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Insurance contributes 0.6% to GDP

By on August 4, 2014

The insurance sector contributed 0.6 per cent to the country’s Gross Domestic Product between 2012 and 2013, figures obtained from the National Insurance Commission on Friday have indicated.

This shows a drop of 0.1 from its previous contribution of 0.7 per cent.

The Commissioner for Insurance, Mr. Fola Daniel, attributed this fall to the rebasing of the economy, noting, however, that the sector had a lot to offer the economy, but were yet to be fully explored.

Daniel said, “Strategies are needed to build the industry following the recent rebasing of the GDP which has reduced the sector’s contribution to the economy from 0.7 per cent to 0.6 per cent.

“In the last four years, NAICOM has consistently initiated developmental policies aimed at strengthening and deepening insurance penetration in order to enhance the sector’s contribution to the GDP through its Market Development and Restructuring Initiative.”

The NAICOM boss also said this was a time all hands must be on deck to deepen insurance penetration in the country and raise the level of professionalism of operators.

In a related development, the Nigerian Insurers Association has said that between 2004 and 2013, the insurance industry earned N1.5tn premium from life and non-life insurance policies.

Statistics also obtained from the NIA on Friday revealed that the sector made premiums of N69.4bn, N76.3bn, N82.3bn and N100.6bn in 2004, 2005, 2006 and 2007, respectively.

The figure rose to N150bn, N179.9bn, N185.7bn and N217.7bn in 2008, 2009, 2010 and 2011, respectively, while in 2012 and 2013, the insurance industry earned N247.58bn and N285bn, respectively from the businesses underwritten.

According to the NIA, while the general insurance business has continued to contribute to the sector’s earnings, the overall contribution of the life business has remained low.

The life business earned only N11.3bn, N14.6bn, N29.3bn, N34.3bn and N39.7bn in 2006, 2007, 2008, 2009 and 2010, respectively.

According to the NIA, the increase in the last financial year’s premium can be attributed to the relative stability and sustained growth in the economy, increase in insurance awareness and government’s patronage of insurance services.

It noted the innovations and improved service delivery by member companies as well as the growing confidence in the insurance system by the general public aided the sector’s growth.

The association stated that the performance was also aided by better regulatory supervision with the release of guidelines for risk-based supervision; anti-money laundering and combating financial terrorism guidelines; and the adoption of the full International Financial Reporting Standards for the 2012 accounts.

It said the enforcement of the provision of Section 50(1) and (2) on premium payment and the regulation on premium collection and remittance had begun to yield the desired results, particularly in terms of curtailing large volume of premium debt in the balance sheets of member companies.

For 2001, 2002, 2003, 2004 and 2005, the NIA stated that the growth rate of premium from life insurance business stood at 24.5 per cent, 29 per cent, 22.4 per cent, 20.4 per cent and 6.1 per cent, respectively.

The growth rate also steadily rose from -1.5 per cent in 2006 to 23.8 per cent in 2007 and 85.8 per cent in 2008.

The figure fell from 16.9 per cent to 15.9 per cent between 2009 and 2010, thus revealing an average growth rate of 24.3 per cent in the 10-year period.

The NIA report showed that the sector recorded an average growth rate of 22.1 per cent between 2001 and 2010 in the non-life business.

The data revealed that between 2001 and 2002, the average growth rate of the non-life business rose from 26.2 per cent to 35.6 per cent, but fell in 2003, 2004, 2005 and 2006 to 26.9 per cent, 25 per cent, 10.7 per cent and 7.4 per cent in that order.

The rate, however, rose from 24.9 per cent in 2007 to 44.1 per cent in 2008, but fell again to 19.6 per cent and 0.9 per cent in 2009 and 2010, respectively.