Nigerian Insurance industry
With only 0.5% insurance penetration, Nigeria is in the early stage with insurance and is a potential hub for expanding into West Africa. According to a 2012 report by Enhancing Financial Inclusion & Access (EFInA), there are about 1.3 million Nigerians that have insurance cover. Motor insurance is the cover taken out the most, while life assurance, medical, critical illness cover and livestock/agriculture insurance have extremely low uptake.
Nigeria has a population of about 166 million people with 59 insurance companies, while South Africa with a population of about 52 million has 184 insurance companies; and Ghana with a population of about 25 million has 47 insurance companies.
As well as in-funding which will a play major role in taking up larger ticket risks particularly in the oil and gas sector, energy and aviation sectors, the recent reforms in the insurance sector created significant opportunities in terms of market induced consolidation for greater risk retention capability and an upgrade in technical capacity.
Out of Nigeria’s 59 insurance companies, 24 of them are currently listed on the Nigerian stock exchange. The industry has two main types of income, investment and technical income, it contributes a mere 0.56% to GDP, but the growth rate of the industry premium is estimated at about 18% per year. There have been some mergers and acquisitions, including Crusader Insurance merged with Custodian & Allied Insurance, and Assurance African Holdings acquired GT Assurance, now Mansard Insurance.
Compared to advanced economies, the total insurance premium as a percentage of GDP for US is 14.5%, UK, 15%, Ireland 22% and Germany 8.9%. With a young and growing population coupled with technological advancement and stable economic growth projected at about 6.2%, there is no doubt that opportunities abound in the Nigerian insurance industry. The industry needs a push to implement good corporate governance and for the government to implement favourable policies with respect to automotive policy, oil and gas as well as the housing sector.