LAGOS,Nigeria (VOICE OF NAIJA)- The Nigeria Liability Insurance Pool’s annual report revealed a significant 51.6% increase in gross premium earnings for 2023, rising to N1.79 billion from N1.18 billion in the previous year.
This substantial growth was largely attributed to the hike in third-party motor insurance premiums, which took effect in January 2023.
This change followed the National Insurance Commission’s decision to raise the premium rate for motor insurance in Nigeria starting January 1, 2023.
In the directive, private vehicles that previously paid a N5,000 premium for a N1 million Third Party Property Damage Limit were now required to pay a N15,000 premium for a N3 million coverage.
Owner good vehicles were to pay a N20,000 premium for a N5 million claims.and staff buses were to pay a N20,000 premium for a N3 million claims.
Speaking at the 14th Annual General Meeting of the Pool held recently in Lagos, the NLIP Chairman, Gboyega Lesi, highlighted the growth in the gross premium of the pool
“can directly be attributed to the review of third-party premium by NAICOM which took effect from January 1, 2023”.
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“Claims expenses grew by 61 per cent from N297.3m in 2022 to N478.6m in 2023. This increase is majorly due to the review of third-party liability limits from N1m to N3m for private motor, N5m for third-party property damage and the high inflationary rate in the country.
“Similarly, the hike in property pricing driven by the adoption of the fire tariff with a four-year moratorium for full implementation also contributed significantly to the growth in premium income. Despite the increase in claims expenses, the Pool posted an impressive underwriting surplus of N533.4m in 2023, showcasing operational efficiency and prudent risk management,” he explained.
By the end of the year, the Pool’s total assets had risen from N1.3 billion in 2022 to N1.8 billion in 2023, marking a 39 percent increase.
Regarding the outlook for the Nigerian insurance sector in 2024, Lesi mentioned that the firm is aiming for growth in the coming year, despite starting from a low base.
He noted, “The country’s insurance industry is relatively underdeveloped, hindered by a range of economic problems in recent years and stratified income levels. However, growing disposable incomes, together with rising confidence among businesses and consumers, will facilitate ongoing growth. The development of the sector as a whole will be reliant upon the expansion of the country’s middle class, which will in turn depend on continued economic growth and a stabilisation of the inflationary environment within Nigeria.”
He added that the leadership changes across the industry towards the end of 2023, driven by the implementation of the Code of Corporate Governance, are expected to have a positive impact on the industry.
“These changes, aimed at enhancing transparency, accountability, and effectiveness within the sector, have ushered in a new era of leadership characterized by fresh perspectives and innovative approaches. Key players across various insurance firms have undergone restructuring at the executive level, with new leaders appointed to spearhead strategic initiatives and drive organizational growth. The infusion of new talent and expertise is expected to invigorate the industry, fostering a culture of innovation and adaptability in response to evolving market dynamics,” Lesi posited.
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The NLIP offers reinsurance services for its members’ third-party liabilities, covering motor and general third-party liabilities, workmen’s compensation and employer’s contingent liabilities, and builders and occupiers’ liabilities, among others.
In 2023, the Nigerian insurance industry experienced significant growth, with gross written premiums exceeding N1 trillion for the first time, up from N790 billion the previous year.
As of December 31, 2023, total assets in the industry reached N2.67 trillion, with capitalisation amounting to N851 billion.