Insurance

58 Insurance Firms Generate N2.1trn Gross Premium

By ZAKA KHALIQ

Despite low insurance adoption in the country, the 58 underwriting companies in insurance sector have generated a whopping N2.1 trillion as gross premium income from underwriting risks in the last seven years, LEADERSHIP checks have revealed.

The premium income of the industry had steadily grown over time, showing increasing insurance appetite of Nigerians, even though penetration is still abysmally low, compared to the country’s huge population.

LEADERSHIP investigations further revealed that from the N2.1 trillion gross premium generated, the insurers paid about N549billion claims to Nigerians, leaving the industry with an actual profit of N1.4trillion between 2010 and March, 2017.

Between 2010 and 2014, the industry recorded a gross premium income of N1.22 trillion, made N358 billion premium income in 2015, recorded an estimated N390 billion total premium in 2016 and was able to pull an estimated N140 billion gross premium in the 1st quarter of 2017, making N2.1 trillion gross premium income generated in the last seven years.

As more Nigerians become aware of the need to make claims on insured assets, the compensation demand has equally risen in the last seven years, while industry observers believe the figure this year could double last year’s, as the value of claims soars as a result of naira devaluation.

Between 2010 and 2014, the industry paid N124 billion claims to claimants, paid an estimated N150 billion claims in 2015, N190 billion in 2016 and N85 billion in the first quarter of 2017, translating to N549 billion total claims paid in the last seven years.

Market observers, who commended the industry operators, believe things could only be better, as stakeholders continue to raise insurance awareness and expecting that in no time, the industry can realise the N1 trillion gross premium income target set by the federal government in 2014.

Speaking exclusively to LEADERSHIP yesterday, the director general, Nigeria Insurers Association (NIA), Mr. Sunday Thomas, said increase in insurance awareness as well as awareness on claims was responsible for the huge premium income and claims generated by the industry.

He said the industry was trying all it could to remain relevant to the nation’s economy, stating that lack of enforcement, especially of the compulsory insurances, had been a serious challenge to the industry.

He, however, pointed out that if the law enforcement agencies such as the Federal Roads Safety Corps(FRSC), Vehicle Inspection Officers(VIO), Nigerian Customs Service, among others could prosecute the uninsured Nigerians, more people will subscribe to insurance products and services.

Explaining the reason for increase in claims in the last one year, Thomas said the increase in fraudulent claims, coupled with more awareness on claims as well as increase in value of claims, led to increase in claims value and volume.

His words: “In recession, people will want ways and means to make money. The tendency to defraud is very high. It is not likely that insurance companies will be able to stop all fraudulent claims, but they can stop as many as possible.

“Then we also know that the value of claims, by the reason of foreign exchange issues, has increased. So, all these combined would have been responsible and again, there is an increase in awareness in terms of the knowledge of claimants to make claims on their policies”.

He added that insurance firms have increased their level of investigation and verification of claims to ensure the claims paid by the insurers are genuine ones.

In the same vein, the president, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Kayode Okunoren, said though penetration is low, things were gradually improving in terms of growth of gross premium income.

He called for reclassification of insurance, such that it would include pension, health insurance, workmanship compensation, and agric insurance, as they were previously insurance products, believing that if this was done, insurance contributions to GDP will rise.

“There is the need for reclassification of what insurance means by bringing in pension, health insurance, workmanship compensation, agric insurance. In other climes, all the aforementioned products are classified as insurance. If all these are brought into insurance, you will see a different figure on insurance penetration and contributions to GDP”, Okunoren said.

The managing director, Linkage Assurance PLC, Dr. Pius Apere, said though the premium income had grown over time, the figure could have been more if not for the high rate of rate-cutting in insurance industry, adding that the industry was mainly surviving on the brokers’ market.

Stating that the current insurance products were recycled products, he charged his colleagues to leverage on the untapped potentials in the retail market through launching of retail products that could actually drive the premium income.

“Insurance industry is just recycling products; recycling in the sense that some operators are cutting rates. So, the real premium is actually going down because of rate-cutting. It is only when they go into retail marketing through micro-insurance that insurance penetration could be deepened”, Apere noted.

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