Ebere Nwoji and James Emejo
The National Insurance Commission (NAICOM), has said that the prevailing foreign exchange crisis and inflationary trend have negatively impacted on insurance sector with life insurance segment being the worst hit.
NAICOM however said the insurance sector had in the past eight years witnessed 15 per cent annual growth from N282.9billion in 2015 to N726billion in 2022.
Commissioner for Insurance and Chief Executive Officer of NAICOM, Mr. Sunday Olorundare Thomas, disclosed these at the 2023 retreat for Insurance Journalists held in Uyo, Akwa Ibom State.
While explaining how the aforementioned negative economic factors affected insurance business, he said the current level of exchange rate and inflation makes assets replacement an issue.
This, he stated, is because with inflation and high exchange rate of dollar to Naira, insurance assets that were foreign exchange dependent would be affected as people would not be ready to revalue their assets as such in replacing a damaged property, “insurance firms would be under no obligation to pay anything more than the cost of the property and the sum assured.”
This according to him discourages people from insuring.
Under the present circumstance, Thomas said those who were wise, needed to adjust the value of their assets in order to derive maximum benefits, “because when the value was increased, it means more premium would be paid for claims payment to be higher when the unforeseen occurs.”
According to him: “When we have this less level of exchange rate, assets replacement becomes an issue, and when you get to the position where assets that were acquired at a particular amount, especially assets that are foreign exchange dependent, people are not quick to revalue their assets.”
Delivering a paper at the seminar titled: “The Insurance Sector and the Nigerian economy: Impact, Challenges and the New Frontiers,” Assistant Director, Corporate Strategy, NAICOM, Dr Usman Jankara said insurance sector performance could be measured in terms of assets, claims ratio, capitalisation and retention ratio.
He said the Nigerian insurance sector’s Gross premium has experienced significant growth in the past eight years, from N282.9 billion in 2015, to N726 billion in 2022, showing 15 per cent growth.
He said total assets of the industry within the same period grew from N917.3 billion in 2015 to over N2.382 trillion in 2022 showing 60.5 percent growth.
