Wednesday, January 24, 2018 /08:31AM /Fitch
Ratings
Fitch Ratings says it expects the Nigerian
insurance market to return to real gross written premium (GWP) growth in 2018
as favourable fundamentals support long-term development.
The insurance industry in Nigeria declined in real
terms in 2016 as high inflation eroded modest nominal GWP growth. As GDP growth
picks up and inflation slows, we expect to see a return to real GWP growth in
2018.
Nigerian insurance fundamentals remain favourable.
There is strong potential for economic growth, a young population with a
growing middle-class, investor interest and low insurance penetration. These
factors are offset by recent economic decline and significant structural
challenges such as a population typically sceptical of the benefits of
insurance. 
Fitch believes the local insurance market would
benefit from additional scale. Consolidation and technological improvements
could lead to lower operational costs and those insurers that manage to cut
costs could gain market share by offering consumers better-value products.
A new risk-based supervision regime is being
implemented by the regulator as part of a gradual move to a Solvency II-type
regime in Nigeria. This could lead to a new round of capitalisation as several
insurers have already stated their intent to raise additional funds. 
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