Oil, gas sector drives surge in non-life insurance, contributes over 40% – Expert
Nigeria’s oil and gas sector played a pivotal role in driving the growth of the country’s non-life insurance market, contributing approximately N132.06 billion in gross premiums during the first quarter of 2024.
This figure represents 40.4 per cent of the total premiums paid in the non-life insurance segment, according to the Securities and Exchange Commission’s (SEC) bulletin on insurance market performance for the period.
The report highlights that the non-life insurance segment dominated the industry, generating a total of N326.9 billion in gross premiums, which accounted for 69.5 per cent of the overall premium pool.
In comparison, the life insurance segment contributed 30.5 per cent of the total premiums, with gross written premiums amounting to N143.8 billion.
Industry expert, Dr. Tunde Ajayi, a financial analyst with extensive experience in the insurance sector, remarked on the significance of the oil and gas sector’s contribution.
“The substantial share of premiums from the oil and gas sector underscores its critical role in bolstering the non-life insurance market. This sector’s performance not only reflects its inherent risks but also the increasing awareness and need for robust risk management solutions among industry players,” Dr. Ajayi stated.
The SEC report further elaborated on the composition of non-life insurance premiums, noting that fire insurance accounted for 19.1 per cent, while motor insurance made up 14.9 per cent of the segment.
Other significant contributors included marine and aviation insurance at 10.0 per cent, general accident insurance at 9.7 per cent, and miscellaneous insurance at 5.9 per cent.
The first quarter of 2024 also saw an impressive year-on-year growth in gross premium income, reaching N470.7 billion, a 51.1 per cent increase compared to the same period in 2023. This growth rate starkly contrasts with Nigeria’s real Gross Domestic Product (GDP) growth, which was recorded at 2.98 per cent during the same timeframe.
In the life insurance sector, the Group Life segment led with 38.1 per cent of the total premiums, while the individual life business accounted for 33.1 per cent.
The annuity business, representing 28.9 per cent of the life insurance gross premiums, experienced significant growth, driven by rising customer interest and confidence in the sector.
This growth has been bolstered by strong regulatory measures aimed at enhancing the stability and attractiveness of the insurance industry.
The report also shed light on the industry’s premium retention rates, with the overall retention rate averaging 54.2 per cent. The life insurance segment achieved a higher retention rate of 79.9 per cent, while the non-life sector recorded a retention ratio of 42.9 per cent.
In terms of assets, the total value of Nigeria’s insurance industry grew by 36.9 per cent in the first quarter of 2024, rising from N2.4 trillion in the first quarter of 2023 to N3.3 trillion.
Non-life businesses accounted for N1.94 trillion of these assets, while the life insurance sector held approximately N1.39 trillion.
Dr. Ajayi emphasized the significance of these figures, stating, “The growth in assets and premiums within the insurance sector reflects a positive trajectory for the industry. However, it also calls for continuous vigilance and adaptive strategies to manage the associated risks effectively.”
