FX crisis, inflation dampens insurance despite 15% growth

By Cynthia Ezekwe.

The National Insurance Commission (NAICOM), says the country’s prevailing foreign exchange crisis and high  inflation have negatively impacted the insurance sector with the life insurance segment being the worst hit.

Sunday Thomas, the commissioner for Insurance, disclosed this recently, at the 2023 seminar  for insurance  journalists, held in Uyo, Akwa Ibom State.

NAICOM however said the insurance sector had in the past eight years witnessed 15 per cent annual growth from N282.9 billion in 2015 to N726 billion in 2022.

Thomas pointed out that  the current level of exchange rate and inflation makes asset replacement an issue, noting that it discourages people from insuring.

He noted further that  with inflation and high exchange rate of dollar to Naira, insurance assets that were foreign exchange dependent would be affected as people would not be ready to revalue their assets as such in replacing a damaged property,

“When we have this less level of exchange rate, asset replacement becomes an issue, and when you get to the position where assets that were acquired at a particular amount, especially assets that are foreign exchange dependent, people are not quick to revalue their assets,” the commissioner added.

Delivering a paper at the seminar titled: “The Insurance Sector and the Nigerian economy: Impact, Challenges and the New Frontiers”, Usman Jankara assistant director, corporate strategy, NAICOM,  said insurance sector performance could be measured in terms of assets, claims ratio, capitalisation and retention ratio.

He said the Nigerian insurance sector’s gross premium has experienced significant growth in the past eight years, from N282.9 billion in 2015,  to N726 billion in 2022, showing 15 per cent growth, adding that total assets of the industry within the same period grew from N917.3 billion in 2015 to over N2.382 trillion in 2022 showing 60.5 percent growth.