Fitch Ratings, one of the global rating agencies, has identified the “low average earnings and widespread poverty” in Nigeria as some factors weighing on insurance affordability and the growth of the sector.
“Nigeria’s potential consumer base needs to be educated more about the benefits of both life and non-life insurance coverage to support more robust growth in the sector,” the agency added. “We see strong growth in life premiums over the medium term to reach N217.96 billion by 2024. We forecast premiums in the larger non-life insurance market to increase by a revised 2.9 per cent rate in 2020 to reach a level of N248.85 billion.
Low income and a lack of understanding of the benefits of life insurance remain the most important obstacles facing life insurers, it stated. It said: “Nigeria’s insurance market is highly fragmented in both the life and non-life segments, with just four companies holding over five per cent market share in the life sector and six within the non-life sector. The market is highly competitive and we expect this to continue as more foreign players capture more market share.
The National Insurance Commission last month extended the deadline issued to insurance companies to raise their minimum paid-up capital to September 2021. The recapitalisation deadline had earlier been fixed for December 31, 2020, which became not feasible following the economic disruptions caused by COVID-19. Insurers now have up to September 30, 2021, to fully recapitalise in a two-phased plan.
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