AS the economy contends with declining revenue over falling oil prices and depreciation of the naira, which may affect premium income of insurance companies, the sector has the potential to grow volumes and enhance shareholder value, analysts have said.
This will require that insurance companies device means to take advantage of growth opportunities around it that would not only increase its penetration but enhance awareness and contribution to GDP.
Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, who spoke at the Insurance Sector Outlook for 2015 organised by the Chartered Insurance Institute of Nigeria (CIIN) said in the mist of challenges there are also opportunities
Insurance sector in the most populous black nation of Africa, Nigeria contributes barely o.65 percent to GDP and less than 1 percent in penetration, making it third largest in Africa with premium size of about N300 billion as at the end of 2014 financial year.
. Speaking on the topic “Economic Policies of Government Issues, Challenges, Prospects and Implications for Insurance Sector” said Young and growing population of approximately 170 million people present a huge growth opportunity , even at 2.6 per cent annual growth rate would have accommodated 4 million of the population.
“Stable economic growth projected at 6.2 percent is favourable for business growth and insurance as an important arm of the financial services market would benefit, says Rewane.
He also emphasized on opportunities in the country’s technological advancement, where mobile telecommunication phone ownership currently stands at 84.9 percent in urban areas and 55.6 per cent in rural areas.
“Sale of life insurance using mobile phone network to 126million active lines would definitely boost insurance penetration, Rewane stated.
Bola Temewo, president, Chartered Insurance Institute of Nigeria said the Institute has provided this platform annually to empower industry operators with the required knowledge on economic fundamentals to guide their business decision during the year and going forward.
There is no doubt that businesses are facing hard times, so the relevance of this forum at the beginning of every financial year cannot be over emphasized, particularly as the economic faces difficult times as result of dwindling oil prices, falling government revenue and depreciating value of the naira, Temewo stated.
According to Business Monitor International the Nigerian insurance market remains at an embryonic stage of development with the combined assets of the country’s insurers comprising only a tiny percentage of GDP and total premiums lagging behind more developed markets such as South Africa.
