Ifeanyi Ugwuadu
14 July 2008
Lagos — The Vision 2020 insurance sector report has put the premium potential of the insurance market at N12 trillion in the next 12 years. But the report indicated that a "conservative" realisable income for the sub-sector by 2020 will total N6 trillion with the existing structure.
Although the report noted the structural deficiencies of the system but it identified opportunities for growing the insurance sector quickly to attain the status of a global market in the next decade.
Using the available expertise, industry capitalisation and risk-based supervision, the 2020 Vision sees half of the market potential being achieved before the period.
VISIT: From right: Vice President Goodluck Jonathan; Managing Director, Bank of Industry Limited, Ms. Elven Oputu; Chairman/Founder of BRAC, Bangladesh, Mr. Fazle Hasan Abed; BRAC's Deputy Executive Director, International and Africa Operations, Mr. Imran Matin; and Executive Director International, BRAC, Mr. Aminul Alam, in a business discussion during a visit by BRAC and Bank of Industry to the vice president at the Presidential Villa, Abuja recently.
The Vision's document sees immediate growth in bancassurance, mortgage, the credit market, telecom and education sectors and puts its premium generation at N1trillion by 2020. Compulsory insurance of all buildings under construction, public buildings and the mortgage market development is expected to rake in another N1 trillion.
Premium income from compulsory group life insurance, annuity, motor insurance, marine imports, professional indemnity, workers' compensation is estimated at N2 trillion by the end of the Vision period.
Improved retention in oil and gas sectors through the local content policy of the government including solid minerals insurance and marine hull underwriting is projected to pull N500 billion during the period.
Compulsory pension and national health insurance projected to cover a wider range of the Nigerian society before 2020 are estimated to generate N2 trillion and N3 trillion respectively.
A total of N2 trillion will in addition be generated from property and casualty insurance within the time frame of the Vision 2020 projections.
The quick-win opportunities identified within the existing framework envisages a graduated market premium income of N1 trillion by 2012, N2.5 trillion in 2015 and N6 trillion in 2020, adding that an additional minimum of 250,000 jobs will be provided by the industry within the next seven years.
However, the analysis shows that key challenges confront the attainment of the goals. The report urges an urgent review of NAICOM Act of 1997, Insurance Act 2007, National Health Insurance Scheme Act of 1999 and Pension Reform Act 2004 to make them work as well as adapt the regulations to global standards.
The report also encourages sharpening of managerial and entrepreneurial skills to help players compete favourably in the international market. In addition, the report canvasses that products insurance products be customised to the Nigerian market.
Similarly, the issue of scientific underwriting, better customer service and risk-based management was forcefully put forward as impediments to the realisation of the full potentials of the industry in the next 12 years. But issues of solvency of underwriters require serious attention, the report noted.
"The government, the regulators, the operators and the insuring public will need to create a new mind-set that will focus on collective investment and interest in the development of the insurance market in Nigeria," the Vision report stated.
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