Nigeria Insurance Report 2014 - New Study Released

From: Fast Market Research, Inc.
Published: Wed Dec 04 2013

As of late 2013, it is clear that some of the objectives of the Market Development & Restructuring Initiative of NAICOM, Nigeria's insurance regulator, were overly ambitious. Nevertheless, positive changes are underway, and should benefit the country's leading insurers. The coming year or so will show whether the MDRI actually produces a meaningful rise in non-life penetration, as it should.

When NAICOM, the insurance regulator of Nigeria, launched its Market Development & Restructuring Initiative (MDRI), the ambitious objectives were due to have been achieved by the end of 2012. A year later, successes are hard to identify and to quantify. In terms of premiums written, we think that the entire insurance sector is only about one third of the size envisaged by the architects of the MDRI. It is not at all clear that Nigerians have confidence in insurance companies. How many Nigerians actually use insurance is not clear: however the figure is far nearer the 6% of 2008 than the 30% hoped for.

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Nevertheless, and as was the case last year, the overall tenor of this report is positive. Real progress has been made towards the objectives of the MDRI. Nigeria's leading insurance companies may be (very) small organisations by most standards, and lacking in pricing power. However, they have demonstrated the ability to survive in the face of enormous challenges. Several of them enjoy the backing of multi-lateral institutions such as the International Finance Corporation (IFC - the private sector arm of the World Bank). A number are in partnership with multi-nationals from South Africa, many of whom are looking to expand their businesses in the rest of Sub-Saharan Africa (SSA).

In fact, 2014 could well be the year which shows whether Nigeria's insurance sector really is moving towards the transformation hoped for by the architect of the MDRI and some other protagonists. In this report we explain the various developments that have been underway in the insurance sector and in the broader economy. Crucially, though, we identify the factors to look for in 2014 that will show where Nigeria's insurance sector is headed.

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