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 second quarter of year 2022, the National Insurance Commission (NAICOM) disclosed on Friday.
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.
In spite of the fact that the retention in the non-life business was above average level, when compared to the 59.4 percent recorded during the corresponding period in 2021, NAICOM stated that the decline would require a focused attention for improvement, going forward.
Out of the Gross premium income of N369.28 billion recorded in the second quarter of 2022, the Non-Life segment maintained its primacy at 59.3% of the total premium generated, while Life business recorded 40.6 percent of the insurance market production.
A further sub-division in the Non-life business shows that Oil & Gas was the leading driver at 32.5 percent, fire 20.7 percent. Motor Insurance 14.8 percent, while Marine & Aviation, Gen. Accident and Miscellaneous reported a share of 12.3 percent, 10.9 percent and 8.9 percent, respectively.
For the Life business, the share of Annuity was about 24.7 percent, while Individual Life held a major driver position at 41.8 percent of the premium generated during the period.
Meanwhile, the percentage of incurred claims as against reported, mirror the market retention view during the period.
Motor Insurance retained its lead posting a claims settlement ratio of 92 per cent. Progress was, however, more noticeable in the Oil & Gas with 85.7 percent per cent of claims settlement ratio, an increase of some 43 points compared to its position of 42.8 percent recorded in the corresponding period of 2021. Miscellaneous insurance also posted about 62 percent, higher than 44 percent paid claims ratio, compared to its corresponding period of 2021. while General Accident (75%), Fire (76.2%) and, Aviation & Marine (61.9%) followed in that order.
NAICOM added that “The Insurance market indeed remained profitable during the period, recording an overall industry average of about 56.9 percent, maintaining a relative position (57.7 percent) recorded in the corresponding period of preceding year. The Non-Life segment loss ratio stood at 43.6% while the life business stood at about sixty-nine (68.5%) per cent depicting a less profitable scenario comparatively, over the same period. The net loss ratios for non-life, bears an improved market image in the current period as compared to the preceding period when it was 48.2%.”
