National Insurance Commission Highlights Challenges and Growth in the Insurance Sector

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.