The insurance sector activity in the country has set for itself the target of a premium volume of N6 trillion and total market asset base of N16 trillion before the year 2020, if all went as planned by the sector.
It will also move from the current employment of about 10,000 to generate not less than 300,000 employment opportunities and increase penetration (ie the contribution to the gross domestic product (GDP) of 15 per cent from the current inconsequential 0.3 per cent.
The industry is optimistic that the achievement of a density (premium per capital) of $256 is realistic in the next four years.The director-general (DG) of the Nigerian Insurance Association (NIA), Sunday Thomas, said that the sector would make frantic efforts to reduce insurance gap from 94 per cent to less than 30 per cent, inculcate insurance culture among the citizenry and full adoption and implementation of solvency-focused and risk-based supervision as part of efforts to boost the sector.
However, his calculation has been widely corroborated by statistics and reports from globally acclaimed rating agencies.According to the International Monetary Fund (IMF), Nigeria and four other African countries, namely Ghana, Tanzania, Zambia and Cote d’Ivoire are to contribute to the robust economic growth of Africa’s insurance market by 4.3 per cent this year and 5.1 per cent in 2017.
The projection, which was monitored on the AFK Insider’s website, showed that fast growth in insurance patronage was beginning to emerge in these countries due to the already expanded market, thus reducing South Africa’s market share.
Insurance companies have historically focused their energies on South Africa, one of Africa’s most mature financial markets. Life insurance premiums in South Africa accounted for almost 90 per cent of the total life premiums across Africa in 2013.
The rise in incomes and affluence feed insurance purchases as consumers spend more on discretionary items such as cars and second homes. A bump in spending on basics, including health care and mobile phones, has also created new streams of insurance premium revenues for companies. Yet, insurance premiums paid per capita in sub-Sahara lag behind emerging Asian economies, including India and Vietnam, with the premiums at less than 3 three per cent of the GDP (the United States is more than twice this per cent).
Non-life insurance premiums as a percentage of the GDP hover at less than 1 per cent in some of Africa’s major economies, including Nigeria, Ghana, Tanzania, and Zambia. Statistics suggest fertile ground for a regional boom in the insurance industry, and rising populations will breed further consumer demand, most notably in Nigeria, Ghana and Zambia albeit only if the services offered can grow to meet the market.
African insurers have traditionally targeted the upper income population because of their tendency to have disposal income and financial literacy. But the new consumer base is requiring changes to the system. For instance, distribution through brokers and brick and mortar banks are inefficient pathways to reaching the lower-income population. Insurers are building online and mobile underwriting platforms for policy quotations and renewals as well as purchase and payment. Health insurance, for instance, is now offered through text message in order to expand access.
Nigeria and Kenya are the leaders in this space.Also at the 43rd African Insurance Organisations conference and General Assembly in Morocco (AIO) Nigeria was listed among the top 10 african Insurance markets after South Africa, whose non life insurance premiums dominated African Insurance sector with market size of over $1billion each in 2014.