The Nigerian insurance sector reached a historic milestone in 2023, with gross written premiums surpassing the one trillion-naira mark for the first time, rising from N844.5 billion in 2022, according to a report by EnterpriseNGR titled The State of Enterprise 2024. The report attributed the sector’s growth to the increase in annual insurance premiums from N5,000 to N15,000 and the hike in the minimum rate for comprehensive insurance from 3 percent to 5 percent.
This growth is seen as a significant step toward boosting national investment and infrastructure development through the expanded funds available to insurance companies. Gross written premium refers to the total sum collected by insurers in exchange for providing policies, regardless of the risks involved.
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Obi Ibekwe, CEO of EnterpriseNGR, highlighted that despite economic challenges in 2023, the Financial and Professional Services (FPS) sector demonstrated remarkable resilience. Key challenges included the discontinuation of petroleum subsidies and the liberalization of the naira exchange rate, which led to increased prices and production costs. Inflationary pressures also led the Central Bank of Nigeria (CBN) to adopt stringent monetary policies, affecting the cost of credit for the productive sector.
Despite these hurdles, the FPS sector’s contribution to the national economy increased, with financial institutions contributing N5 for every N100 generated nationally, up from N4 in 2022. The report also revealed that the insurance sector paid out N382.9 billion in claims, a 35.5 percent increase from the N282.6 billion paid in 2022, marking the highest net claims in four years. Claim ratios rose to 53.5 percent in 2023, reflecting the sector’s improved responsiveness to policyholders.
Additionally, the sector’s total assets grew by 8 percent to N2.7 trillion in 2023, showing a 75.3 percent increase over the past five years, up from N1.5 trillion in 2019.
