In the first half of 2023, Nigeria’s top insurance companies witnessed a substantial surge in net claims payments, reaching N49.158 billion. This marks a significant 25.47% increase compared to the N39.178 billion recorded in the previous year.
Factors contributing to this surge include economic challenges, persistent inflation, and an uptick in fraudulent claims. The data is compiled from the financial reports of prominent industry players, including Custodian Insurance, NEM Insurance, Sovereign Trust Insurance, AXA-Mansard Plc, AIICO, Mutual Benefits Assurance, and Cornerstone Insurance.
Collectively, these firms represent a significant share of the insurance market and are prominently listed on the Nigerian Exchange. They earned a total of N200.515 billion in gross premium income, signifying a 21.1% increase compared to N165.626 in 2022.
Notably, insurance companies disbursed 24.52% of their premium income as claims in H1 2023, marking a marginal rise of 0.87% from the previous year.
Experts suggest that insurance companies have grappled with surging claims, impacting their premium growth and profitability. Economic challenges such as difficulties accessing foreign exchange, security issues, and global economic headwinds have played significant roles.
Moreover, inflation, shrinking government revenues, Naira devaluation, and rising energy costs have added to the challenges confronting insurance companies in Nigeria.
Here is a breakdown of the seven Nigerian insurance firms by claims, based on published financial statements:
- NEM Insurance – N3.516 billion: This represents an 18.44% decrease from the previous year. Despite this, the company reported a profit after tax of N3.499 billion in 2023.
- Cornerstone Insurance Plc – N4.262 billion: This reflects a significant 166% increase from the previous year. The firm reported a profit after tax of N11.251 billion.
- AIICO Insurance Plc – N5.730 billion: This marks a 56.51% increase from the previous year. AIICO reported a profit after tax of N5.301 billion.
- Mutual Benefits Assurance Plc – N7.290 billion: This represents a 16.36% increase from the previous year. However, the company reported a 2.71% drop in net earnings.
- Sovereign Trust Custodian Insurance – N7.559 billion: This reflects a substantial 74.53% increase from the previous year. The company recorded a 10.39% increase in profit after tax.
- AXA Mansard Plc – N9.389 billion: This marks a 10.08% increase from the previous year. The insurance firm reported a significant 582% growth in net earnings.
- Custodian and Allied Investment Plc – N11.412 billion: This represents an 8.90% increase from the previous year. The company recorded a 33.07% increase in profit after tax.
In summary, the surge in insurance claims in Nigeria is attributed to a combination of economic factors, including inflation, difficulties in forex access, and security challenges. This has led to increased pressure on insurance firms’ premium growth and profitability. Hyperinflation has also played a role in escalating living costs and insurance claims in the country. The industry is advised to adopt proactive and dynamic claims management strategies in light of these challenges.