Nigerian insurance industry introduced some innovations in distribution in the face of the COVID-19 pandemic. These helped to drive industry growth during 2020. It is expected that more innovative product distribution channels will be introduced to reduce the dominance of insurance brokers. Insurance sector also witnessed some regulatory-backed opportunities last year such as digitalization of marine insurance certificates and increased awareness of the benefits of insurance. Nigerian insurers grew their combined gross premium income by 15%, slightly lower than the 15.55% recorded by the industry in 2019. The latest available annual report by the National Insurance Commission states that the insurance market in 2018 expanded at about 14.46%, recording a gross premium income of about NGN426bn ($1.04bn) as against NGN372bn in 2017.
Insurers’ recapitalization exercise, currently suspended, would change the structure of the Industry. The persistent naira devaluation has reduced the strength of capital in the insurance industry since the last recapitalization exercise in 2007. It is estimated that as at 31 December 2020, the industry had an estimated capital base of $1bn, significantly lower than $2.2bn recorded as at 31 December 2007. The recapitalization exercise could be a watershed in the industry in that, in addition to the benefits accruing from a larger capital base from a risk underwriting perspective, improved investment management practices would be supported by a larger investment portfolio driven by the need to generate adequate returns. Recapitalization requirements have also prompted mergers and acquisition transactions in the Industry.