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VENTURES AFRICA – Insurance premiums of Africa’s most populous country will grow to over N1 trillion ($6.3bn) over the next 5 years, according to the National Insurance Commission of Nigeria (NAICOM).
Last year premiums rose to N260 billion ($1.6bn), a 12 percent increase from 2011’s N233 billion ($1.47bn).
With compulsory insurance coverage for employees, a growing middle class and an increasing number of high net-worth individuals, the sector will gather greater momentum, said NAICOM’s Head of Strategy, Babajide Oniwinde.
Already, these favourable conditions have attracted investment companies like London-based Old Mutual and Sanlam of South Africa.
Old Mutual’s acquisition of a majority stake in Oceanic Life, a unit of Ecobank Transnational Inc. (ETI), was approved in March, while Sanlam bought a minority of FBN Holdings plc life business in 2010.
Also, NSIA Participations SA Holdings, based in Ivory Coast, acquired a majority of ADIC Insurance Ltd., a unit of Diamond Bank plc, and Assur Africa Holding, a group of European development finance institutions, purchased GTAssurance plc, before changing its name to Mansard Insurance plc.
With over 160 million people, the insurance sector in Africa’s second-largest economy still falls short compared to developed countries.
For instance, Switzerland – a country of about 8 million people – had insurance premiums 38 times higher than Nigeria last year.
In August, a report by Nigerian opinion polling and research organisation, NOI Polls Limited revealed that 9 in 10 Nigerians (86 percent) are uninsured while vehicle/car insurance (63 percent) is the most commonly purchased insurance cover compared to a much smaller 20 percent of the population that had life assurance.
According to the polling company, lack of awareness and public enlightenment on the benefits of insurance are the major factors hindering the growth of the sector in Nigeria. It however noted that ”only nine percent [of Nigerians] stated that they do not trust insurance companies, compared to some decades ago when insurance practitioners were considered fraudulent for use of hidden clauses and non-payment of claims.”