Despite the challenging business environment exacerbated by high inflationary pressure and the Russia-Ukraine conflict affecting global supply chain, the Nigerian insurance sector remains upbeat in the first half of 2022.
Market analysts said returns of major players in the industry have beaten expectations in the review period largely due to increased confidence of consumers and the adoption of technology.
The development, according to them, is impacting market penetration, product distribution that has also been supported by the entrance of fintech and insurtechs into the sector.
Olumide Ibidapo, managing director/CEO of FBN Insurance Brokers Limited, while reviewing the performance of the industry, said in spite of the global and national economic headwinds, the insurance sector in Nigeria performed considerably well in H1 2022.
He said the performance was influenced by the increased confidence of the public in insurance and the positioning of the industry by major stakeholders including the National Insurance Commission to take advantage of the increasing rate of technology penetration in Nigeria.
According to the National Bureau of Statistics, the insurance and finance sector witnessed a growth of 23.24 percent in the first quarter of 2022, higher by 23.70 percentage points compared to Q1 2021 and down by 0.90 percent points from the rate recorded in the previous quarter. In real terms, there was a quarter-on-quarter growth of 5.01 percent.
In Q1 2022, the contribution of finance and insurance to real GDP was 4.51 percent, up from the 3.77 percent recorded in Q1 2021 and the 3.66 percent recorded in Q4 2021.
Ibidapo said the performance showed that the insurance sector is on course to achieve its 2022 projections, despite the relatively low penetration rate and other challenges.
He, however, lamented that the inflationary pressure was impacting greatly on claims payments profile of many underwriters due to increasing costs of items required to make good reported losses.
“Equally, the business environment is witnessing a daily rise in operational cost, most especially energy-related costs/consumables, which could erode whatever gains made by the industry,” he added.
Ibidapo said with the advent and subsequent growth of fintechs in the financial sector, many players in the space were leveraging technology to drive their business.
He said: “At FBN Insurance Brokers, we have created a digital roadmap that would see us realise our goal of completely automating our business processes while leveraging on the best technology available.
“On the customer front, we intend to use a data-driven approach to better understand their needs, preferences and possible challenges. Doing this will help us in proffering the right insurance solutions while also providing very useful insights to our underwriting partners for product development.”
Daniel Braie, managing director/CEO of Linkage Assurance Plc, said his company was able to beat its target in the first half as it continues to meet customer expectations in terms of claims and service delivery.
He told shareholders during the company’s last annual general meeting in Lagos that the company was moving in a positive direction as shown in its quarter-by-quarter performance.
He said the management was working to ensure that its underwriting and risk management strategies were adequately deployed to ensure a healthy and stronger bottom line at the end of the year.