Nigeria’s insurance industry roars to new heights, hits N1trn premium

Cynthia Ezekwe

The Nigerian insurance sector has recorded a historic achievement, surpassing the one trillion naira mark in premium income for the first time ever. This was revealed in the recently released figures for Q4 2023, which showed that Gross Premium Written (GPW) hit the notable figure of N1.003 trillion, representing a 27 per cent increase from the previous year.

The National Insurance Commission (NAICOM), in a report titled “Market Performance at a Glance -Q4, 2023,” revealed that the non-life segment of the insurance industry, which covers general risks such as property damage, accidents, and other liabilities, accounted for 61.3 per cent of all premiums written during the year. Meanwhile, the life insurance segment, which offers financial protection in case of death, disability, or other events, accounted for 38.7 per cent of premiums written, with a value of N388.1 billion.

The premium breakdown highlights the difference in market share between the life and non-life segments of the industry. In the life segment, the industry recorded a retention rate of 87.7 per cent, meaning that 87.7 per cent of premiums were retained by insurers in that segment. In the non-life segment, retention was much lower at 54 per cent, reflecting the more competitive nature of that market. Overall, the industry recorded a 66.7 per cent average retention rate, 

According to the National Insurance Commission (NAICOM), the non-life segment of the market experienced notable growth due to the performance of the Oil & Gas and Fire Insurances, which contributed 27.3 per cent and 24.1 per cent of the total premiums written in that segment. 

In a direct reflection to the ongoing regulatory measures regarding claims settlement, the insurance industry regulator pointed out that  the life business recorded about 95 per cent of net claims to the total recorded claims during the year while the market average stood at about 71.4 per cent of the N536.5 billion gross claims reported at the close of fourth quarter, 2023.

The commission further noted that in a direct reflection to its  “no-premium no-cover” policy, the outstanding premium has continued to decline, as the industry posted just  1.6 per cent outstanding of all the premiums generated in the market during the period.

It further said within the period under review, total assets of the sector stood at about N2.67 trillion while capitalisation stood at  N851 billion in 2023.

NAICOM’s detailed report on claims payment by class provided a glimpse into the different areas of insurance and how they performed. Giving a breakdown of claims payment by various classes, the commission said motor insurance class paid gross claims of N32.1 billion and net claims of N31.0 billion, fire insurance class paid gross claims of N61.5 billion and net claims of N41.3 billion.

The report also revealed that the general accident insurance class paid N22.3 billion in gross claims and N17.0 billion in net claims. In addition, the marine insurance class paid N16.9 billion in gross claims and N12.0 billion in net claims, while the oil and gas class paid N157.1 billion in gross claims and N54.6 billion in net claims.

The commission also provided a breakdown of the market size and market capitalisation for both the non-life and life insurance segments. Non-life insurance had a market size of N1.669 billion, while life insurance had a market size of N1.00 billion, bringing the total market size to N2.673 billion. In terms of market capitalisation, non-life insurance had stood at N670.2 billion, while life insurance was N180.9 billion, bringing the total market capitalisation to N851.0 billion.

The report also revealed that in terms of outstanding premium, the non-life insurance segment had an outstanding premium of just 2.5 per cent of the total premium, while life insurance had an outstanding premium of 0.2 percent of the total premium.