Swiss Re: Global Insurance Premium to Grow 10% Due to Positive Response to Claims, Public Exposure to Risks

Ebere Nwoji
Recent developments in Nigeria and other climes have pointed to significant growth in insurance premium generation towards the end of this year more than the pre CCOVID-19 era, a report by Swiss Re has revealed.

Swiss Re in the report predicted that the global insurance market premium will experience 10 per cent growth, driven by increased exposures, risk awareness and evolving client needs.

“These developments as have been observed come in the form of insurers being more sensitive to claims and people’ s frequent exposures to emerging risks that could cause devastating losses, “the report stated.

According to Swiss Re Institute, non-life insurance premiums are expected to be 10 per cent higher than pre-COVID levels by the end of this year.

According to the report, heightened risk trends will increase the need for insurance protection, but also require a greater focus on evaluating and modeling, and ensuring pricing is adequate for the risks taken.
“There is a clear recognition that claims’ frequency and severity is rising as demonstrated by recent natural catastrophes or cyber incidents, ”said Swiss Re’s CEO of reinsurance, Moses Ojeisekhoba.

“This means the need for protection is growing, and the industry has important work to do in offering insurance and closing the protection gap. Swiss Re’s extensive risk knowledge and very strong capital position allow us to support our clients in their growth ambitions, “he stated.

“Climate change poses the biggest long-term threat to the global economy. The world economy is set to lose up to 18 per cent of gross domestic product from climate change by 2050 if no mitigating actions are taken. While climate change is a real threat, it also poses the largest growth opportunity to the industry, as major investments will be necessary. To achieve the 2030 agenda for global sustainable development, investments in the order of $6.9 trillion a year will be required, “Swiss Re said.
In Nigeria, the emergence of these risks and insurers’ positive response to them has spelt high degree of trust from governments and individuals who before now were alien to insurance.

The development became more pronounced after Nigerian insurance operators settled claims from the EndSARS protest and the offer of N11 billion free insurance cover to frontline health workers during the COVID-19 lockdown.
Recently, the Director General, Nigeria Insurers Association, Mrs Yetunde Ilori revealed that insurers have so far paid a total of N5.4 billion claims from the damages caused by the hoodlums who high jacked the EndSARS protest.
Insurers told THISDAY that they learnt a big lesson from the protest and at the same time have used their claims experience from it to lure the public to believe in insurance.

This, they said, will lead to higher patronage and higher premium growth.
According to the Managing Director, Afriglobal Insurance Brokers, Mr Casmir Azubuike said insurers learnt from EndSARS protest, “we have been hearing about catastrophes and everybody believed that catastrophe can only come when you have wars, natural disasters like flood but little did anybody know that could come from that angle and it came and was very overwhelming to the industry.”

“If you look at that EndSARS protest critically, it could have been possible for the insurance industry to opt out of that risks or those losses but for image reasons, the industry decided to take them up because when you read the policy document, they will talk about riot, strike, civil commotion, war or war like situation, politically motivated risks.
“If you bring these together and link them to the EndSARS protests, you find links which could have been possible for insurance companies to say look, we are not liable or at best let us pay these claims on ex-Garcia basis. But because the industry is struggling to shore up our image, we paid, “he stated.

Commenting recently, the Lagos State Governor, Mr Babajide Sanyo Olu, said the behaviour of insurance operators towards claims from the protest was very encouraging and goes to show that insurance protection was real.
The governor, who stated this while addressing insurers at the recent Africa Insurance Organisation’s Conference in Lagos where he was represented by the state Commissioner for Finance, Mr Rabin Olowo, said because of this, the state has perfected plans to bring all its workforce under various group insurance coverage including Group Personal Accident Insurance Cover, Group Life Insurance.

“EndSARS experience was a test and we are grateful to insurers for taking responsibility and it proves that insurance is working. I encourage Nigerians to buy insurance, we are partnering with 150 brokers who will serve as intermediary to over 20 insurance companies to provide end to end risk management services for all classes of insurance in the state including group life, he said.”

He said given the positive response of the insurers to claims when risk occurs, his administration could not afford to shy away from the services of the insurance sector.

“This is why we have continued to partner with various insurance bodies and associations in the enlightenment of our people on the benefits of insurance and mitigating loses that might result from unforeseen occurrences, “he said.
On the other hand, the devastating effects of flood from different parts of the country is serving as warning to Nigerians in that more people now patronise insurance.

Well aware of this, the Vice President, Professor Yomi Osinbanjo, at the AIO conference, challenged the regional insurers to get prepared to handle risks emanating from climatic change.

“It was quite eye opening. While there will obviously be opportunities for new insurance products and solutions, especially in the property and casualty segment of the business, insurance companies must also be prepared for the systemic nature of climate induced damage, with the possibilities of market failures and more system-wide destabilisation.

“Here in Nigeria, the growing intensity of flooding and damage to vast agricultural acreages might have a knock-on effect on other areas of the economy. Further slumps in the economy is bad for everyone, even insurers”, he said.
According to him, for Africa, there is perhaps a more significant challenge, noting that in the past two years, the wealthier countries, after building their own economies on fossil fuels, are now banning or restricting public investments in fossil fuels, including gas.

Also outside the shore of Nigeria the story is the same, Swiss Re in its report forecasts that insurance market premium will experience growth that will be driven by increased exposures, risk awareness and evolving client needs.