Micro-Insurance, Tech, Key to Deepening Nigeria's Insurance Sector - Coronation Research

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Monday, September 09, 2019 /   07.30AM   / Ottoabasi Abasiekong for Proshare WebTV / Header Image Credit: WebTV 


The rollout of Micro-Insurance and Adoption of Technology will go a long way in deepening the Nigerian Insurance sector. 

This was part of the submission of the report on, "Nigerian Insurance Industry: From the Lagoon to the Ocean" published by Coronation Merchant Bank's Research Team. 

In the wake of the new recapitalization drive of the National Insurance Commission, NAICOM by June 2020, the Head of Research for Coronation Merchant Bank  Mr. Guy Czartoryski in a briefing with financial correspondents, gave insight into how the insurance landscape will be transformed beyond 2020. 

He acknowledged the fact that at the moment the Nigerian Insurance Industry is under-developed with a current total capitalization of N300bn for all the insurance companies. 

Czartoryski noted that in real terms the insurance industry has not grown in the last 10 years, as insurance penetration at 0.31% compared poorly to India's penetration of 3.69%. 

He said that without growth and scale, the average return on equity for insurance companies will remain low. 

Speaking further on the planned recapitalization circular published by NAICOM in May, 2019, Czartoryski said Coronation Merchant Bank Research estimates that 22% of insurance companies complied with the new capital requirements. 

The Merchant Bank's report projects that the NAICOM recapitalization requirement will reduce insurance companies from 59 to 25. 

Also, the report noted that 36% of insurers met less than 50% of the capital requirement, 21% met 50% of the capital requirement, and 21% met 75% of the capital requirement. 

According to him the NAICOM circular has led to a new round of capital raising from companies like AIICO, LASACO, NEM (purchased by AFIG); Sovereign Trust; Royal Exchange General (bought by InsuResilience); amongst others. 

Emphasizing the need for driving micro-insurance, Czartoryski  cited India as an example of a country that has achieved 3.69% penetration, because of driving a robust micro-insurance policy supported by the state. 

He stressed that Micro-insurance has a role in educating the market and building trust in the industry, which has contributed to the steady rise in the penetration and density of the Indian Insurance sector. 

Coronation Merchant Bank's head of research also identified Ghana as the African example that has successfully implemented micro-insurance, which translated to a Compound Annual Growth Rate, CAGR, of 6.9% between 2013 to 2017. 

On the role of technology in deepening insurance penetration, he highlighted the following opportunities;

  • 38.5m Bank Verification Numbers, BVNs - Opportunity for bancassurance
  • 172.9m SIM Cards - Opportunity for Distributing Insurance with Telcos
  • Technology that transformed banking industry can be applied to the insurance industry, which can lead to a significant lead in customer base from thousands to millions.


He also believed that enhanced dialogue with regulators like the Central Bank of Nigeria, CBN and the Nigerian Communications Commission, NCC can unlock the opportunity for the insurance industry in the country to witness significant growth and scale. 

Czartoryski also acknowledged the banking sector reforms and recapitalization of 2004, that reduced the number of banks from 89 to 25, and stated that between 2004-2019, the banks achieved a CAGR of 27.9%. 

He believed that with effective recapitalization of the insurance industry in 2020, the sector would witness remarkable growth over the next decade. 

Key areas he identified as potential  drivers of transformation of the insurance industry include;

  • Utilization of Data
  • Ensuring proper identity checks
  • Engaging Tech and Telcos


On the recapitalization he said "The key element which has been lacking over the past ten years is growth. Only with significant future growth  can the recapitalisation of the insurance industry be justified".


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