The Challenge before Nigerian Insurance Companies
The Lagos state government estimates that N1 trillion naira ($2.6 billion) would be needed to rebuild Lagos after the recent unfortunate paralysis where many properties were touched. Our top leading insurance companies, including Leadway and Axa Mansard, do not have that kind of money, assuming that the properties were appropriately insured.
From the emerging reports, Lagos state alone requires a whopping sum of N1 trillion to resuscitate the vandalized infrastructures. The concern expressed by many stakeholders is the total costs accruable if all the vandalized infrastructures were fully insured – as the resultant claims could swallow up the insurance industry.
I estimate that the whole industry cannot muster a claim capacity of up to N1 trillion. Largely, if our markets are efficient, the stocks of the insurance firms would have touched new lows. Yet, the issue is not touching new lows but some going bankrupt on the weight of the expected claims.
What do you think will happen in this sector in Nigeria?
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