Insurance sector struggles with adverse environment
Antagonistic working setting headlined by COVID-19 Pandemic and #EndSARS protest in 2020 has taken a large toll on the expansion fee of the Nigerian insurance coverage business.
However prime 16 insurers have managed to document optimistic figures of their 2020 monetary outcomes although considerably under earlier yr’s figures. The 16 corporations management over 80 % of your entire business.
The 16 corporations are AIICO Insurance coverage, Axa Mansard, Consolidated Hallmark, Cornerstone Insurance coverage, and Coronation Insurance coverage. Others are Linkage Assurance, Mutual Advantages Assurance, Nem Insurance coverage, Niger Insurance coverage, Status Assurance, Regency Alliance, Royal Alternate, Sovereign Belief, Sunu Assurance, Common Insurance coverage, and Veritas Kapital.
Monetary Vanguard perusal of the early studies submitted by the 16 insurance coverage corporations to the Nigerian Inventory Alternate exhibits a 27 per cent year-on yr, y/y, progress in profitability in 2020, down from 89 % in 2019.
The businesses’ mixed revenue after tax (PAT) rose to N26.5 billion in 2020 from N20.Eight billion in 2019 which exhibits 27 % progress, however the 2019 outcomes exhibits that revenue rose to N20.Eight billion from N11 billion recorded in 2018, a whopping progress fee of 89 %.
Equally, mixed gross premium written, GWP, grew to N255.1 billion in 2020 from N219.6 billion in 2019 indicating 16 % progress fee, however in 2019 GWP rose by 39.2 per cent, y/y, from N157.Eight billion in 2018.
In the meantime, on account of the destructive developments within the working setting the 16 corporations’ claims bills in 2020 rose by 16.5 per cent to N92.Eight billion from N79.Eight billion in 2019, whereas through the 2019 monetary yr claims fee fell by 4.1 per cent, y/y, from N83.22 billion in 2018.
Although the expansion charges in the important thing efficiency indices in 2020 was decrease when in comparison with that of 2019 business stakeholders are of the view that the efficiency is commendable given the anticipated destructive influence of the COVID-19 Pandemic and sharp enhance in claims within the aftermath of the EndSARS disaster.
Recall that the Nigeria Employers Consultative Affiliation, NECA, had estimated that the non-public sector misplaced over N5 trillion on account of the #EndSARS protest which resulted within the destruction of companies and properties throughout the nation.
The Nigerian Insurers Affiliation, NIA, had estimated that the insured losses might run into billions of naira which might negatively influence insurance coverage corporations’ liquidity, steadiness sheet and money stream.
Chairman of Nigerian Insurers Affiliation, NIA, Mr. Ganiyu Musa mentioned: “The event may have a big impact on the business. Claims from these damages may have a right away destructive influence on corporations’ liquidity, steadiness sheet and money stream however primarily, insurance coverage was constructed for instances as these and for this reason individuals take up insurance policies.”
However regardless of these hostile conditions a few of the corporations recorded gorgeous outcomes through the yr, however just a few others suffered large declines.
Common Insurance coverage recorded the very best progress in after tax revenue, with 1,592 per cent enhance to N1.1 billion in 2020 from N65.1 million in 2019.
Veritas Kapital was second with 280 per cent progress in after tax revenue to N468 million in 2020 from N123.Four million in 2019.
Within the third place is Coronation Insurance coverage with 254.Three per cent progress in after tax revenue to N759.Three million in 2020 from N214.Three million in 2019.
Nem Insurance coverage got here fourth with 70.Eight % progress in after tax revenue to N4.1 billion in 2020 from N2.Four billion in 2019.
Within the fifth place is Status Assurance with 50.5 per cent progress in after tax revenue to N649.7 million in 2020 from N431.Eight million in 2019.
Others are AXA Mansard with 48.Three % progress in after tax revenue to N4.Three billion in 2020 from N2.9 billion in 2019; Sovereign Belief, 48.Three per cent progress to N746.Three million from N503.Four million in 2019; and Sunu Assurances, 33.6 per cent progress to N301.zero million from N225.Three million in 2019
Additionally in after tax revenue Linkage Assurance recorded 26.7 per cent progress to N1.9 billion in 2020 from N1.5 billion in 2019; Mutual Advantages, 25 per cent to N4.5 billion from N3.6 billion in 2019; Regency Alliance, 8.Three per cent progress to N703.7 million from N649.6 million in 2019; Consolidated Hallmark, 7.Eight per cent to N647.1 million from N600.Three million in 2019; and AIICO Insurance coverage, 1.zero per cent progress to N5.Three billion from N5.2 billion in 2019.
