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Investors showing interest in insurance sector — Goldlink boss

By on October 13, 2014

Growth opportunities that are visible in Nigeria’s economy are attracting foreign investment to the insurance industry, the Managing Director, Goldlink Insurance Plc, Mr. Gbolahan Olutayo, has said.

He told our correspondent how the insurance sector had been faring since the beginning of the year.

According to him, there would be more entries of foreign investors into the insurance market as well as several mergers and acquisitions among local players.

He said, “With a growing population, technological advancement and stable economic growth projected at about 6.2 per cent; there is no doubt that opportunities abound in the Nigerian insurance industry.”

The push that the industry requires now, he explained, was to implement good corporate governance, development in human capital, good ethical standards and favourable policies with respect to automotive policy, oil and gas as well as the housing sector.

He noted that the industry was capable of more growth if the various challenges confronting it could be effectively tackled.

“Amidst several challenges, there was significant growth recorded in the first half of the year in terms of written premium value. Nigerian insurance industry grew at a review-period Compounded Annual Growth Rate of 10 per cent. This was due to the strong performance of the life segment which registered a CAGR of 22.2 per cent during the review period,” he said.

Olutayo said the industry had been innovative since the beginning of the year with new products coming up especially in the life business.

Some of the companies, he said, were keying into strategic alliances with telecommunications network providers to provide life cover.

“This has created more awareness about insurance among the populace. We cannot also rule out the effort of Nigerian Insurers Association in combating the issue of fake third party motor certificates,” he said.

According to him, the evolvement of financial inclusion products like Micro Insurance and Takaful insurance by the National Insurance Association also constitute some of the panacea to insurance sector under-development.

The worsening terrorism in some part of the country, inconsistent power supply, high level of corruption, people’s personal beliefs and high level poverty, he said, were factors that were strongly limiting the growth of the economy.

Olutayo noted that the Nigerian economy ranks the 26th biggest in the world and the first in Africa with a rebased Gross Domestic Product of N80.3tn, while oil and gas still accounts for 90 per cent of Nigeria’s export as agriculture holds 38 per cent of the GDP.

In many countries, the underwriter said, insurance industry plays an active role in the stability and efficient diversification of risks and contributes immensely to economic development.

However, he added, in the case of Nigeria; the sector still plays a passive role in the economic development of the country.

Citing a 2012 report by Enhancing Financial Inclusion & Access, he said only about 1.3 per cent of Nigerians have insurance cover.

“The insurance penetration rate is put at 0.68 per cent compared with South Africa and Kenya’s 14.7 per cent, 3.06 per cent respectively according to Swiss Re World Insurance Report 2013,” he added.

Although the Gross Premium grew by 25 per cent from 2008 to 2012 reaching N300bn in 2012, he said, this was still way below the industry target of N1tn.

He noted that the growth rate of the industry premium was estimated at about 18 per cent per year.