Nigeria’s insurance industry has witnessed an upward growth trajectory as the second largest sector in the financial services broad sector after the banking industry with a Gross Premium Income of 389.2 billion naira in 2017, from 75 billion naira in 2005. The total assets of the insurance industry is estimated at 1.1 trillion naira while its investment portfolio is 848.6 billion naira as at December 2017, according to a report by Agusto and Co.
Insurance penetration in Nigeria is 0.5 percent which is among the lowest in Africa when compared with South Africa at 17 percent, Namibia 6.7 percent, Kenya 2.8 percent, Mozambique 1.62 percent, Togo 2 percent, Senegal 1.5 percent and Ghana 1.1 percent. Also Nigeria’s insurance sector’s insurance density at $6.2 which is a measure of the industry’s Gross Premium Income per capita is among the lowest in Africa in comparison to regional peers; South Africa $762.5, Egypt $22.8, Kenya $40.5, Angola $30.5.
Despite it’s low penetration rate it has recorded an average growth rate of -10percent from 2014-2017 with penetration rate increasing by 13 percent, between 2016-2017 from 0.47 percent to 0.53 percent.
The National Insurance Commission which is the regulator of Nigeria’s Insurance industry introduced the Microinsurance framework in 2013 to deepen insurance penetration and drive market growth by expanding insurance coverage to those at the bottom of the pyramid who are non consumers of insurance products. Its guideline was reviewed in 2018 which set the minimum capital base for all categories
- Unit Micro Insurer: 40 million naira (General: 25 million naira. Life: 15 million naira)
- State Micro Insurer: 100 million naira (General:60 million naira. Life: 40 million naira)
- National Micro Insurer: 600 million naira (General: 400 million naira. Life: 200 million naira)
Due to the growth in the number of internet users in Nigeria by 27 percent from 72.4 million in 2017 to 92.3 million in 2018, with an all time high of 113.3 million expected in 2019, and social media users by 6 percent from 27.6 million users in 2017 to 29.3 million in 2018 and 30.9 million estimated for 2019, various players in the sector have leveraged this to deepen insurance penetration through various social media channels. Insurance brands are using this medium to drive sales and marketing of their various products. Advances in technology have seen insurance operators adopt RFID technologies for data analytics in order to settle premium claims and also next generation point of sale payment solutions that utilizes Near Field Communication, QR Codes, USSD to receive payments.
The enforcement of compulsory motor vehicle insurance has seen an increase in revenue for the retail insurance market when the Market Development and Restructuring Initiative was launched in 2009 to enforce compulsory insurance compliance for Motor Insurance and eradication of fake motor insurance policies procured from unregistered insurers. Motor Insurance is the third highest contributor with 11percent in 2016(37 billion naira) and 9 percent in 2017(34 billion naira) to the insurance industry’s GPI behind Life Assurance and Oil and Gas Insurance. Operators are beginning to deepen penetration through retail channels with a focus on the bottom of the pyramid and middle class through the introduction of retail/micro insurance products which are sold at affordable rates. With growth in population and increase in rural urban migration, there are boundless opportunities for insurance companies to record high growth rates.
In order to deepen insurance penetration and harness the opportunities available in the retail segment, industry players are utilizing agency models, strategic partnerships, market blasts and religious organizations while developing innovative products as well as upgrading existing ones. Some of the products include SME Insurance, Travel Insurance, Gadget Insurance, Personal Savings Plan, Education Savings Plan, etc.
The broker (wholesale) market is the largest distribution channel in the insurance industry with majority of GPI. According to Nigerian Council of Registered Insurance Brokers, brokers control about 85 percent of the market in 2017.
Coverdor, a Nigerian Insure-tech startup has launched Brokerly, Africa’s first software as a service platform which plugs directly into the existing website of any insurance broker extending its web features with online policy quote and comparison, billing and secured online payment, intuitive self onboarding, policy binding features, lives support through in app messaging, claims reporting and tracking, user account dashboard which contains self serving policy administration tools and a back office broker operations management system that enables the broker manage all operations, using a 100 percent paperless approach where all transactions are backed in the cloud. It will enable insurance brokers to compete on all fronts of digital distribution, business process improvement and customer service while delivering intuitive digital user experiences that resonate with modern customers.
Brokerly will be delivered to Insurance Brokers through a Consultancy As A Service approach with its team of business analysts and project managers available to understand the requirements of any broker and personalize its technology to their needs.
Brokerly will redesign the wholesale (brokerage) industry as it upgrades the capabilities of insurance brokers to operate as digital insurance brokers enabling them deepen insurance penetration through product innovation for the market.