Nigeria’s insurance industry sees changes as top 10 insurers post N472.6bn premium

    Cynthia Ezekwe

• Data show increasing growth of life business

• Indigenous insurers not yielding leadership 

• Bankers move into insurance to dominate

A data set showing Nigeria’s top 10 insurers by gross written premium (GWP) is giving analysts the encouragement to suggest emerging dynamism in the country’s insurance landscape that could position it for enhanced growth and greater development.

The data do not, however, show that insurance penetration in Africa’s most populous country and its largest economy by gross domestic product (GDP) size, is about to improve, but a combined gross premium of N472.6 billion by the 10 top insurers is giving comfort to analysts to suggest that something positive lies ahead for the industry.

Analysts say the emerging dynamism in the Nigerian insurance market going by the dataset can be seen in the increasing growth of life business against general business which is traditionally the industry’s mainstay; the fact that indigenous insurers are still holding ground as far as industry leadership is concerned; that bankers have moved into insurance with a view to dominate and bring banking industry midas touch to the industry to give it a shakeout; and the data showing that the frontier for growth is in the composite model, while that of competition lies in microinsurance, Takaful and insurtech. 

The evidenced data of the accomplishments of the ten leading general business/life insurance companies in the country by gross written premium (GWP) in 2022 show an insurance sector that is growing from strength to strength. 

However, despite the significant growth and accomplishments of the top ranked insurance firms, the industry continues to face a variety of challenges. These challenges have impacted the sector’s ability to achieve higher levels of penetration. 

The data, recently compiled by business fitness consultancy firm, Finterate Projects, showed that the top ten insurance firms in the general business/life insurance sectors generated a total Gross Written Premium (GWP) of N472.6 billion in 2022, highlighting the increasing importance of insurance in the country’s economy. 

Gross written premium is a key metric for evaluating the overall performance of the insurance sector. This metric refers to the total premiums collected by insurers, before deducting any reinsurance ceded. This is an important indicator of the industry’s growth, as it provides insight into the demand for insurance products, as well as the amount of risk that insurers are willing to take on. 

The impressive achievement in the Nigerian insurance industry has been attributed in part to the increasing awareness of insurance products and services among Nigerians, and the improved quality of service delivery by insurance companies during the period in review.

 A breakdown of the data by Finterate Projects showed that the general business insurance among the top ten insurance firms amounted to N228.4 billion, while the life insurance segment recorded N186.5 billion. This indicates that the general insurance segment outperformed the life insurance segment in terms of gross premiums written. 

In terms of combined gross written premium (life & general business), Leadway Assurance Company Limited was the clear leader, with a total of N90.8 billion. AIICO Insurance Plc came in second, with N87.5 billion. Custodian Insurance rounded out the top three, with a combined GWP of N75.7 billion. Following behind in the rank ing were Sanlam Nigeria, in fourth place with N53.1 billion, and AXA Mansard Insurance PLC, in fifth place with N41.2 billion. NEM Insurance was next, in sixth place, with N33.3 billion, followed by Mutual Benefits, in seventh place with N29.4 billion. Zenith Insurance was in eighth place, with N20.9 billion, and Heirs Insurance was ninth, with N20.0 billion. Rounding out the top ten was Cornerstone Insurance, with N18.2 billion. 

Breaking down the rankings further, AIICO Insurance was the leader in life insurance on a standalone basis, with N61 billion in GWP. Leadway Assurance was second, with N50.3 billion, while Sanlam Nigeria was third, with N41.8 billion. In the general business insurance segment, Leadway Assurance led the way with N40.4 billion, followed by Custodian, with N37.9 billion, and NEM Insurance, with N33.3 billion. 

Analysts familiar with the operations of the insurance industry have attributed the sector’s growth to a variety of factors, including an increase in consumer awareness of the benefits of having insurance coverage, and the efforts of leading insurance providers to increase their customer reach and improve customer service. However, they point to the fact that there are several challenges that the industry must overcome to continue on this trajectory of growth. 

According to Ekerete Gam-Ikon, a management consultant with expertise in the insurance sector, the positive data on the performance of top general and life insurance companies in Nigeria is indicative of the potential for the sector to grow even further. In his words, the gross written premium is “racing towards its trillion naira status,” meaning that the industry is on the cusp of a significant milestone. 

Gam-Ikon opined that the datasets reveal that the life insurance category has been growing rapidly in recent years, outpacing the general category in terms of contribution to overall gross written premium. This shift, he explained, has important implications for the sector, as life insurance policies typically offer higher premiums and longer-term contracts, which means more income for insurance companies in the long run. 

