In Lagos, Nigeria’s biggest city with a population of over 20 million people, Fidelis Johnson says he has no interest in insuring his assets and doesn’t believe in life insurance.
“Taking a life insurance makes me have a premonition of my death which is a usual Africa belief. Nigerians cannot insure life,” he says.
Fidelis, 45, owns a small business with an estimated net worth of N5 million. He has been in the business of spare parts since 1998, but has not bothered to purchase insurance for his shop or goods.
Cultural attitudes like Johnson’s, general public apathy and lack of enforcement of existing compulsory insurance laws are slowing the growth of Nigerian insurance companies.
Nigerian Insurers are growing at a rate lower than is needed to hit the average peer country gross premium as a percentage of GDP rate of 5 percent or the N1.1 trillion gross premium income target set by the Nigeria Insurance Commission (NAICOM), an analysis of the nine months through September, 2013,results of 13 listed companies shows.
Insurers would have to grow gross premiums by a minimum of 30 percent per annum for the next 5 years to meet NAICOMs target, according to business Day’s analysis.
However thirteen listed firms which have released nine-month results collectively made total gross premium income of N80.1 billion for the September, 2013 period, an increase of 18 percent from N68.6 billion recorded in the corresponding period Q3 2012.
The firms are follows: Prestige Assurance Plc, Equity Assurance Plc, Continental Re-Insurance Plc, Aiico InsurancePlc, Corner Stone Insurance Plc, Sovereign Trust Insurance Plc, Regency Alliance Assurance Plc, Mansard InsurancePlc, Custodian and Allied Plc, Unitykapital Assurance Plc, Oasis Insurance Plc, NEM Insurance Nig Plc and Linkage Assurance Plc.
“The research conducted recently by our firm shows the industry may not write up to N500 billion in three years as it will be difficult to remove insurance patronage from culture and religious beliefs,” said Obinna Chilekezie, Principal Researcher, and Independent Insurance
“In other economies where insurance was contributing more to the GDP, their people patronize insurance willingly,
Nigerian Insurers underwrote N260 billion ($1.62 billion) in total gross premiums as at 2012, according to Fola Daniel, commissioner for
South Africa, the continent’s largest insurance market recorded new investment premium of $19.6 billion in 2012 which is about 5 percent of its GDP of $393 billion, according to a March, 2013 insurance sector report by PWC.
The preponderance of general public don’t see the importance of Insurance business and the level of awareness is low said Emmanuel Okoh an Abuja based chartered stock broker in a telephone chat with BusinessDay.
“Government hasn’t made it compulsory for people to get their third party vehicle Insurance from legitimate companies as a lot of them prefer to get fake certificates from simulated insurance companies,
The introduction of Takaful based Insurance by NAICOM may assist in deepening Insurance
“The Islamic based Insurance will lead to economic expansion, national growth, spike market penetration level and also contribute to GDP,” he said.
There is huge upside potentials for Nigerian insurance companies in with a market of over 160 million people.
However that potential is grossly untapped. For instance the 13 insurance firms analysed had a combined market capitalisation of N90.3 billion (Jan 15). This is lower than the market capitalisation of one second-tier Nigerian lender (Diamond Bank), with a market capitalisation of N98.4 billion.
The Insurance Company with the highest market capitalisation in Nigeria is Mansard Insurance Plc, with a market capitalisation of N23.9 billion and a market price per share of 239k as at 15th January 2014.
The least capitalized are Equity, Sovereign, Regency, UnityKapital ,and Oasis Insurance with a market capitalisation of N4.42 billion,N3.43 billion,N3.33 billion,N6.93 billion, and N4.3 billion respectively; Their stock prices stood at 50k a piece.
“There are opportunities for the industry which include the micro and retail insurance products as well as intensifying enlightenment of the citizenry about insurance benefits,” said Chilekezie.
The industry is also getting more competitive, with a number of direct under writers having entered into the market in recent years.
Old mutual Fund Plc, a South Africa based insurance firm has finalised its investment in Oceanic Life Limited by acquiring the majority shareholding of the company.
Another South Africa financial services group, Sanlam, has entered into a joint venture with First Bank of Nigeria plc to form a new insurance firm, FBN Insurance Company Limited.
By: BALA AUGIE
