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… As Insurance Penetration May Hit Over 3% Soon

LAGOS – As the insurance industry recapital­isation exercise continues to gather steam, investors both local and foreign are showing strong investment propo­sitions in buying into companies in the sector.

Daily Independent observed that investors, local and foreign are already in talks with most of the operators in a view to having a stake in the companies whether through mergers or acquisitions.

Also noted is that some stronger insurers in the market are also looking at possible acquisi­tion of weaker ones that may not be able to meet the new minimum capital threshold.

Barely nine months to the end of the recapi­talisation exercise as stipulated in the Nigerian Insurance Industry Reform Act (NIIRA) 2025, the 58 insurance and reinsurance companies are already in a panic mood to see that they scale through the hurdle and stay afloat, this newspa­per has observed.

For the investors, their traction came on the heels of potentials the emerging insurance mar­ket holds to the investment public.

They reason that with enormous capital and the current rise in insurance revenue among the operators the indication is that the sector holds much for them in terms of returns on investment (RoI), said one local investor who anonymously confided in our correspondents.

Meanwhile, Prince Babatunde Oguntade, the immediate past president of the Nigerian Coun­cil of Insurance Brokers (NCRIB) has projected that about 60percent of the insurance companies jostling to recapitalize may make it to the finals on a standalone basis, implying that the remain­ing 40percent will be finding their feet through merger and acquisitions.

The NCRIB further projected that Nigeria’s insurance penetration could reach three per cent within the next three years given the steady expansion of brokerage activities and stricter enforcement of compulsory insurance across states under the Nigerian Insurance Industry Reform Act (NIIRA) 2025.

“With NIIRA 2025, we expect insurance pen­etration to reach three per cent within three years,” Oguntade said.

The positive growth indicators show the consistent rise in the stocks of quoted insurers traded on the floor of the NGX, rise equity invest­ments, jump underwriting revenues and revived prompt claims settlements.

Investors who hitherto were snubbing insur­ance related matters are now seeing these devel­opment as key growth factors demonstrating a clear signs of industry’s pride of place in the financial sector of the economy.

Also indicative of the risk management sec­tor’s growth trajectory is the Nigerian Insur­ance Industry Reform Act (NIIRA) 2025 which according to experts, has opened up windows for growth and the National Insurance Com­mission’s insistence on creating an insurance industry driven by value, innovations, and trans­parency and above all strong companies viable to meet the needs of the policyholders when it matter most.

Analysts believes that as Nigeria’s recapi­talisation policy unfolds, it signals more than a change in financial structure, it represents a dec­laration that Africa’s largest economy is ready to lead the continent’s insurance transformation noting that the exercise and the NIIRA 2025 Risk- Based Capital framework mark a major turning point for the industry, driving financial strength, mergers, and continental competitiveness across Africa’s insurance market.

“This reform is a reset button for Nigeria’s insurance market.” Adding “If effectively man­aged, it could turn the country into a continental hub for insurance capacity and risk retention,” said the expert who refused his name in print.

The next few years will determine whether this bold vision delivers the sustainable, resil­ient, and trusted insurance sector Nigeria—and Africa—has long awaited.

According to Mr Olusegun Omosehin, the Commissioner for Insurance and Chief Exec­utive Officer of NAICOM the new Act, signed by President Bola Tinubu earlier this year, was designed to strengthen the financial capacity of insurance institutions noting that it would also ensure that the institutions could effectively manage large-scale risks, including those posed by climate change.

The commissioner noted that one of the ma­jor objectives of NIIRA 2025 is to create bigger and better-capitalised institutions that can stand the test of time stressing that proper capitalisa­tion would enable Nigerian insurance firms to collaborate regionally and pool resources to manage high-impact risks more effectively.

“When institutions are adequately capital­ised, they can align with others across the conti­nent to share and mitigate risks, especially those related to climate and environmental challeng­es,” he said.

He assured that NAICOM was closely moni­toring the performance of insurance companies to ensure prompt settlement of claims and ad­herence to financial obligations.

“Claims are being paid as and at when due, and we are pleased with the level of compliance. Our role as regulators is to ensure that insurers remain reliable and that policyholders’ interests are always protected. Nigeria is making steady progress, the recapitalisation exercise is not just about compliance, it’s about building stronger, more resilient institutions that can support na­tional development and withstand future eco­nomic shocks,” he submitted.

Analysts are of the view that the ongoing recapitalisation exercise which is part of the NIIRA 2025 seeks to promote economic growth and development via improved financial stabil­ity of insurance companies, enhanced claims settlement, increased investment, improved gov­ernance and transparency as well as increase in insurance penetration

Experts noted that with strengthened re­capitalisation structure backed by governance reforms, and improved penetration, the insur­ance sector will move firmly into the spotlight, emerging as both a stabiliser for investors and a growth engine for Nigeria’s evolving financial landscape.