Mixed reactions trail Nigeria’s top 10 motor insurers’ N33.6bn premium in 2021

By Cynthia Ezekwe.

Despite playing  a very significant role in mobilisation of investable resources, specifically in the insurance industry,  the demand for and penetration of motor insurance in Nigeria has been found to be at a snail pace, but not surprising for a country where financial systems are not sufficiently robust.

A 2022 report by the Nigerian Insurance Association (NIA), indicated that only 3.4 million out of a total of 12 million registered vehicles were insured as of 2021, representing a staggering 71.67 per cent non-coverage.

NIA further reported that only about 2.53 million out of the 12 million registered vehicles on Nigerian roads possessed genuine motor insurance, leaving about 9.5 million uninsured.

The report also revealed that some of these 9.5 million vehicles that are not insured use fake motor insurance papers, while the others do not have certificates at all, while many others who had genuine insurance papers fail to renew when their policies expire.

Amid the operational and penetration challenges seen in the Nigerian insurance industry, some notable insurance companies have posted respectable numbers in business retention, especially in the motor insurance sector, reflective of its market resilience and increasing capacity albeit slow-paced.

The 2021 approved financial statements of insurance companies compiled by insurance advocacy firm Finterate Projects, disclosed that the total premium from Nigeria’s 10 leading motor insurers stood at N33.6 billion, while the total claims paid was N16.9 billion in the year under review.

According to the report, NEM Insurance Plc, a composite insurance company incorporated in 1960, recorded the highest premium  of N8 billion, closely followed by Leadway Assurance co.Ltd, with a record of N5.2 billion.

Mutual Benefits Assurance co, had the third highest total premium of N3.9 billion, followed by Custodian & Allied Insurance co, which recorded a total premium payment of N3.5 billion.

AXA Mansard Insurance Plc emerged the fifth highest motor insurer in 2021, with a total of N2.8 billion premium, followed by AIICO Insurance, with a record of N2.6 billion premium.

Consolidated Hallmark Ins Plc, Linkage Assurance Plc,Cornerstone Insurance Plc,Lasaco Assurance Plc, made up the top ten motor insurance with a total premium of N2.2 billion,N2.1 billion,N1.7 billion,and N1.3 billion, respectively.

In terms of claims payments in the motor insurance sector for  2021, Mutual Benefits Assurance Co., incorporated in 1991 and licensed as a life and non-life  insurer by NAICOM in 1993, made the highest motor claims payment of N2.4 billion, a significant 62.13 per cent of the motor premiums it generated in the year under review.

NEM Insurance Plc, which amassed the highest motor premium, made the second  highest motor claims payment of N4.2 billion, 53.498 per cent of total motor premium it gathered.

According to the report, Leadway Assurance Co.Ltd made the third highest motor claims payment, with a record of N2.7 billion, 53.26 per cent of its total motor premium.

Linkage Assurance was fourth on the list of highest motor claims payment, as it paid N1.1 billion, 52.16 per cent of its total motor premium.

Consolidated Hallmark Ins Plc ranked the fifth highest motor claims remunerator with claims worth N1.1 billion, 51.85 per cent of its total motor premium.

Cornerstone Insurance plc, the ninth highest premium generator, recorded the sixth highest motor claims payment of N804 million, which is 47.18 per cent of the premium it generated.

Finterate projects also disclosed that AXA Mansard was the seventh highest claims remunerator as it paid N1.3 billion, which is 47.13 per cent of its total motor premium.

AIICO Insurance emerged eighth position in motor claims payment, as it paid N1.2 billion, a significant 46.57 per cent of its total motor premium.

Custodian & Allied Insurance, was the ninth highest remunerator in terms of motor claims payment, as it paid N1.6 billion, 46.52 per cent of the motor  premium it generated.

Meanwhile, Lasaco Assurance maintained its 10th position in terms of both motor premium and claims payment. The private insurance company established in 1979,recorded N137 million worth of claims payment, which is 10.03 per cent of the total motor premium it generated.

Given the above figures and percentages, experts have given mixed reactions considering the performance of the top 10 motor insurers in 2021 in relation to expectations.

as some are of the opinion that there was a significant improvement in motor insurance premium generation and claims payment, and optimistic about 2022 premium generation and claims payment, while the reverse is the case to some of the insurance experts.

Ekerete Gam-Ikon, a management consultant in insurance, described motor insurance as the best known form of insurance and the highest source of premium for most insurers.

Gam-Ikon noted that the top 10 Motor insurers of 2021 revealed an interesting perspective of insurers that weren’t expected to emerge within the top ranking.

“In that 2021 performance, we saw a general business insurer only, NEM Insurance Plc, beating composite insurers to emerge top. This is clearly a niche strategy which NEM has adopted to be a market leader in respect of Motor Insurance,” he said.

Speaking on the major drivers of the growth recorded by these insurers, the insurance consultant noted that prompt claims settlement and payment, and commitment to an enduring relationship that make the top 10 motor insurers the companies of choice is one of the core drivers of growth recorded by the companies.

He also pointed out that  developing the expertise to maintain competitive advantage in motor insurance, as well as continuous improvement of  branding, to enable the insurers to enjoy public endorsements at any gathering, were all factors that contributed to the growth recorded by the top 10 most prominent Nigerian motor insurers in 2021.

On his expectations for the 2022 motor insurers performance, Gam -Ikon said, ” I expect that the top three leaders will most likely retain their positions but we’ll see changes in other positions because some insurers have become conscious and striving to focus on that niche market as well.”

He also expressed optimism that insurance companies are likely to pay more attention to motor insurance claims recognising that it is the class of insurance which readily exposes insurers that delays or pays claims promptly.

According to Gam-Ikon,  the  2022 performance will also increase the level of confidence that users have in motor insurance.

“More people will take up Motor Insurance now that it seems like somebody somewhere is sharing valuable information and data about this class of insurance,” he added.

On the contrary, Peter Irene,former managing director of International Energy Insurance PLC, was not impressed about the performance of the top 10 motor insurers,stressing that motor insurance is not recording significant growth as it ought to, referring to it as an insurance segment where “insurers are bleeding.”

“Under comprehensive they give multiples of unprofessional deductions and call them all sorts of names. I am sure the industry is collecting less than 50 per cent of what they are expected to collect,” he remarked..

Irene added that the growth seen in the motor insurance sector is majorly a result of increasing prices due to weakening of the Naira against dollar. According to him,most people don’t actually insure, but  collect fake insurance motor certificates from licensing offices.

To ensure a better performance in the sector, he advised motor  insurers to focus on effective management of earned premium and claims settlement indices.

He added that  intervention measures should be put in place to boost the trust of the insuring public in order to increase insurance demand and hence improve earned premiums.

Irene also charged companies to appraise every insurance risk in terms of motor characteristics before underwriting. This move, he opined, would ensure that adequate premium is charged to be able to indemnify policyholders in event of loss/calamities.