Insurance sector records 39% growth in Q1, 2023 as gross premium hits N311.5bn

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FINANCIAL MARKET ECONOMY

BY FESTUS OKOROMADU

The Nigerian insurance industry recorded a sustained market expansion in premium generation of N311.5billion in the first quarter of 2023, translating to 39.2 percent growth year on year.

Data released by the National Insurance Commission in its market performance bulletin for the first quarter of 2023, showed that the Non-Life segment contributed 64.4 percent of the total premium generated, thus sustaining its market lead.

Oil & Gas emerged a major growth driver at 32.6 percent with a far distant second at 21.7 percent for Fire Insurance. Motor Insurance stood at 16.4 percent while General Accident, Marine & Aviation, and Miscellaneous reported a share of 13.0 percent, 9.1 percent and 7.2 percent in this order.

Life business on the other hand recorded about 35.6 percent of the market output. The share of Annuity business stood at 25.0 percent of the total Life Insurance gross premium as the segment was led by Group Life business with a record share of 43.8 percent of total premium generated for life business during the quarter.

On premium retention capacity, the report showed that underwriters remained dominant as Life business retention stood at 81.0 percent while Non-life posted a record ratio of 46.0 percent during the period under review.

The sector recorded a decline in claims as total insurance claims during the first quarter recorded a significant decline at 35.4 percent, YoY to stand at N86.8 billion. Gross claims stood at a comfy ratio of 28.6 percent of all premiums generated during the period while the net claims paid on the other hand was N182.2 billion, representing about 79.9 percent of gross claims reported during the period under review.

The market average for Life Insurance business recorded a near perfect point of 91.0 percent claims settlement against all reported claims during the first quarter while the non-life segment stood at 69.5 percent during the same period.

“The trend of the claims settlement ratio against reported claims was a direct reflection of the market retention view, significantly above average for all classes with Motor insurance leading at a ratio of 94.4%. This is followed by General Accident (80.8%), Miscellaneous (73.4%), Marine (68.0%) and Fire (56.4%) posting some significant ratios of paid claims against reported claims during the period. Table 3 provides the percentage of net claims paid against gross claims reported with respect to non-life classes for the first quarter,” the report disclosed.

The industry recorded a roundly profitable occasion during the period, recording an overall market average loss ratio of 38.1 percent, about eighteen points higher than the immediate past period of the preceding year. The net ratio of Life Insurance was 42.6 percent while for the non-Life it stood at a much more profitable record of 33.7 percent during the same period.

The market, especially in its non-life segment has sustained its good profitability standing which is good for investors’ assurance and customer confidence as only profitable ventures are sustainable and could easily settle policyholders’ obligations.