Insurance Industry In Nigeria Is Not Doing Badly – Expert
The insurance industry in Nigeria is not doing badly having recorded 15 percent growth in the last ten year, expert has said.
In his presentation at an industry event in Uyo, Akwa Ibom State, titled “The Insurance Sector And The Nigerian Economy: Impact, Challenges And The New Frontiers,” Dr Usman Jankara, a Director at the National Insurance Commission (NAICOM), highlighted the industry’s growth during the past ten years, noting that the industry is not doing badly.
He said the 15 percent growth recorded by the insurance industry in the past ten years is the highest growth recorded by an industry in the history of Nigeria’s economy.
According to him, “From 2015 to date when you look at the gross premium income of the insurance industry which was N282 billion and today the industry’s gross premium income is in excess of N726 billion, representing an average annual growth of 15 percent. That is not to say that the industry couldn’t have done better, but it is just to point to the fact that things are not as terrible or are not as bad as it is meant to look.
“There is no economy that has grown by 15 percent over a ten-year period, not any sub-sector –whether banking or others have attained this feat. The only time we had such growth was after Prof Chukwuma Soludo’s consolidation exercise in the banking industry. Even after that, the growth was hovering around 10-15 percent.
“The insurance industry is not doing badly, of course, there is a lot of room for improvement and the industry is determined to do better, working assiduously to put certain things in order.”
Speaking further, he said “The Asset of the industry actually grew from N917 billion in 2015 to about N2.328 trillion in 2022. That again, to me, is an exceptional growth in assets which is about 60 percent growth.
“Every time we hear people say that deposits in banks have hit some trillions of naira, we all say wow this is big!
“But when we look at insurance industry we look at premium as equivalent of deposit in banks but that is not a fare comparison. The deposits you pay in the bank are actually your money. It is not the bank’s money. The premium you pay to insurance company is equivalent to the money you spent to procure something, so they are not the same.
“We should also be discussing the sum insured or value of assets that are covered by insurance industry in Nigeria, that way; we are going to appreciate not just the fact that insurance industry is playing a crucial role.
“When you look at the industry, people tend to look at insurance penetration as the only way to assess the development and the extent of maturity of the insurance industry. Whereas that is accepted, there are other things to the effect that insurance industry provides certain services that cannot be assess by way of quantitative metric such as ratios and all that. Of course, industry’s penetration rate is about 0.4 percent, while insurance density is about 1.5 percent.
“By penetration rate, we are talking about insurance contribution to the nation’s gross domestic product (GDP), the proportion of insurance to GDP and here we are using insurance premium but if we were to use the asset covered by insurance industry, the proportion will be bigger.
“For insurance density, we are just saying how many Nigerians are insured or what proportion of the population of Nigeria are insured. All these indices overlooked the important contribution of insurance to the Nigerian economy another issue is the fragmented nature of the concept of insurance in Nigeria.
Jankara said insurance industry would have recorded about 17 percent or more growth rate if Pension and National Health Insurance are still part of insurance as it is in other parts of the world.
“In other clime, for instance, pension and health insurance are part of insurance, so what you consider as contribution of insurance in other climes, is not the same in Nigeria. In Nigeria, pension and health insurance are not part of insurance.
“Therefore it is wrong to compare Nigeria insurance industry’s contribution to GDP with that of other nations such as South Africa, Ghana, Kenya where pension and health insurance are part of insurance. You can imagine if, in Nigeria, Pension Asset and Health Insurance Asset are added to insurance data, the penetration rate will increase to about 17 percent or more,” he said.