Nevertheless, Cornerstone Insurance coverage recorded a 60.9 per cent decline in after tax revenue to N1.6 billion in 2020 from N4.1 billion in 2019.
However, Niger Insurance coverage which has been in loss place recorded annual lack of N575 million, although an enchancment from N1.7 billion loss recorded in 2019.
Evaluation of GPW
Veritas Kapital recorded the very best progress in GWP which rose by 110.Three per cent to N6.1 billion in 2020 from N2.9 billion in 2019.
Common Insurance coverage adopted with 78.9 % progress in GPW to N3.Four billion in 2020 from N1.9 billion in 2019.
Sunu Assurances got here third with 35.5 % enhance in GPW to N4.2 billion in 2020 from N3.1 billion in 2019.
Others are Cornerstone Insurance coverage with 34.Four per cent enhance in GPW to N17.6 billion in 2020 from N13.1 billion in 2019; Linkage Assurance, 27.7 per cent enhance to N8.Three billion from N6.5 billion in 2019; AIICO Insurance coverage, 24.1 per cent to N61.Three billion from N49.Four billion in 2019; Status Assurance, 19.2 per cent to N7.03 billion from N5.9 billion in 2019; Consolidated Hallmark 11.5 per cent to N9.7 billion from N8.7 billion in 2019; Nem Insurance coverage, 11.Three per cent to N22.03 billion from N19.Eight billion in 2019; Axa Mansard, 9.2 per cent to N47.6 billion from N43.6 billion in 2019; Royal Alternate, 8.5 per cent to N15.Four billion from N14.2 billion in 2019; Mutual Advantages, 8.02 per cent to N20.2 billion from N18.7 billion in 2019; Coronation Insurance coverage, 6.6 per cent to N16.2 billion from N15.2 billion in 2019; and Sovereign Belief, 1.Eight per cent to N11.1 billion from N10.9 billion in 2019.
Nevertheless, Niger Insurance coverage recorded a 42.Eight % decline in GPW to N1.03 billion in 2020 from N1.Eight billion in 2019, and Regency Alliance recorded 1.Eight per cent decline to N3.87 billion from N3.94 billion in 2019.
Veritas Kapital recorded the very best progress in claims fee which rose by 87.9 per cent to N907.2 million in 2020 from N482.Eight million in 2019.
Sunu Assurances adopted with 48.Four per cent enhance in claims fee to N1.zero billion from N673.Eight million in 2019 whereas Cornerstone Insurance coverage got here third with 38.03 per cent enhance in claims fee to N7.04 billion from N5.1 billion in 2019.
Within the fourth place is Regency Alliance with 35.Four per cent enhance in claims fee to N1.zero billion in 2020 from N738.Three million in 2019.
Mutual Advantages got here fifth with 32.2 per cent enhance in claims fee to N7.Eight billion from N5.9 billion in 2019.
Within the sixth place is AIICO Insurance coverage with 25.Three per cent enhance in claims fee to N31.2 billion from N24.9 billion in 2019.
Others are: Nem Insurance coverage with 20.5 per cent enhance in claims fee to N4.7 billion from N3.9 billion in 2019; Status Assurance, 14.Three per cent to N1.6 billion from N1.Four billion in 2019; Axa Mansard, 12.Three per cent to N20.9 billion from N18.6 billion in 2019; Consolidated Hallmark, 11.Eight per cent enhance to N3.Eight billion from N3.Four billion in 2019; Common Insurance coverage, 5.6 per to N428.7 million from N405.9 million in 2019; and Sovereign Belief with 3.6 per cent enhance in claims fee to N2.9 billion from N2.Eight billion in 2019.
Nevertheless, 4 corporations recorded decline in claims fee. They’re Niger Insurance coverage with a 33.Three per cent decline to N1.2 billion from N1.Eight billion in 2019; Royal Alternate, 19.5 per cent decline to N3.Three billion from N4.1 billion in 2019; Linkage Assurance, 18.Eight per cent decline to N1.Three billion in 2020 from N1.6 billion in 2020, whereas Coronation Insurance coverage recorded 8.Four per cent decline in claims fee to N3.7 billion in 2020 from N4.04 billion in 2019.
