Insurers Optimistic of Better Performance in 2022

As businesses step into the beginning of first half of 2022, Ebere Nwoji reports that developments in insurance sector point to the fact that the coast is bright enough to enable the insurance sector surpass performance in corresponding period of last year.

Insurance sector was one of the few sectors that marched into the year 2022 with high sense of optimism and expectations   despite the fears of the effect of new variants of COVID-19, known as Omicron and Delta variants, which left many sectors with fear and doubts at the onset of the year.

Indeed, the sector operators were optimistic that there was going to be accelerated economic recovery and additional digital technology investments, which would generate significant growth for the insurance sector in 2022.

In fact, the industry was so optimistic about the year that global reinsurance giant, Swiss Re in its sigma report projected that global insurance premiums would exceed $7 trillion for the first time by mid-2022.

We are now into the first half of the year and Global Insurance Index report said insurance premium pricing has been on increase with exception of cyber risk, signaling that by the end of the first half of the year, the sector may achieve the projected $7trillion premium.

Though figures on first half performance of the sector are yet to be released, the Global Insurance index report, said Global commercial insurance prices rose by 11 percent in the first quarter of 2022 marking the fifth consecutive reduction in rate increase since global pricing increases peaked at 22 percent in the fourth quarter of 2020.

The report said this was however, the eighteenth consecutive quarter that composite prices rose, continuing the longest run of increases since the inception of the Marsh Global Insurance Market Index in 2012.

“”In the first quarter of 2022, slower rates of increase in financial and professional lines led to moderated rates in most geographies, but financial and professional lines continue to outpace property and casualty lines driven primarily by cyber pricing with rate increases averaging 26 percent compared to 7 percent and 4 percent respectively” the report stated.

 It said Cyber insurance pricing continues to show significant rate increases to 110 per cent in the US and 102 percent in the UK for the quarter.

The report gave key highlights of region by region composite price increase within this first half of the year saying United States witnessed 12 percent increase, UK 20 percent, Continental Europe 6 percent, Latin America and Caribbean 6 per cent, Asia 3 per cent, pacific 10 percent.

In Nigeria, operators late in 2021 muted the idea of raising premium prices especially motor insurance premium rate  and set up a committee that wil fix the new price but at present not much has been said about it as the operators are still struggling to ensure that Nigerians appreciate and value  the place of insurance in their daily living.

Report by National Bureau-of statistics said insurance 

In some parts of the north recent report said as insurers were contemplating increasing their prices of motor insurance, group of commercial motor operators have insisted on buying from touts as a way of reducing cost of operations.

In the key sectors like aviation and oil and gas insurance, insurance buyers lament that Nigeria’s premium remained very high.

Although aviation insurance buyers especially airline operators have been complaining bitterly about Nigerian insurers’ high aviation premium rate, insurers have insisted that aviation risk exposures in Nigeria was very high compared to other countries.

They have therefore maintained their stand on the prevailing premium rate within the period.

But in overall, operators said the first half of the year was good business wise.

According to the Managing Director, Afriglobal Insurance Brokers, Casmir Azubuike, one of the factors that propelled the industry within the period was the outcome of the #endSARS protest and positive attitude of insurers towards the emanating claims.

He said the development proved to Nigerians that insurance risk and claims is real and that Nigerian insurers can pay claims.

He said the event of the protest inspired people to make provision for the rainy day.

On the side of insurers, the beginning of this first half of the year witnessed more state government collaborating with the insurers to make their indigenes accept insurance as well as the regulator spreading its tentacles in search of how to deepen insurance penetration.

For instance, within the period, NAICOM licensed web aggregators to push insurance to Nigerians in different parts of the country.

Web aggregators are companies registered under the companies act which maintains or owns a website and provides information on insurance products of different insurers.

The commission said it has received applications from a good number of would be aggregators and is currently looking into them.

The commissioner for insurance last month took insurance crusade to Kastina State where he appraised the state governor Aminu Bello Masari on the activities of the commission and benefits in insurance .

He, at the same time sought his support in enforcement of compulsory insurances in his state.

