Insurance Market’s Gross Premium Now N813.1bn
The insurance market recorded about N813.1billion in Gross Premium Written in Quarter 2, 2024, indicating a 47.4 per cent growth rate compared to the same period of the previous year and a 72.7 per cent, quarter on quarter, it was gathered yesterday.
According to the National Insurance Commission (NAICOM), the steady growth from Q1 of the year correlates with the current performance of the period under review, as contained in the commission’s Bulletin entitled: “Synopsis of the Insurance Market, Second Quarter, 2024”.
The performance analysis of the Nigerian Insurance Industry is an insight into the market behavior in the second quarter of 2024.
The performance analysis of Gross Premium Written during the quarter under review shows that the market achieved a gross premium written of N813.1billion, a notable performance amid macroeconomic challenges in the country.
The report further showed an update on claims component, stating that consistent regulatory focus on public awareness and the enforcement of timely claims settlements has had a significant impact on the insurance industry, signifying persistent increase in gross claims reported, stood at N297.9 billion in Q2 2024.
This represents 36.6 per cent of all premiums generated during the period and, a 15 percent increase on annual basis.
The net claims paid on the other hand stood at N259.4 billion, signifying an 87.1 per cent of all gross claims reported in the industry during the period.
On one hand, the life insurance business of the industry recorded a near perfect point of 92.5 per cent claims settlement against reported claims while net claims paid of the non-life segment stood at about 83 per cent of gross claims reported.
The percentage claims settlement was a direct replication of Q1 2024 array, in all classes, the ratio of net claims paid stood above average position against the figures.
Motor Insurance business reported an exceptional ratio of 95.3 per cent of net claims paid against gross claims while Marine & Aviation businesses followed at about 95.0 per cent, higher than in the previous corresponding period of 74.5 per cent of the preceding year.
The General Accident of 85.9 per cent and Fire 67.7 per cent stood at a relative stability compared to the preceding period.
The performance in the Oil and Gas in terms of claims settlement was rather commendable as it recorded an improved ratio of net claims paid to total reported claims of about ninety-three per cent during the period.
This is despite recording a low retention ratio during the same period at just about thirty-two per cent.
On profitability of the sector, the report stated that the market indeed remained profitable during the period under review, recording an overall industry average net loss ratio of about 55.5 per cent, higher than 52.9 per cent reported in the previous corresponding period.
It read: “The Non-Life segment’s net loss ratio stood at 57.2 per cent while Life business recorded an improved net loss ratio of 53.6 per cent during the same period. The net loss ratio of the overall market average has improved by three points compared to the corresponding prior period. It is remarkable that the market has sustained some good profitability standing during the review period.
“However, it is important to note that the ratios mentioned reflect the market averages while there are few other underwriters whose loss ratios were rather recorded at a level not so impressive, over a hundred per cent or higher during the same period. This indicates that while some players in the market are experiencing significant challenges, the broader industry still maintains a favourable profitability profile.”
Also on market concentration risk, the report showed that a relatively uneven distribution of market share is recorded more in the Life segment of the industry compared to the Non-Life section during the review period.
During the quarter under review, the top three Life insurance companies accounted for about 43.8 per cent of the total Life premiums, while the top three companies in the Non-Life segment held approximately just about 34.8 per cent.
Furthermore, 86.6 per cent of all Life business was concentrated among the top ten players, with the bottom ten players contributing just 1.3 per cent of the Life insurance premiums.
On the other hand, in the Non-Life section, the top ten underwriters generated around 66.3 per cent of the gross written premium, while the least ten Insurers controlled only 1.1 per cent of the market share during the same period.
Meanwhile, the industry reported a total asset of N3.68trillion, signifying a 9.5 per cent increase from the N3.33 trillion reported in Q1 2024.
The balance sheet indicates that the Non-Life business holds assets amounting to N2.29 trillion, while the Life business accounted for N1.39trillion of the industry total assets. These figures highlight a significant increase in both segments, reflecting the overall robustness and upward trajectory of the industry.
Overall, the report stated that the industry has indeed demonstrated resilience, good soundness, profitability, and stability in view of the market behaviour during the period of the second quarter.
This is supported by the key indicators of premium generation, claims experience and a significant asset expansion which is suggestive of effective risk management, prudent underwriting practices and, certainly, an effective regulatory environment prevalent in the industry. Thus, the market remained not only profitable in the current but signifying a positive outlook, definitely, the report noted.