Insurance coverage executives who spoke to Monetary Vanguard, select to see optimistic narrative within the 2020 efficiency in opposition to the gloomy expectations, on the backdrop insured losses arising from the pandemic and the destruction that adopted the #EndSARS disaster.
However in addition they famous that the #EndSARS didn’t include commensurate injury on the insurance coverage in contrast with the financial injury attributable to low insurance coverage protection.
Commenting, Group Managing Director of Continental Reinsurance Plc, Dr. Femi Oyetunji, mentioned: “One of many issues that I’ve discovered most disheartening in Africa is that if there’s a catastrophe, there are enormous financial losses however few insured losses due to the low insurance coverage penetration.
“Sadly, the insurable loss from the #EndSARS protests is nothing in comparison with the financial loss and that once more is due to under-insurance or non-insurance. Folks don’t know the significance of insurance coverage. Insurance coverage performs an enormous position in restoring individuals again to the state they have been earlier than the loss occurred.”
Additionally talking to Monetary Vanguard, Managing Director, Sunu Assurances Nigeria Plc, Mr. Samuel Ogbodu mentioned that many victims of the #EndSARS protests didn’t insure their companies and those that insured didn’t prolong their insurance policies to cowl riot and strike.
Ogbodu mentioned: “Nigerians are very value delicate. In case you inform them about hearth and particular peril, and also you add riot and strike, a few of them will simply say, ‘I’m not .’ They simply wish to do the conventional hearth insurance coverage, which is the essential cowl. Beneath hearth insurance coverage, we’ve hearth and particular peril and we’ve hearth and extraneous peril. Riot and strike is extraneous peril which have to be paid for. Most individuals didn’t purchase that cowl.”
On his half, Managing Director/Chief Government Officer of Common Insurance coverage Plc, Mr. Ben Ujoatuonu, averred that whereas insurance coverage corporations pays for each insurance coverage cowl that extends to riot and commotion, they won’t pay for covers that exclude riots and commotion.
He mentioned: “It relies on the quilt the corporate or particular person has purchased. If the coverage excludes riot and civil commotion, then the insured won’t obtain any indemnity from his insurance coverage firm.”
On the best way ahead, operators suggested companies and people to be taught from the disaster that adopted the #EndSARS disaster and absolutely embrace insurance coverage to protect in opposition to losses from unexpected accidents.
In keeping with the Nationwide Insurance coverage Fee, NAICOM, whereas it might be essential for companies and people to undertake value discount measures in response to rising inflation and the cruel enterprise setting, they need to keep away from the tendency to increase such discount to insurance coverage.
Talking on this regard at a current digital summit, Commissioner for Insurance coverage, Mr. Sunday Thomas famous that this isn’t one of the best of time to scale back insurance coverage consumption, however the biting inflationary pressures.
Thomas famous that generally the achieve in lowering value could possibly be lower than what’s misplaced in the long term.
He mentioned: “As a result of there may be inflation and recession within the economic system, the tendency to scale back value is excessive. Regardless of the biting inflation within the nation, as individuals scale back the price of bills, this isn’t one of the best time to scale back insurance coverage.”
On his half, Oyetunji, CEO, Continental Reinsurance Plc, famous that threat is something that brings uncertainty into the achievement of aims, therefore enterprise homeowners should determine their dangers and one of the best measures to guard their companies in opposition to such dangers.”
Additionally talking, Chief Monetary Officer of Linkage Assurance Plc, Mr. Emmanuel Otitolaiye mentioned that the #EndSARS disaster was an eye fixed opener for a lot of people and companies on the necessity to have enough insurance coverage, as such, the insurance coverage business have to be prepared, sturdy and secure in order that as they take up extra dangers, there will likely be no drawback in paying the claims, when the time to settle claims arises.
He mentioned: “There’s a want for native insurance coverage corporations to develop capability within the side of buying and selling and know-how and make sure that the Nigerian insurance coverage business can stand at par with so many different insurance coverage corporations on the market on the planet. “We don’t want a prophet to inform us that many insurance coverage corporations are struggling to outlive.
When you think about the long run viability of a few of these corporations, many are grossly illiquid. Even when there’s a enterprise alternative, the proportion they’ll take will likely be so insignificant. In essence, the business have to be sturdy and secure in order that after they take up dangers, when the time to settle claims comes, there will likely be no drawback in paying the claims.”
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