Africa is progressively gearing itself towards a brighter future and a growing insurance industry aids in the development and growth of the economy. It encourages savings and investment, job creation and growth in capital markets and financial assets. Africa has exhibited growth in life premiums of 12.8% and non- life premium of 2.1% in 2013. 1 Over the past decade the Nigerian insurance industry has grown steadily and this can be shown in the total premiums which have gone from about N75 billion in 2005 to over N300 billion currently.
Foreign investors have shown a great interest in the Nigerian insurance sector through entry into the market. These include Sanlam and Old Mutual from South Africa and AXA from France acquiring a $246 million stake in Mansard Insurance. Progressivity can be seen in the introduction of new insurance products in the growing mortgage and housing sector.
Even though Nigeria has shown positive signs of development in this industry there is still room for more growth when compared to other emerging markets. There are challenges faced by the Nigerian insurance industry which include low penetration levels, for lack of consumer trust, low implementation of compulsory insurance and a lack of professionals that are adequately skilled in this space.
These challenges, however, can be overcome if the insurance industry in Nigeria adopts some of the ideas and methods from the banking sector in Nigeria which has grown significantly over the past ten years whereby the total banking assets are now over US$150 billion.
NAICOM’s transformation agenda for the next 3 years envisages growth in the written premiums from N300 billion currently to N1 trillion in the next 3 years. Job creation in the insurance Industry, enforcement of compulsory insurance and building of consumer trust and public awareness are part of the commission’s plans to achieve its transformation agenda.
The transformation agenda supports the Central Board of Nigeria’s financial system strategy 2020. The sector is aspiring to get to employ 100 000 people in the insurance industry from the 30 000 people currently. Growth in the number of people holding an insurance policy is also included in the agenda. Presently, Nigeria has 3 million policyholders out of a population of 174 million people.
This means that there is a lot more potential to increase the number of policyholders to 10 million in the next 3 years. Selling insurance policies can be done through mobile phones due to the high penetration of mobile phone of over 70%. This allows for the insurance industry to tap into the informal sector in order to increase the number of policyholders.2