The Nigerian insurance sector experienced robust growth in the third quarter of 2024, marked by a significant expansion in total assets. These assets reached N3.88 trillion, a 5.15% increase compared to the previous quarter’s N3.69 trillion. This growth reflects the industry’s overall financial strength and stability. The non-life segment dominated the asset landscape, holding N2.34 trillion, while the life segment accounted for N1.54 trillion. This positive trajectory is attributed to several factors, including substantial premium generation, favorable net loss ratios, market expansion, and a competitive operating environment. Furthermore, ongoing regulatory initiatives focused on process automation, market deepening, and legal framework improvements contribute to the sector’s promising outlook.
Premium generation witnessed a substantial surge, registering a 60.9% year-on-year increase and a 44.3% quarter-on-quarter rise, culminating in approximately N1.17 trillion. This growth was primarily driven by the non-life segment, which commanded a 68.9% market share with N808.4 billion in premiums, while the life segment contributed the remaining 31.1%. Within the non-life segment, oil & gas insurance held the largest portfolio share at 35.2%, followed by fire insurance at 21.3%, and motor insurance at 14.4%. Marine & aviation, general accident, and miscellaneous insurance accounted for the remaining shares. In the life segment, individual life insurance led with a 41.8% contribution, followed by annuity business at 31.8% and group life insurance.
Claims reported during the third quarter totalled N564.1 billion, representing 48.1% of the total premiums generated. This underscores the industry’s commitment to fulfilling its obligations to policyholders. The life insurance segment achieved an impressive claims settlement ratio of 81.6%, while the non-life segment attained a commendable 73.6%. Within the non-life segment, motor insurance boasted the highest net claims paid ratio at 92.3%, followed by miscellaneous insurance at 88.9%, general accident at 86.3%, and fire insurance at 75.1%. Oil & gas insurance, while lower at 63.7%, showed considerable improvement compared to the same period in the previous year.
Profitability remained a key highlight for the insurance sector, with an overall net loss ratio average of 62.8%. The non-life segment recorded a loss ratio of 66.7%, while the life segment significantly improved its performance with a ratio of 57.4%. This improvement in the life segment’s profitability underscores its enhanced market performance and positive outlook. However, despite the sector’s overall strong performance, eleven insurers reported net loss ratios of 100% or higher, indicating areas requiring attention within the industry.
Market concentration remained a significant factor in the industry’s competitive landscape, particularly within the life segment. The top three life insurance companies controlled approximately 59.8% of the total life premiums, compared to the top three non-life insurers who controlled 33.3% of the non-life premiums. This disparity suggests a higher level of concentration within the life insurance sector. Furthermore, the top ten life insurers accounted for 65.3% of all life insurance business. In the non-life segment, the top ten underwriters also generated 65.3% of the total gross premiums, while the smallest ten companies held a mere 0.7% market share.
While the life segment exhibits a greater degree of market concentration compared to the non-life segment, the report suggests that the life segment’s exposure to concentration risks is not excessively high. This relatively balanced distribution within the non-life market suggests a more competitive landscape compared to the life insurance sector. Despite the uneven distribution of market share, the report concludes that the life segment, while less desirable in terms of competitiveness, is not overly vulnerable to market concentration risks. This nuanced assessment provides a comprehensive overview of the market dynamics within the Nigerian insurance sector.
