Insurance market in the country is said to have a developmental potentials of growth going by its increasing population and its position as Africa’s largest economy according to a new report from ratings agency AM Best.
The agency though regretted that insurance industry in the region failed to catch in the the potentials but the industry will use the mandatory insurance to speed up its growth
In a new Best’s Market Segment Report: Nigeria’s Insurance Market Offers Significant Potential Despite Headwinds, AM Best notes that, due to the Covid-19-driven economic slowdown, the insurance market regulator, the National Insurance Commission (Naicom), has agreed to further delay its revised plans to strengthen market capitalisation and limit the volume of premium flowing out of the country.
“Nigeria has failed to deliver on that potential historically, due in part to the volatility of growth in the country’s real gross domestic product, coupled with the sporadic enforcement of mandatory retail insurance lines”
AM Best warns: “If Naicom strictly enforces the new requirements, smaller insurers will face significant pressure to merge with larger players.”
But overall, it believes successful implementation of the capital standards “would be favourable for the sector, as they should drive a market-wide strengthening of capital adequacy”.
It suggests: “Market consolidation and the resultant reduction in competition should help alleviate fierce pricing pressure and improve underwriting discipline.”