Nigerian insurers saw their total gross premium income rise 22.2 percent to N380 billion in 2016, despite a wave of insurgency in the north east of the country, fall in global oil prices and a generally challenging business environment, the umbrella body of insurers, the Nigerian Insurance Association (NIA), said Thursday in Lagos.
A combined 55 operating companies in the sector posted N311 billion in 2015 but a 22.2 percent growth in 2016 numbers was masked by what they said were the negative impacts imposed on insurance activities in country by the harsh socio-economic and political environments.
Eddy Efekoha, chairman of NIA Thursday listed factors such as falling crude oil price, epileptic power supply, cut throat inflation, prolonged period of recession and internal conflicts in the form of insurgency and herdsmen attacks on farms as combining to drag down the profitability of insurance as a business in Nigeria.
Efekoha challenged the federal government to strive towards improving Nigeria’s ease of doing business ranking in order to attract interest from global players in the insurance market to the industry in the country.
The enforcement of the “No premium, No Cover” clause in the insurance law, especially on the part of government businesses will go a long way in improving liquidity among member companies and thus empower them to discharge their obligations, including prompt payment of admitted claims, Efekoha said.
“Year 2016 will be remembered as one of the most challenging in Nigeria’s recent history. Tight monetary liquidity and slump in oil earnings led to the first major contraction in the economy in over two decades. Prices of goods and services skyrocketed while run-away inflation peaked at about 18 per cent,” he noted.
Nigerian insurance firms have failed to excite shareholders with improved earnings even as their stocks continue to lag behind peers at the Nigerian stock Exchange.
Analysts continue to admonish underwriting firms to up their games in the area of investment portfolio management to complement their earnings from their core business.
Beside, the comparatively low capital outlay of Nigerian insurance institutions have made them outsiders in the lucrative businesses of oil and gas as well as aviation insurance, where they currently serve as outposts for foreign insurers.
“We are optimistic that in spite of the challenges posed by the economy, the suspension of the FRC Corporate Governance Code, improved anti-money laundering mechanism, improved enforcement of compulsory insurances and improvement in regulations coupled with the administrative ingenuity of chief executives, the Nigerian insurance industry continues to be the preferred destination for global players”, Efekoha remarked.