The National Insurance Commission (NAICOM) has raised concerns about the adverse effects of the ongoing foreign exchange crisis and inflationary trends on the insurance sector, with a particular impact on the life insurance segment.

Despite these challenges, NAICOM reported that the insurance sector had demonstrated resilience over the past eight years, achieving an impressive 15 percent annual growth rate. This growth saw the sector’s total revenue surge from N282.9 billion in 2015 to an impressive N726 billion in 2022.

Mr. Sunday Olorundare Thomas, the Commissioner for Insurance and Chief Executive Officer of NAICOM, shared these insights during the 2023 retreat for Insurance Journalists held in Uyo, Akwa Ibom State.

Explaining how the aforementioned economic challenges have affected the insurance business, Thomas said the current exchange rate and inflation levels have made asset replacement a significant concern.

Due to inflation and the high exchange rate of the dollar to the Naira, insurance assets that rely on foreign exchange rates have been impacted.

This situation results in policyholders not receiving payouts exceeding the cost of the damaged property and the sum assured, ultimately discouraging people from investing in insurance.

Under these challenging circumstances, Thomas advised that prudent individuals should consider adjusting the valuation of their assets to maximize their insurance benefits. By increasing the value of their assets, policyholders can ensure higher payouts in the event of unforeseen incidents.

Speaking at a seminar titled “The Insurance Sector and the Nigerian Economy: Impact, Challenges, and the New Frontiers,” Dr. Usman Jankara, Assistant Director of Corporate Strategy at NAICOM, discussed various metrics for measuring the insurance sector’s performance. These metrics include assets, claims ratio, capitalization, and retention ratio.

Jankara highlighted the remarkable growth of the Nigerian insurance sector over the past eight years, with the gross premium increasing from N282.9 billion in 2015 to N726 billion in 2022, representing a substantial 15 percent growth.

Also, the total assets of the industry during the same period surged from N917.3 billion in 2015 to over N2.382 trillion in 2022, indicating an impressive 60.5 percent growth.

Leadway Assurance Limited, a leading insurance company in Nigeria, announced that it is making significant strides in the implementation of the International Financial Reporting Standard (IFRS 17).

The company’s commitment to adhering to this new global standard was highlighted at a one-day workshop organized for members of the Nigerian Association of Insurance and Pension Editors (NAIPE) in Lagos.

IFRS 17, previously known as IFRS 4 Phase II, is an International Financial Reporting Standard developed by the International Accounting Standards Board (IASB).

It aims to standardize insurance accounting practices worldwide, enabling better comparisons between companies, their historical performance, current financial positions, and risk exposures. The standard is scheduled to take effect from January 1, 2023.

Speaking at the workshop on the topic “Navigating the New Financial Reporting Standard,” Mr. Raphael Akomolede from the Finance Department provided valuable insights into Leadway Assurance’s progress regarding the implementation of IFRS 17.

He revealed that the company has successfully completed various stages of the implementation process, including Gap Analysis, Financial and Operational Impact Assessment, and the Design of Future State Finance Process/Technology Gap Analysis.

Also, Leadway Assurance has undertaken the Development, Documentation, and Review of the Target Operating Model, along with the crucial steps of Vendor Selection for IFRS 17 and the preparation of Technical Documents.

Akomolede further highlighted that Leadway Assurance’s relevant departments are currently working concurrently on System Testing and Implementation (pre and post).

They are also focused on reviewing and producing financial statements for 2021 and 2022, ensuring compliance with IFRS 17. Moreover, the company aims to produce interim IFRS 17-compliant financial statements, including transition disclosure.

Addressing the limitations of the existing standard, IFRS 4, Akomolede explained that IFRS 17 replaces it with a comprehensive set of guidelines for measuring insurance contracts.

While IFRS 4 allowed insurers to use local Generally Accepted Accounting Principles (GAAP), it lacked a consistent method for accounting for insurance contracts.

Consequently, investors found it challenging to discern which groups of contracts were profit-making and which were not.

Akomolede highlighted the transformative impact of IFRS 17, including improved comparability, relevant and updated measurement of insurance contract liabilities, a more intuitive presentation of financial performance and position, enhanced disclosure and transparency, and clear differentiation between insurance activities and investment activities.

Commending the National Insurance Commission (NAICOM) for their Roadmap for the implementation of IFRS 17 in the Nigerian insurance industry, Akomolede acknowledged the Commission’s relentless efforts since 2019 to ensure the full adoption of this global standard.

The workshop also featured Joshua Ogbeifun from the Strategy and Special Project Department at Leadway Assurance, who presented on “Breaking Down the Power of Synergy.”

Ogbeifun shared Leadway’s strategic approach to maintaining its dominant position in Nigeria’s insurance industry, both in terms of revenue and profit market share.

He emphasized Leadway Assurance’s commitment to becoming a customer-centric organization, employing an efficient sales process and structure, and leveraging partnerships to provide data-driven customer insights and customer-led solutions.

Ogbeifun described Leadway Assurance as a one-stop shop business group with associated companies, including Leadway Pensure, Leadway Asset Management, Leadway Health, and Leadway Capital & Trust Limited.

This diversification allows Leadway Assurance to offer comprehensive insurance solutions to cater to the varied needs of its customers across different sectors.

In his closing remarks, Mr. Olusakin Labeodan, the Chief Marketing Officer at Leadway Assurance, underscored the pivotal role of the media in business growth and national development.

Labeodan expressed his gratitude to NAIPE members for their attendance and called upon them to leverage their positions as journalists to disseminate the news about the benefits of insurance in Nigeria.