Pan-African credit rating agency and business information provider, Agusto & Co. Limited, has predicted that the insurance industry will survive the weak macro economy and continue its steady growth in 2023.
the rating agency which stated this in its 2023 insurance industry report, stressed that it expects a modest performance by the Industry in FY 2023, supported by the rising yield environment.
According to Agusto & Co, “Initiatives such as the bancassurance model, which would enable insurance operators to partner with the banking industry to deepen their reach in the retail market will also bolster the Industry in our view. The rate hikes for third-party motor insurance and the bullish growth track for micro insurance, takaful insurance and some new entrants in the conventional insurance landscape are also growth drivers for the Industry. Furthermore, the intensified marketing campaigns, awareness programmes and adoption of digital channels would continue to support penetration, albeit strong broker relationships would remain vital in bolstering performance. The political terrain would also shift in the year 2023 and the operators’ ability to respond promptly to these changes would be a key factor for the Industry’s performance in the near term.”
It pointed that the non-conventional takaful insurance segment which is an under-tapped area is already witnessing significant growth as evidenced by the marked 172 per cent growth in gross premium income (GPI) in FY 2021.
“We anticipate that the segment would continue on its upward trajectory in the near term. Takaful insurers offer alternatives to conventional insurance and their model is based on the concept of social solidarity, cooperation and mutual indemnification of losses of members. Agusto & Cobelieves that these alternative insurers would continue to leverage the large Muslim population in Nigeria estimated at over 100 million to grow the segment. Albeit, the relatively low awareness of these alternative products remains a challenge to be surmounted. Micro insurance is also poised for growth given the dwindling consumer purchasing power, large informal sector and relatively high poverty rate in the country.
In the near term, Agusto & Co. expects the introduction of a risk-based capital regime to gain momentum while NAICOM continues to implement policies and directives that would boost the Industry’s sustainability. A strong regulatory stance to claims payments, which resulted in the withdrawal of the license of some insurers in 2022, though being contested in the court of law, would remain in 2023 and possibly going forward as part of NAICOM’s efforts to sanitise the Industry, “it stated.
continue to leverage the large Muslim population in Nigeria estimated at over 100 million to grow the segment. Albeit, the relatively low awareness of these alternative products remains a challenge to be surmounted. Microinsurance is also poised for growth given the dwindling consumer purchasing power, large informal sector and relatively high poverty rate in the country.