NAICOM says premiums from oil & gas remain industry’s biggest in Q1’23

Business A.M

The National Insurance Commission (NAICOM) says premiums from the oil and gas sector of the economy have remained the biggest following its data compilation on the insurance industry activities in the first quarter of 2023.

Business from oil and gas contributed the biggest share to total non-life gross premiums, the Commission said.

In its report titled “Q12023 Insurance Market Performance Bulletin”, NAICOM noted that oil and gas business generated gross premiums of N65.4 billion or $85.8 million in the first three months of 2023, an amount that was 30 percent higher than in the corresponding quarter in 2022.

 The amount accounts for 32.6 percent of total nonlife insurance gross premiums, three percentage points lower than in the first quarter of 2022.

There was also a significant fall in oil and gas insurance retention to 25.2 percent in Q1 2023 compared to 49.9 percent in the corresponding period in 2022, suggesting that in the first quarter of 2023, Nigerian insurers transferred 74.8 percent of the income generated from oil and gas business overseas, in breach of the regulatory maximum of 30 percent.

Industry players say that the continued depreciation of the naira as well as difficulty in accessing foreign exchange makes it difficult for insurers to comply with the local content law.

NAICOM also said that performance in the oil and gas sector continues to post some relatively poorer indicators compared to other classes of insurance, due to obvious technical and financial inadequacies prevalent in the industry notwithstanding regulatory measures aimed at reversing the trend.

There are expectations that the recapitalisation drive by industry players and upgrading in professionalism could reverse the scenario to the preferred direction in terms of underwriting and claims management capacity in that segment of the market.