The gross written premiums of the Nigerian insurance sector surpassed a trillion-naira mark for the first time to hit N1 trillion in 2023 from N844.5 billion in 2022 despite the economic challenges, a new report by EnterpriseNGR shows.
The report by the private sector group entitled, ‘The State of Enterprise 2024’ said the hike in annual insurance premiums of N15,000 from N5,000 and a rise in the minimum rate for comprehensive insurance to 5 percent from 3 percent contributed to the growth.
“By driving penetration to increase the funds available to insurance companies, the Insurance sub-sector can support national investment and contribute to infrastructure development through this growth,” the report stated.
Gross written premium is the total amount of money an insurer collects from its customers in exchange for insurance policies. It is the sum of all premiums charged regardless of the risk the insurer takes.
Obi Ibekwe, CEO of EnterpriseNGR said the SOE report is an annual publication that showcases the accomplishments and contributions of the Financial and Professional Services (FPS) sector to Nigeria’s people, businesses, government, and economy.
Read also: Nigerian insurance sector gross premium crosses N1trn milestone
“The FPS sector demonstrated remarkable resilience despite the socio-economic challenges encountered in 2023. Noteworthy developments during the year included the discontinuation of petroleum subsidies and the liberalisation of the naira exchange rate, which led to heightened general price levels and increased production costs,” she said.
She added that inflationary pressures prompted the Central Bank of Nigeria (CBN) to adopt stringent monetary policies that influenced sector activities, particularly affecting the cost of credit to the productive sector.
“Despite these challenges, the collective financial institutions contributed N5 for every N100 generated nationally — an improvement from nearly N4 in 2022 and the assets held by deposit money banks expanded significantly, affirming their capacity to bolster economic activities,” Ibekwe said.
According to the report, Insurers recorded the highest net claims paid of N382.9 billion in 2023 which is 35.5 percent higher than the N282.6 billion claimed in 2022, the first time in four years.
Similarly, claim ratios increased by 53.5 percent in 2023, compared to 44.1 percent in 2022 and 51.3 percent in 2021.
“The significant increase in claim ratios reflects the increasing responsiveness of the industry to fulfilling its obligations to provide adequate protection against damages and losses incurred by policyholders,” the report added.
The Insurance sector’s assets grew by 8 percent to N2.7 trillion in 2023, up from N2.5 trillion. In the last five years, the industry’s total assets grew by 75.3 percent from N1.5 trillion in 2019.
