2019 Nigeria Insurance Industry Report

2019 Nigeria Insurance Industry report

…From the Lagoon to the Blue Ocean


Nigeria’s insurance industry has not shared in the growth experienced by other Nigerian financial services, notably banks, pension funds and mutual funds. In fact, it has hardly grown in real terms over 10 years. This is according to a report from one of the leading research houses in Nigeria – Coronation Research (a part of Coronation Merchant Bank).

Without scale the industry suffers from poor returns on equity. Yet its smallness is also its opportunity. If it were to grow to the level reached by countries with similar GDP per capita, it might grow by a factor of 10 times in real terms in eight-to-10 years. The technological infrastructure and data necessary for expansion are largely available.

Recently, the National Insurance Commission (NAICOM) announced the introduction of new capital requirements, due in June 2020 for the sector. We believe these will reduce the current 59 companies to around 25. There are close parallels with the banking reform of 2004. The banking industry grew rapidly after that, so the question is how the insurance industry can grow after 2020. In the meantime, there will be capital raising and M&A.

According to Guy, Czartoryski; Head, Coronation Research, “to position the sector for radical growth, one must consider the lessons learned in Asian markets, and also in West Africa which shows how insurance can be rolled out to tens of millions of customers. Cooperation between regulators is critical, as are distribution partnerships with banks and telecom companies. Fresh capital is necessary for development, but a fresh strategic approach is required to reach the industry’s potential.  

Nigeria’s insurance sector presents perhaps the most remarkable investment case of any industry in Nigeria.  At one level the business case is very simple. Insurance penetration, at 0.31%, is extremely low, even...

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