Sunday Ojeme Nigeria’s substantial oil and gas reserves, its young and growing population and its position as Africa’s largest economy continue to point to significant development potential for its insurance sector, AM Best has said.
In a new Best’s Market Segment Report, “Nigeria’s Insurance Market Offers Significant Potential Despite Headwinds”, AM Best notes that, due to the COVID-19-driven economic slowdown, the insurance market regulator, National Insurance Commission [NAICOM]), has agreed to further delay its revised plans to strengthen market capitalization and limit the volume of premium flowing out of the country, adding that insurance penetration – market gross written premium (GWP) as a percentage of gross domestic product (GDP) – is extremely low, further highlighting the market’s long-term growth opportunities.
Am Best said Nigeria’s failure to deliver on that potential historically had been due in part to the volatility of real GDP growth in the country, coupled with the sporadic enforcement of mandatory retail insurance lines. According to the rating agency, robust and timely market statistics that will support insurers’ knowledge and understanding of trends are scarce, adding that while the official statistics published by NAICOM cover financial information up to the year-ending December 2018, for this report, AM Best also made use of year-end financial information from the 15 largest insurers (who account for approximately four fifths of the market’s GWP).