Opportunities, challenges awaiting Nigerian insurance industry in 2024

Cynthia Ezekwe

The Nigerian insurance industry was marked by numerous challenges in 2023, including the impact of inflation and the need to adapt to digitalisation. Inflation was a major concern, as it made it difficult for many companies to operate profitably. In addition, the industry faced a lack of public trust and a low level of insurance penetration.

In 2023, the industry continued to benefit from digitalisation, as the use of technology allowed the sector to make significant progress in achieving its goals. Digitalisation helped to improve efficiency, reduce costs, and expand the industry’s reach. There is also strong optimism that the industry is set to reach the N1 trillion gross premium income (GPI) milestone by the end of 2023 from N727 billion in 2022,underpinned by a renewed focus on financial inclusion and risk management.

Given the various challenges and achievements  experienced in the insurance industry in 2023, experts have identified several key issues that the sector is likely to face in 2024. These include an increasing cost of claims due to inflation and supply chain disruptions, a growing risk of natural disasters and climate change, a rising cost of capital, the need to adapt to new technologies, and the need to engage more effectively with customers, especially younger generations.

Insurance management consultant, Ekerete Ola Gam-Ikon, described 2023 as being of a rocky start for the insurance industry in Nigeria, noting that NAICOM’s announcement of new premium rates for motor insurance, especially third-party motor insurance, led to a significant increase in the cost of premiums by about 300 percent. This, he observed, led to a lot of controversy and debate within the industry, but ultimately the new rates were implemented.

According to Gam-Ikon, arsenals were hauled at NAICOM and the insurance industry from within and outside. He, however, expressed happiness that the efforts to make Nigerians appreciate the benefits of Third Party Motor Insurance and the value of insurance paid off.

Gam-Ikon also commented on the importance of the regulatory position on tenure limits, which has resulted in the appointment of new CEOs for a number of insurance companies. This has brought about some changes in the industry, as well as a renewed focus on customer service and the settlement of outstanding claims. He also noted the role of the Nigerian Insurers Association (NIA) in encouraging claimants to approach their insurers for the settlement of outstanding claims. These developments, according to him, show that the insurance industry in Nigeria is undergoing some important changes, which have the potential to benefit consumers.

“Overall, the insurance industry excelled in 2023, in my view, but compared to where we ought to be with regards to insurance penetration, we are faced with huge challenges, some familiar old issues,” he said. 

Gam-Ikon noted that the insurance industry in Nigeria faces several challenges, including public apathy and a lack of trust in the leadership of the industry. This lack of trust is exacerbated by the presence of financially weak and distressed insurance companies, which may struggle to meet the needs of existing and potential policyholders. He further noted that these challenges must be addressed in order to fully exploit the opportunities that exist for the industry in 2024. 

He said, “Until Nigerians can confidently transact business with any insurance company without fear of ‘will my claims be paid’, we are not ready!

“So, in 2024, the insurance industry in Nigeria should show that efforts made to demonstrate improved market discipline and capacity to do more will result in unprecedented levels of achievements. In 2024, we expect the insurance sector to become a trillion Naira market in terms of Gross Written Premium,” he noted.

Gam-Ikon also highlighted the potential impact of the implementation of the Risk-based Supervision system and Risk-based Capital approach by NAICOM. He suggested that this could lead to a more dynamic and competitive insurance industry in Nigeria, with improved standards and performance. He also noted that this could help to increase public trust in the industry, as it would provide greater transparency and accountability.

The insurance expert expects that the Nigerian insurance industry will be dominated by NAICOM in 2024, with a focus on the passage of the Insurance Amendments Bill and the improvement of guidelines on microinsurance and Takaful. He also predicted that the industry would continue to adopt digital solutions to address long-standing problems and challenges. 

Gam-Ikon believes that more efforts must be made to raise awareness and educate policy makers at all levels of government about the importance of the insurance industry. He also noted that insurance operators and regulators, such as NAICOM, will need to place a greater emphasis on data and data-driven decision making.