By Sola Alabadan
The Nigerian insurance industry recorded 93 percent premium retention ratio in the Life business, while non-life recorded a ratio of 55 percent during the fourth quarter of year 2022, the National Insurance Commission (NAICOM) disclosed on Thursday.
The premium retention ratio refers to the portion of premiums (and therefore risk) that is kept on an insurance company’s books, rather than being passed on to the reinsurance companies.
The inspiring numbers in business retention being posted by the industry in spite of the operational challenges posed in domestic and global economies, according to the commission, reflect the market resilience and increasing capacity.
In the period under review, industry wide average retention ratio stood at 71.3 percent, which is slightly a point lower than it held in the previous quarter and four points lower in comparison to same period (YoY). Persistently, the Life business retained about the same point of 93.3 percent from its prior position of 93.8 percent in quarter three.
In the Non-Life segment, Motor Insurance continued its lead as the highest retaining portfolio with a retention ratio of 93.5 percent, also a point higher than its standing in the prior quarter.
While Oil & Gas recorded the least at 35.9 percent, NAICOM lamented that the oil and Gas portfolio remained a challenging angle in the market owing to its nature of enormous capital and professional requirements.
Consequently, the retention performance in the current period sustained its prior position when compared to the third quarter as evidenced by the overall Non-Life business ratio of 55 percent, slipping from about 56.6 percent held in the prior period.
Meanwhile, the insurance claims reported during the fourth quarter stood at N318.2billion, representing a 31.2 percent Quarter on Quarter growth.
This development was attributed to the growing awareness and market expansion, as well as consumer’s confidence.
Similarly, the net claims paid were reported at N244.3billion, growing at about 17.9 percent QoQ during the same period.
Insights into the Non-life segment shows that Motor Insurance led with regards to claims settlement vis a vis gross claims reported at about 92.3 percent signifying a nine points improvement as against its prior position.
Fire Insurance was the least at 46.3 percent, the only class below average proportion.
All other portfolios of General
Accident Insurance (80.7%), Oil & Gas (51.6%), Marine & Aviation (74.4%), miscellaneous Insurances (86.1%) recorded a proportion above the average, of paid claims against gross claims
reported.
Life Insurance business, on the other hand reported two points less in comparison to the position held in the prior period of 94.6 percent of net claims paid, compared to total claims reported during the same period of 2021.
