Insurance companies in Nigeria incurred a sum of N68.615 billion in net claims in the half year of 2022 which compares to about N39.145 billion same period in 2021.
According to the information contained in the half-year financial statements of these companies and compiled by Nairametrics research, the companies’ net claims rose by 75.28% compared to half-year 2021.
Nairametrics compiled claims from Custodian and Allied, NEM, Coronation, Mansard Plc, AIICO, Consolidated Hallmark Insurance, and Cornerstone Insurance, all of which are among the 7 largest Insurance companies quoted on the Nigerian Exchange.
The companies did not explain why net claims have more than tripled in the half year. However, the insurance companies also ended up earning a total of N156.342 billion as gross premium in the half year compared to N131.110 billion same period last year.
This means the insurance companies incurred 43.88% of their gross Premium as claims expenses in the half-year quarter of this year compared to 29.86% same period last year.
The rising claims experienced in recent times by these companies have upstaged the rate of growth in premiums, a development that industry watchers said was threatening the profitability of the firms and the industry as a whole.
Various factors, such as shrinking federal/state government revenues, unavoidable devaluation of the Naira, and high energy costs resulting in an inflammatory landscape increased challenges being faced by insurance companies in Nigeria.
Access to forex by businesses and individuals alike became very difficult as the year progressed and the gap between the interbank and parallel market became very wide, compounded by the security challenges and build-up to the 2023 general elections.
The effect was a high operational cost that has made some companies to stop operations with attendant layoffs and increasing unemployment impacting the ability of businesses, individuals and governments to enter into insurance contracts and pay appropriate insurance premiums.
This is a list of the top seven insurance firms by claims in Nigeria based on published financial statements.
7. Coronation Insurance – N1.429 billion
Coronation Insurance Plc trailed with a claim payment of N1.429 billion from N2.88 billion reported in H1 2021. It gained a 32.75% increase in gross premium during the review period. The company recorded a premium of N9.290 billion in the half year 2022 from N6.998 billion in 2021. Notably, 15.38% of its total gross premium was incurred on claims in the review quarter.
However, it reported a 23% growth in its profit after tax to N490 million in H1 2022 from N398 million recorded in H1 2021.
6. Consolidated Hallmark Insurance Plc – N1.558 billion
Consolidated Hallmark Insurance recorded net claims of N1.558 billion in H1 2022, a 50.82.2% increase compared to N1.033 billion incurred in the corresponding period of 2021. The insurance firm recorded a gross premium of N6.237 billion from N5.776 billion, accounting for a growth of 7.98%, which means that 24.97% of the total gross premium was incurred as claims in the period under review.
The company reported a 29.82% growth in profit after tax to N566 million in H1 2022 from N436 million declared in H1 2021.
5. Cornerstone Insurance Plc – N1.602 billion
Cornerstone Insurance incurred a total of N1.602 billion in claims in H1 2022, which is 20.77% lower than the N2.022 billion spent in the corresponding period of 2021. Meanwhile, gross premium written rose by 8.78% to N10.665 billion from N9.804 billion in H1 2021.
It is worth noting that 15.02% of the total gross premium was incurred as claims in the period under review.
Cornerstone Insurance’s Profit after tax also came under pressure from growth in claims as the firm reported a 48.74% drop in net earnings to N408 million from N796 million recorded in H1 2021.
4. NEM Insurance Plc – N4.311 billion
NEM Insurance followed with a net claim payment of N4.311 billion in H1 2022, an 11% growth from N3.880 billion recorded in H1 2021. NEM Insurance Plc posted a gross premium of N18.339 billion for the first half of the year 2022 from N15.237 billion in 2021, accounting for an increase of 20.36%.
This indicates that the company paid 23.51% of its gross premium as net claims in half of the year.
NEM Insurance reported a profit after tax of N2.535 billion, a 25.74% increase from N2.016 billion posted in H1 2021.
3. AXA Mansard Plc – N17.584 billion
AXA Mansard paid a whopping claim of N17.584 billion during the quarter as against N10.866 billion in H1 2021.
AXA-Mansard Plc sustained a positive trajectory during the half year ended June 30, 2022, with a 33.92% growth in gross premium. The company reported a premium of N34.717 billion in its half-year 2022 gross premium from N25.923 billion a year ago, taking advantage of the rise in the risk environment due to operational headwinds in the first half of the year.
However, notably, 50.65% of the gross premium was spent as net claims in the review period.
The insurance firm also reported a 61.96% decline in net earnings to N871 million for H1 2022 from N2.290 billion recorded in H1 2021.
2. Custodian and Allied Investment Plc – N20.293 billion
Custodian and Allied Investment Plc saw its claims rise to N20.293 billion in H1 2022 from an inflow of N2.491 billion in the same period of 2021, due to more insurance benefits than claims.
Despite financial and operational headwinds in the first half of the year, Custodian and Allied Investment Plc reported a 10.88% growth in gross premium for the first half of the year 2022 to N36.521 billion as against N32.936 billion in 2021.
Meanwhile, 55.57% of its gross premium was used as net claims during the review period.
The company recorded a 3.12% decrease in profit after tax to N4.723 billion in H1 2022 as against N4.875 billion posted in H1 2021.
1. AIICO Insurance Plc – N21.838 billion
AIICO Insurance incurred a net sum of N21.838 billion on claims in H1 2022, an increase of 4.31%, compared to N20.936 billion spent in the previous year (H1 2021).
AIICO Insurance Plc also reported an increase of 17.82% in gross premium during the half year as it remained resilient in the operational environment amid volatility in the economy. AIICO reported a premium of N40.574 billion during the half year of 2022 as against N34.436 billion, representing a growth of 17.82%, indicating that 53.82% of its gross earnings was used in paying claims in the review period.
AIICO Insurance Plc recorded a profit after tax of N2.048 billion in H1 2022, an increase of 133% when compared to its previous net earnings of N880 million recorded in H1 2021.
What analysts are saying
Mr. Pekun Talabi, managing director, of Regent Alliance Insurance Brokers Limited, reacting to the development, linked the cause of the increase to inflation-induced and rising insecurity in the country.
“The increase in claims during the period could be traced to rising inflation in the country, owing to this development, cost of repairs has gone up astronomically, the high level of insecurity, incidence theft has increased, the rate of employee infidelity is also on the increase,” Talabi said.
The managing director, Tangerine General Insurance Plc, Mr. Mayowa Adeduro said the rise in claims was due to a lot of #EndSARS claims that occurred in 2020 and the incidences of economic downturn made itching for claims even at a little thing.
“We noticed that people’s maintenance culture has gone down due to the high cost of living spiked by inflation. Inflation is a factor because the imported items have gone up due to a hike in the exchange rate and this affected the maintenance culture in Nigeria.
“Disposable income has gone down and people are struggling to maintain what they have. For instance, if vehicles are not maintained very well and an accident occurs, the insurance firm will still pay the claims.
“We also see a bit of employee infidelity in the banking sector but it is not a major factor. Insecurity is also low on the claims because most victims of attacks are not insured. Low maintenance culture, job infidelity, theft of goods on transit and breakdown of vehicles on the roads due to bad roads, all combined to help spike the increase in claims,” Adeduro said.
