Developments in the Insurance Sector in Nigeria

By Babajide Oniwinde - Regulatory Expert

April 2013

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Presentation Outline
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Introduction Developments in the Insurance Sector Performance of Insurance Companies

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Conclusion
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Introduction
Several initiatives embarked upon by NAICOM . has been enhancing the regulatory framework and ensuring that the insurance market is deepened and the operators are strengthened.
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The Insurance sector has witnessed improvements in capacity to carry huge risk(e.g. Oil& Gas/ Aviation), there has also been improved competition in the market in the year 2012
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Developments in the Insurance Sector Divestment of Certain Insurance Companies from their Bank Parent 13 Companies were affected Insurance Companies by the Banking divestment affected by Divestment rules. guideline
1. FBN Life 8. UBA Metro 9. Mansard (GTB) 10. Oceanic Insurance
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6 are divested MBO.

by sale or

2. Zenith Insurance 3. ADIC (Diamond) 4. Great Nigeria (Wema)

11UnityKapital 12. Keystone 13. Law Union and Rock (Skye)

3 are retained under Holdco

5. Wapic 6. . Union Assurance 7. Fin Insurance

4 are still being finalized ahead of CBN deadline.

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Developments in the Insurance Sector ./2 Industry Structure

576 Insurance Brokers.

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2250 Insurance Agents

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59 Insurance Companies

Life Insurance Companies ( N2b minimum Capital) General Insurance Companies ( N3b minimum Capital) Composite Insurance Companies( N5b minimum Capital)

48 Loss Adjusters 2 Reinsurance Companies (Minimum Capital N10b)

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Developments in the Insurance Sector /3

Foreign Interest in Insurance Companies

S/N 1 2 3 4 5

Insurance Company ADIC Oceanic Insurance Mansard Insurance Prestige Assurance FBN Life

Foreign Interest NSIA Old Mutual South Africa European Consortium New India, India Samlam South Africa Met life South Africa
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Increase interest foreign investors the market.

of in

Investors

are bring capital, manpower as well as innovation into the market.

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UBA Metro

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Developments in the Insurance Sector/4

IFRS
Insurance companies have started sending in their accounts in IFRS formats. NAICOM is working closely with FRC on monitoring compliance with IFRS.
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Sensitization workshops have been conducted throughout 2012 for CEOs, Board members, CFOs, External Auditors on IFRS.

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Developments in the Insurance Sector/5

Risk Management
Guidelines on Risk management Framework for insurers and reinsurers was released in February 2012.
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Companies are employing various tools for identifying, analyzing and monitoring risk to which they are exposed.

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Developments in the Insurance Sector/6

Micro Insurance
Micro Insurance diagnostic study was conducted to assess the demand and supply of insurance policies to the low income to facilitate financial inclusion. A draft framework is being reviewed by industry and consultants and will be released to provide standards for operation of micro insurance activities.
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Developments in the Insurance Sector/7

Takaful Draft Guideline

A draft framework has been developed for Takaful operation. This is in consultation process.

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The Commission has also become a full member of the standard setting organization Islamic Financial Services Board(IFSB).
There are proposals for a standalone Takaful company.
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Developments in the Insurance Sector/8

No Premium No Cover
The guideline requires that cover will not take effect until premium is paid in full by the insured. There has been a considerable improvement in the prompt payment of premiums to insurance companies as a result of this guideline this improved liquidity and cash flow.
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Developments in the Insurance Sector/9

AML/CFT
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The IMF Technical Assistance Mission helped in populating and testing the AML/CFT Riskbased Supervision Matrix and the production of a Draft AML/CFT On-Site Supervision Manual. NAICOM carried out a review of the AML/CFT Regulations for the insurance industry. The printing and gazetting of the revised regulations.
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Inspection & Supervision

51 insurance companies were inspected. There was monitoring of all remedial actions and other actions recommended by the Commission. Several insurance brokers were inspected in 2012. 2 additional zonal offices were opened to cover inspection range.

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Developments in the Insurance Sector/11

Cross Border Supervision

10 insurance companies have subsidiaries outside Nigeria spread over West Africa Cameroun, Cote dVoire, the Gambia, Ghana, Liberia, Sierra Leone. In Uganda, Kenya. NAICOM has signed an MOU with the National Insurance Commission of Ghana for information sharing and joint inspection..
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Developments in the Insurance Sector/12

Enforcement Activities
Forced resignation of the Board of one insurance company over issues of Corporate Governance and financial reporting.

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Interim Managing Board appointed to control the affairs of the company. No policyholder was put at risk.
Suspension of another insurance company from taking on New business pending investigation regarding Corporate Governance issues.

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Performance
Trends in Premium income
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300,000.00 260,845 ( Estimate) 250,000.00 212,156.00 M 200,000.00 i l l 150,000.00 i o n s 100,000.00 75,619.00 190,309.00 157,138.00 Insurance Premium Income
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Total Insurance Premium Income 2005-2012

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233,135

105,378.00 95,005.00

50,000.00

0.00

2005

2006

2007

2008
Year

2009

2010

2011

2012

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Performance
Industry performance trend
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Total Assets (Nb)

1

December 2010 585 212 53 658 20

December 2011 621 233

December 2012 635

Total Premium (Nb)

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260 Total Claims paid (Nb) 60

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Number of Branches 658 655 Claims Ratio (%) 25 24

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Developments in the Insurance Sector/15

Complaint Bureau & Consumer Protection

The Complaints Bureau of NAICOM received over 300 fresh complaints, 55 has been fully resolved and settled while the others are on course for resolution. Prestige Assurance plc is the lead company in the insurance of the ill- fated Dana Air crash. The Commission have been monitoring the payment of compensations to families of victims.
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Developments in the Insurance Sector/15

Awareness Campaign & Public Education

Several initiatives to improve the image of the industry includes the TV programme Insurance & Claims sponsored by NAICOM. Media adverts, billboards, radio jingles, distribution of leaflets. Road shows and stakeholder workshops for enlightenment and financial education.
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Conclusion
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Given the challenges of public resistance to insurance sometimes based on religious and cultural beliefs coupled with the impact of the economy on the disposable income / standard of living of vast majority of Nigerians, the growth of the insurance sector has not been as fast as desired. Nevertheless an ambitious agenda has been put in place to continue to deepen the insurance market.
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Thank you

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