Industry generates N532.7bn GPI; N242.6bn claims payment Q3, 2022

The Nigerian Insurance industry in the third quarter of 2022 generated N532.7 billion gross premium income at a growth rate of about 15 per cent during the period.

Also, gross claims reported by the market during the period was N242.6 billion.

According to the Bulletin of the insurance market performance – a statistical department quarterly synopsis of the insurance market third quarter 2022, National Insurance Commission (NAICOM), as captured by this analytical report, was a virtue of an excellent performance in the financial services sector of the economy.

It generated about five hundred and thirty-three billion (N532.7b) naira in gross premium income at a Year on Year (YoY) growth rate of about fifteen per cent during the period. 1.1 Gross Premium Income – Performance Gross premium income in the third quarter of 2022 stood at N532.7billion, a significant performance as mapped in Table 1 which illustrates the premium contribution by each class of the business.

Likened to the Nigeria’s growth in real Gross Domestic Product (GDP) of 2.3% during the same period, the industry fostered at a higher rate of about fifteen (14.9%) per cent growth rate, an impressive performance once again. The relative contribution of each class of business is provided for in Chart 1, representing the continued development of the Life Insurance business as driven by its component of the Individual Life.

The Non-Life segment as revealed from the data, sustained its market dominance at 58.4% of the total premium generated. Insights in the segment show Oil & Gas was the leading driver at 30.8% with Fire Insurance following at 21.3%. Motor Insurance stood at 14.6% while Marine & Aviation, Gen. Accident and Miscellaneous reported a share of 11.8%, 11.2% and 10.3% respectively.

Life business on the other hand recorded 41.6% of the market production as its share contribution gradually closes up. To the be share of Annuity in the Life Insurance business lagged at about twenty six per cent (25.5%) while Individual Life was at 41.2% of the premium generated during the period.

The insurance claims component defines the essence of insurance business as a whole and indeed a major factor in consumer confidence building. During the third quarter of 2022, the gross claims reported by market of N242.6billion was slightly lower compared to the corresponding period of 2021, signifying a decline of -2.3% in the total claims reported by policyholders. However, the ratio of total claims to gross premium stood at about forty-six per cent during the current period.

The net claims paid on the other hand stood at about N207.2 billion, signifying an 85.4% of all gross claims reported during the period. The Life Insurance business inrecorded a near perfect point of 95.0% claims settlement against all the reported claims while non-life segment stood generously at above seventy (72.4%) per cent during the same period. Chart 4, provides the relative industry Gross and Net claims reported and paid in the non-life section of the market.

Profitability of the Sector The Insurance market indeed remained profitable during the period, recording an overall industry average of about fifty-five (54.5%) per cent, a noteworthy performance though lesser, compared to 46.7% recorded in the corresponding period of preceding year. The Non-Life segment stood at 43.5% better than in the Life business which reported a net loss ratio of sixty four (63.6%) per cent during the period. The sustained lower net loss ratios of the non-life which is relatively a short-term business, is good for the market as it could quickly register some good market image and confidence in the industry.

Nonetheless, despite a rather good scenario of the market average, some three Insurers gave rise to the reported net loss ratio of the period under review. Those were underwriters with figures of a hundred per cent and above of net loss ratios as illustrated in table 4. Table 4 insight into the number of Insurers with highest loss ratios of a hundred per cent or above during the quarter. Table 4: Loss Ratios for Insurers in Q3, 2022

Market Concentration Risk The market concentration as shaped by competition and other factors in the industry revealed a rather similar scenario compared to the second quarter of 2022, indicating that the market control setting has not significantly changed in the last three months. In the Life business segment, the least three companies recorded a proportional contribution of about 0.1%, sam.