Insurance professionals have identified growth opportunities in the Nigerian insurance market and how the sector could impact on the overall economy if these opportunities are unlocked.
Going by predictions from notable international rating agencies and experts, Nigeria’s insurance industry is set to grow utilising expanding ICT deployment, population density and massive use of telecommunication facilities to sell insurance products.
KPMG in its recent analysis on “The African Insurance Market at a Glance” observed that many markets in the Sub-Sahara Africa including Nigeria are experiencing a step forward in terms of the sophistication of the insurance market.
KPMG sees active regulatory agenda and reform which the National Insurance Commission (NAICOM) has consistently pursued.
Experts see positive collaboration between regulators to show best practice and agree common framework for future reform.
This is exemplified with the recent endorsement of a Memorandum of Understanding (MoU) between NAICOM and the National Association of Insurance Commissioners (NAIC) of the United States for the purpose of maintaining efficient, safe, fair and stable insurance markets in Nigeria and the United States.
Both NAICOM and NAIC believe such cooperation will enable them effectively regulate the industry and entrench international best practices.
Under the agreement, the authorities will provide mutual assistance periodically through training, participation in internships with specific educational focus, educational seminars, provision of training manuals/materials and any other issues of common interest.
Similarly, Trust Re a closed joint stock company registered in the Kingdom of Bahrain sees opportunities in Nigeria in terms of growth in Gross Domestic Product (GDP), middle class and disposable income.
The firm also sees increased opportunities for distribution and product innovation supported by mobile communication boom.
Corroborating those positions, an economic expert Mr Bismarck Rewane, Chief executive officer Financial Derivatives Company Ltd ) said in the midst of seeming challenges facing the insurance industry, there are also opportunities.
Rewane who spoke at an insurance seminar organised by the Chartered Insurance Institute of Nigeria (CIIN) in Lagos however said this would require insurance companies to device means of taking advantage of growth opportunities around it that would not only increase its penetration but enhance awareness and contribution to GDP.
Insurance sector in Nigeria currently contributes barely 0.65 per cent to GDP and less than 1 per cent in penetration, making it third largest in Africa with premium size of about N300 billion as at the end of 2014 financial year.
Rewane, who spoke on the topic: “Economic Policies of Government Issues, Challenges, Prospects and Implications for Insurance Sector” said a young and growing population of approximately 170 million people like Nigeria presents a huge growth opportunity, adding that even at 2.6 per cent annual growth rate, it would have accommodated 4 million of the population.
“Stable economic growth projected at 6.2 per cent is favourable for business growth and insurance as an important arm of the financial services market would benefit”, he stated.
He also emphasised on opportunities in the country’s technological advancement, where mobile telecommunication phone ownership currently stands at 84.9 per cent in urban areas and 55.6 per cent in rural areas.
“Sale of life insurance using mobile phone network to 126million active lines would definitely boost insurance penetration, Rewane stated.
Also another insurance expert, Bola Temowo said there is no doubt that businesses are facing hard times but there are opportunities for the industry to grow.
According to him, the economy faces difficult times as a result of dwindling oil prices, falling government revenue and depreciating value of the naira which in turn has affected the industry negatively.