INSURANCE is a protection from financial loss from either natural or man-made disasters. While no profit is supposed to be made from insurance cover, it has a responsibility to return the insured or premium holder to where they were before the disastrous occurrence. Insurance involves pooling funds from many insured entities to pay for the losses that some may incur. 
Such insured entities are therefore protected for a fee, usually renewable at fixed periodicals. The insurance companies of act of 1961 classified insurance businesses into various classes for registration and provided forms for record keeping while 1979 the Inusrance decree specified modes of operation, organisation and transfers, administrative and enforcement guidelines and penalties in addition to authorising insurers. Finally, in 1997, National Insurance Commission (NAICOM) was established to regulate insurance business. Despite its 60-year history, the Nigeria insurance history has not been able to overcome infancy and formative issues to break forth as a formidable backbone of the economy. In its Insurance Sector report 2020 Proshare Nigeria Pvt. Ltd. highlighted the global insurance sector performance in 2019 revealing that the sector premiums reached $6.3 trillion in 2019 after scaling the $5.0 trillion mark in 2018 as the non-life segment surpassed forecast and reported a 3.5 per cent growth in premiums to $3.4 trillion while the life segment premiums also increased 2.2 per cent to $2.9 billion mainly due to a recovery in China. 
Sigma research had expected both non-life and life premiums to contract by 1.0 per cent and 1.5 per cent respectively in 2020 similar to that of the Global Financial Crisis (GFC) in 2008 due to the effects of the pandemic on the insurance business. Although Nigerias insurance market has great potential it has fallen short on that promise. Bests Market Segment Report noted that Nigerias Insurance Market Offers Significant Potential Despite Headwinds, analysts at AM Best cite obstacles to insurance market growth that include low consumer awareness, lax enforcement of mandatory coverage laws, and new proposed capital requirements. There are 57 insurance companies operating in the Nigerian market until about three months ago when NAICOM licensed another additional seven insurance companies and one reinsurance company. 
Although the industry generated N426 billion gross written premium (GWP) in 2018 representing a growth of 14.5 per cent over the previous year, generating compound annual growth rate of total GWP, an average of 8.6 per cent annually between 2014 and 2018, viewed in real terms, the market actually contracted by approximately four percentage points due when marked against 12 per cent inflation. Market-wide GWP (excluding health insurance premiums) grew broadly in line with inflation to reach approximately NGN 490 billion ($1.3 billion) at year-end 2019, according to Nigerian Insurers Association (NIA) figures. Coming from the stunted growth recorded since it contracted 2.9 per cent in 2019, the Nigerian insurance sector recorded a negative 15.3 per cent growth in 2020 according to the National Bureau of Statistics. In terms of global relevance, the Nigerian insurance sector lagged significantly with a total contribution to global premiums at 0.03 per cent as it ranks 63rd of 88 countries profiled by Sigma Research in 2019. 
A Fitch report on Nigerias insurance industry stated With a market supported by the countrys steady economy and large population, Nigerias insurance sector will enjoy a period of growth and development over the medium and long term, albeit interrupted by a slower pace of growth in 2020 due to the effects of the COVID-19 pandemic. The outlook for premiums growth, however, continues to be limited due to low average earnings and widespread poverty, which will weigh on insurance affordability. As even the more affluent middle-class consumers tend to avoid purchasing insurance, which hampers the growth of compulsory basic insurance lines such as motor vehicle insurance, Nigerias 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. 
In spite of Nigerias large population, only a small proportion purchases life insurance. Life premiums currently account for 41.9 per cent of overall insurance spending in the country. Low incomes and a lack of understanding of the benefits of life insurance remain the most important obstacles facing life insurers. However, a recovering economy with rising employment and incomes will drive demand for life insurance products over the forecast period, part of the report said. 
However, regulatory efforts to strengthen the industry have mainly been met with resistance by operators who are afraid of losing their personal grips on the companies when they merge and become bigger. On July 25, 2018, NAICOM announced a new capital base for operators in the sector hinged on the magnitude of risks involved in the business each firm will underwrite. Initially, the regulator had given January 1, 2019, deadline for implementation of the new capital system but later changed the deadline to October 1, 2020. It was further shifted to June 2019 before the regulator shifted again to December 2020. 
But following court cases instituted by some operators, NAICOM suspended further action on the recapitalisation process by the end of December 2020. In addition, House of Representatives directed the regulator to suspend the phased recapitalisation program, citing the economic hardship in the country as a result of the pandemic and the need for increased liquidity to boost growth. 
However, National Insurance Commissioner and NAICOM Director-General, Mr Sunday Thomas said the agency was repositioning the industry to better serve Nigerians and the economy solidly. Speaking in Lagos recently, he said a committee was working on the guideline that will make it mandatory to enforce Nigerian content law in the industry that will ensure an increase in the oil and gas business. 
All the leakages that we have had hitherto will be blocked. What this means is that not just life operations, also non-life operations are expected to grow. And it is not intended to grow for the other market and that is why we are encouraged by the application for a re-insurance company which we are quick to approve. Of course we know that the driver of the economy is the people at the low level of the pyramid and therefore, we are taking financial inclusion policy very seriously. It is now a national policy. For the insurance sector, we are far behind but we are doing a lot of catching up. 
The industry is also developing human capacity to drive the business with training of actuarial analysts as a step towards having actuarial experts in the industry. The commission he said has also modernising its website to make it fully functional and interactive. Sunday Thomas said NAICOM was also in the process of getting concurrence of the Minister for a guideline that will make it mandatory for all agencies to make adequate provision for their insurances. 
Effective from June 1, corporate structure guidelines will become effective. This is to make sure that whatever resources are put in the insurance sector is well protected. We have continued to have inter-regulatory cooperation and that is why I was able to mention what we are doing with Nigerian content. We have been able to sign guidelines for the enforcement of group life and the enforcement of annuity guidelines with PenCom. 
With recent efforts of the regulator, major international insurance companies such as AXA, Old Mutual Ltd and Sanlam Emerging Markets (Proprietary) Ltd are penetrating Nigerian insurance sector. Some banks like GTBank, Sterling, and Access Bank are applying for holding company licences so as to commence insurance subsidiaries. Access Bank, EcoBank, First Bank, and Guaranty Trust Bank have Bancassurance relationships and equity stakes in insurance companies while Zenith Bank, Unity Bank, and Stanbic IBTC Bank have fully owned insurance subsidiaries. 
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