As projected by the global insurers, a major achievement recorded by Nigerian insurers within the first half of this year was huge investment in technology. The insurance industry according to National Bureau of statistics grew by 15.68 percent 

Nigeria insurance operators made a debut in technology investment this year to drive the market.

The technological investment started with the regulator the National Insurance Commission (NAICOM), which recently partnered   the Financial Sector Deeping Africa (FSD) to launch the Risk, Resilience and Regulatory Laboratory (R3Lab) in Lagos.

Speaking on technological investments made by the commission so far at the maiden edition of the insurance parley, Head IT Department, National Insurance Commission (NAICOM), Mr. Abiodun Aribike, disclosed that the insurance regulator; NAICOM was using Information Technology to drive sustainable insurance in Nigeria.

Aribike stated that the Commission in partnership with the Financial Sector Deeping Africa (FSD) recently launched the Risk, Resilience and Regulatory Laboratory (R3Lab) in Lagos to ensure achievement of its purpose.

He added that the initiative was aimed at mitigating the impact of specific challenges bedeviling the insurance regulatory environment in Nigeria as well as exploring ways in which collaboration, technology and insurance supervisory capacity building could improve the regulatory effectiveness of Africa’s insurance industry.

Also last month, the commission officially launched and commissioned a portal.  

According to the commissioner for insurance Mr. Olorundare Sunday Thomas, the portal was one of the initiatives of the Commission being pursued to deepen the insurance market and increase the penetration to the level that is consistent with the nations economy.

Thomas, during the period under review flagged off Nigerian insurance industry’s flag across Africa and beyond by inaugurating a committee on AFCFTA charged with the responsibility of liaising with relevant agencies of government and other bodies on the implementation of the AfCFTA agreement in the Nigerian insurance industry. 

The purpose is to ensure that insurance sector operators benefit maximally from the regional trading initiative.

According to the insurance commissioner, the committee is also charged with the responsibility of developing and ensuring implementation of measures to ensure that the industry effectively exploits the benefits of AfCFTA.

Engage and/or liaise with relevant bodies and agencies such as the National Action Committee on AfCFTA, Nigerian Office for Trade Negotiations on implementation of the AfCFTA Agreement and any such body.

He further said the committee was to coordinate bilateral negotiations with any interested state party regarding the Nigerian insurance sector.

The National Bureau of Statistics (NBS) in its first quarter report on the performance of insurance and finance sector said the sector witnessed a growth of 23.24 percent higher by 23.70 percent points from the rate recorded in the 2021 first quarter and down by 0.90 percent points from the rate recorded in the preceding quarter.

According to the report, the quarter-on-quarter growth in real terms stood at 5.01 percent.

It further said during the period under review, the contribution of Finance and Insurance to real GDP totaled 4.51 percent higher than the contribution of 3.77 percent recorded in the first quarter of 2021 by 0.74 percent points, and higher than 3.66 percent recorded in Q4 2021 by 0.84 percent.

“In nominal terms, however, the sector’s contribution to the overall nominal GDP was 3.80 percent in Q1 2022, higher than the 3.25percent it represented the previous year, and higher than the contribution of 3.10 percent it made in the preceding quarter.

“The Finance and Insurance Sector consists of the two subsectors, Financial Institutions and Insurance, which accounted for 89.12 percent and 10.88percent of the sector respectively in real terms in Q1 2022.

As a whole, the sector grew at 32.29 percent in nominal terms (year-on-year), with the growth rate of Financial Institutions at 34.65 percent and 15.68 growth rate recorded for Insurance.

The overall rate was higher than that of Q1 2021 by 30.14 percent points and higher by 7.36 percent points than the preceding quarter. Quarter-on-Quarter growth was 12.74 percent.

Operators said with a good number of strategies adopted by the regulator during the first half of the year to make Nigerians embrace insurance, and drive insurance marketing through technological investments, insurance sector stands better chance of doubling N630 billion premium it made last year in the current year when both Nigeria insurers Association and National Insurance Commission  (NAICOM) release their financial statements.