He also observed that individual policyholders tend to be more loyal and have a higher average lifetime value than corporate policyholders, noting that the increasing proportion of individual policyholders could have a significant impact on the future of the industry. The insurance expert pointed out that, based on the rankings, it appears that local insurance companies have not been able to seize the leadership positions in the industry. One possible explanation he gave for this development is that the bankers have returned to seek to dominate the insurance sector again since the abolishment of ‘Universal Banking’ which gave them the opportunity to play a pivotal role in the past. 

According to Gam-Ikon, insurers can make the most of the opportunities in the Nigerian market by obtaining a composite licence, which allows them to offer both life and general insurance products. He also noted that the areas of competition in the industry are changing, as traditional areas such as motor and health insurance are becoming more mature. He added that microinsurance, takaful, and insurtech are emerging as the new frontiers of competition in the Nigerian insurance sector. 

Speaking on the impact of the economy on the industry, he said, “The resilience that insurance provides has only made more individuals and businesses to rely on it for survival and sustainability at these trying times. It’s about more insurance and much more resilience of the economy. We hope to see more collaboration between the insurance sector and other sectors that are contributing more to Nigeria’s GDP namely, agriculture, entertainment and technology (digital economy).” 

While the size of Nigeria’s economy and population offer tremendous potential for the insurance industry, Gam-Ikon emphasised that strong actions and initiatives are required to tap into this potential. He noted that the industry needs to focus on increasing insurance adoption, particularly among the country’s large population of underserved and underinsured individuals. 

To achieve this, he suggested that insurance companies should prioritise improving financial literacy, enhancing the customer experience, and offering innovative products that meet the needs of the market. 

Gam-Ikon observed that, while the insurance sector is growing faster than the economy as a whole, insurance penetration remains low in Nigeria due to several “leakages” in the premium income pipeline. He also noted that these issues delayed the insurance sector from reaching its full potential and reaching a trillion naira in premium income. 

Speaking on the top 10 company’s ability to shape the market, he said, “Besides controlling about 56 percent of the total GWP of Nigeria’s insurance industry, these companies also have very intimidating total assets and shareholders’ funds committed to the growth and development of the sector. Their investments in other sectors like banking, infrastructure, oil and gas, real estate and technology reflect the significant impact they are making into the future.’’ 

Also dwelling on the dataset, Gus Wiggle, founder and principal consultant of Carefirst Ltd. a firm that specialises in claims and risks management and believes that the insurance industry in Nigeria still has a long way to go in terms of its development and impact. He stated that, despite the country’s large economy and population, the industry has not reached its full potential and has not yet had a significant impact on the lives of Nigerians. 

Wiggle noted that the total gross written premiums of the insurance industry have grown significantly in recent years, but this growth has not been proportionate to the size of the Nigerian economy. He explained that the country’s low insurance penetration rate indicates that a large proportion of the population is still not utilising insurance products and services. This, he noted, presents a significant opportunity for insurers to expand their market share and drive growth in the industry. 

The Nigerian insurance industry is indeed growing, but experts have identified several challenges that must be addressed in order to sustain this growth over the long term. One such challenge is the low level of insurance penetration, with only 1.5 percent of the population currently having insurance coverage. This means that a significant portion of the population does not have the protection that insurance can provide. 

While this presents an opportunity for insurers to expand their reach and educate more people about the benefits of insurance, it also means that the industry needs to overcome various barriers to increase insurance penetration. 

Another major challenge identified by industry experts to be facing the Nigerian insurance industry is the lack of trust among consumers. In the past, there have been cases of fraudulent practices by some insurance companies, leading to a general lack of confidence in the industry. 

To address these challenges, insurers are advised to work towards rebuilding trust and improving the industry’s reputation by implementing strict compliance measures. This includes ensuring that all products and services are fully compliant with the relevant regulations and standards. 

In addition, insurers have also been urged to be transparent about their products and services, providing clear and easy-to-understand information about the coverage and benefits of their policies. In addition to addressing the challenges of trust and fraud, another point being highlighted is that the insurance industry must adapt to the rapidly changing landscape of technology and customer needs. One key trend is the increasing demand for digitalfirst insurance solutions, such as online policy management and claims processing.

 In order to meet this demand, insurers have been advised to invest in the latest technologies and create user-friendly online platforms that make it easy for customers to access their insurance products and services. 

Experts also noted that significant opportunity lies in the potential for the insurance industry to act as a catalyst for financial inclusion in the country. They noted that by making insurance products more accessible to lower-income groups, the sector can help to increase the number of Nigerians who have access to financial services, which in turn can lead to increased economic activity and growth.