percent higher than the N11.717 billion recorded in the same period in 2023. This increase resulted in a 17.07 percent claims ratio, which is the percentage of premium income that was spent on claims during the three months.

Consolidated Hallmark Insurance Plc recorded a 146.64 percent jump in gross premiums from N4.890 billion to N12.061 billion. The company allocated 32.59 percent of its gross premiums to pay claims during the period in review. 

Meanwhile, Prestige Assurance Plc saw a 41.55 percent increase in gross premiums from N4.814 billion in 2023 to N6.814 billion in 2024. Of this amount, 23.11 percent was used to settle claims during the first quarter of 2024.

The high claims recorded by insurance firms in recent years have been a significant hindrance to the growth of their premium rates and profitability, largely due to the difficult economic situation in Nigeria. Challenges such as limited access to foreign exchange, inflationary pressure, the devaluation of the Naira, and high energy costs have created a challenging environment for the insurance sector, hampering its ability to thrive and expand. As a result, Nigerian insurance firms have been struggling to maintain their profitability while simultaneously providing adequate coverage to their clients.

Mayowa Adeduro, managing director of Tangerine General Insurance Plc,  pinpointed the economic downturn as a major driver of the surge in claims payments. Adeduro observed that people are increasingly filing claims for minor issues as a way to mitigate the impact of the high cost of living, which has been worsened by inflation.

Adeduro highlighted the direct correlation between the current economic downturn and the increase in claims payments. Specifically, he emphasised how decreased disposable income has limited the ability of Nigerians to maintain their vehicles and goods, leading to an uptick in accidents and thefts. This, in turn, has forced insurance firms to pay out more claims, ultimately affecting their profitability.

Furthermore, Adeduro cited poor road maintenance, coupled with incidents of job infidelity, as significant factors contributing to the higher number of claims.

“Social vices such as armed robbery, kidnapping, setting houses ablaze, among others are on the increase. All of these are having a negative economic impact on the economy. Due to economic hardships, fraudulent insurance claims are also on the rise. There are incidents where some people set their houses ablaze and come for insurance claims,’’ the Tangerine General Insurance MD said.

Adetola Adegbayi, chairman of the Nigeria Liability Insurance Pool, cited hyperinflation as a key factor driving the rise in insurance claims in Nigeria. In her view, the country’s heavy reliance on imports has resulted in higher prices for essential goods and services, making it harder for people to afford basic necessities. This, she explained, has created a fertile ground for fraudulent insurance claims, as individuals may be tempted to take advantage of the system in order to alleviate their financial struggles.

“To address this issue, the industry is advised to be proactive and more dynamic in its claims management, particularly with the increased coverage under motor policies due to recently released rate review guidelines,” Adegbayi stated.

In his remarks, Olusegun Omosehin, the immediate past chairman of the Nigerian Insurers Association (NIA), expressed admiration for the insurance industry’s resilience in the face of numerous obstacles. He noted that despite the economic challenges facing Nigeria, the insurance sector remains a fundamental contributor to the country’s economy, playing a vital role in restoring businesses and safeguarding national assets.

According to Omosehin, the insurance industry has been forced to confront its own unique set of economic and socio-political issues, just like the rest of the country. He, however, noted that the insurance industry’s commitment to its customers has enabled it to weather the economic downturn and continue to be a reliable safeguard for businesses and national assets.