Story highlights
- Leading insurance companies in Nigeria disbursed N40.439 billion in claims during Q1 2024, reflecting a 19.40% increase compared to N33.869 billion in the same period in 2023.
- Economic challenges, inflation, and fraudulent claims have impacted the premium growth rate and profitability of insurance firms, leading to increased claims expenses.
- The insurance sector has faced significant challenges due to high inflation, limited access to foreign exchange, and devaluation of the Naira, which have strained operational costs and affected the overall financial health of insurance companies.
Leading insurance companies in Nigeria disbursed N40.439 billion in claims during the first quarter of 2024, compared to N33.869 billion in the same period of 2023, reflecting a growth of 19.40%.
The increase in claims has impacted the premium growth rate of insurance firms, with economic challenges, inflation, and fraudulent claims being significant contributing factors.
This information, compiled by Nairametrics from the financial reports of AIICO Insurance Plc, Prestige Assurance Plc, NEM Insurance Plc, AXA-Mansard Plc, Consolidated Hallmark Insurance Plc, Coronation Insurance Plc, Veritas Kapital Insurance Plc, and Sovereign Trust Insurance Plc, highlights the performance of some of the largest insurance companies listed on the Nigerian Exchange.
During the period under review, these insurance companies earned a total of N193.694 billion in gross premiums, compared to N103.583 billion in 2023.
This means that the insurance companies paid 20.88% of their premiums as claims expenses in the first quarter of 2024, compared to 32.69% in the same period last year.
The high claims recorded by insurance firms in recent years have impacted their premium growth rates and profitability.
Economic challenges such as limited access to foreign exchange and ongoing security issues in the country have exacerbated the situation.
Inflationary pressure has further strained Nigerian households, intensifying the difficulties faced by insurance companies.
Additionally, the devaluation of the Naira and high energy costs have compounded the challenges for the insurance sector in Nigeria.
Nigerian insurance companies and their claims
Highlighted below are the eight Nigerian insurance firms by claims, based on published financial statements.
Prestige Assurance Plc- N1.575 billion
- Prestige Assurance Plc reported a claim payment of N1.575 billion in the first quarter of 2024 from N2.331 billion reported in 2023. Its gross premium stood at N6.814 billion in 2024, a 41.55% increase over the N4.814 billion reported in 2023. Notably, 23.11% of its total gross premium written was incurred on claims in the review of three months.
- However, Prestige Assurance Plc recorded a profit after tax (PAT) of N2 billion in the first quarter of 2024, a 661% growth over N264.407 million reported in 2023 driven by foreign exchange gains of N1.8 billion.
Consolidated Hallmark Insurance Plc-N3.931 billion
- Consolidated Hallmark Insurance Plc recorded net claims of N3.931 billion in 2024, a 285.77% increase compared to N1.019 billion incurred in the corresponding period of 2023. The insurance firm recorded a gross premium of N12.061 billion from N4.890 billion, accounting for a growth of 146.64%.
- What this means is that the company paid 32.59% of its gross premium income as claims in the first quarter.
- The firm also driven by forex gains reported a 469.85% increase in net earnings to N1.471 billion from N258.137 million recorded in 2023.
NEM Insurance Plc – N9.357 billion
- NEM Insurance followed with a net claim payment of N4.957 billion in 2024 from N3.430 billion recorded in 2023, an increase of 44.52%. Similarly, the gross premium written for the period was N29.032 billion as against N11.717 billion in the corresponding period of 2023, a year-on-year increase of 147.78%.
- This indicates that the company paid 17.07% of its gross premium income as claims in the three months.
- In its First quarter 2024 financial results, NEM Insurance has revealed it achieved a total comprehensive profit of N10.54 billion, which represents a 485.55% uptick from 2023’s N1.80 billion.
AXA Mansard Plc – N12.495 billion
- AXA Mansard paid a whopping claim of N12.495 billion during the financial year 2024 as against N10.127 billion in 2023 an increase of 23.38%, Its gross premium stood at N64.640 billion in the review period from N34.391 billion in the comparable period 2023, an increase of 87.96%.
- Notably, 19.33% of the gross premium was spent as net claims in the review period.
- AXA Mansard Insurance Plc Unaudited Financial Statements for 31 March 2024 showed a 712.76% growth in profit to N12.877 billion from N1.585 billion in Q1 2023.
AIICO Insurance Plc – N13.412 billion
- AIICO Insurance Plc saw its claims stand at N13.412 billion in 2024 from N14.224 billion in the same period of 2023, a drop of 5.7%. Its gross premium rose by 54.64% to N49.083 billion from N31.740 billion recorded in 2023.
- Meanwhile, 27.33% of its gross premium was used as claims during the review period.
- The company recorded a 523% increase in profit after tax to N8.983 billion in 2024 as against N1.442 billion posted in 2023.
Others include
- Sovereign Trust Insurance Plc: N1.476 billion (2023 N758 million) +94.72%
- Coronation Insurance Plc: N1.468 billion (2023 N955 billion) +53.72%
- Veritas Kapital Insurance Plc: N1.125 billion (2023 N1.025 billion) + 9.76%
Operators’ reactions
The Managing Director of Tangerine General Insurance Plc, Mr Mayowa Adeduro, reacted to the development in an exclusive chat with Nairametrics.
He said that the sustainable high claims were due to the incidences of the economic downturn which made people ask for claims even for minor things.
He noted that it is observed that people’s maintenance culture has gone down due to the high cost of living spiked by inflation.
Adeduro said the impact of inflation has made the number of claims go higher. 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.
“Social vices such as armed robbery, kidnapping, setting houses ablaze, among others are on the increase. All of these are having a negative economic impact on the economy. Due to economic hardships, fraudulence insurance claims are also on the rise. There are incidences where some people set their houses ablaze and come for insurance claims.
“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.
Speaking at an Annual General Meeting held in Lagos, Adetola Adegbayi, Chairman of the Nigeria Liability Insurance Pool, highlighted that hyperinflation has significantly increased living costs and insurance claims in Nigeria, primarily due to the country’s high dependence on importation. She also noted a rise in fraudulent claims, which has been exacerbated by inflationary trends and unemployment.
“To address this issue, the industry is advised to be proactive and more dynamic in its claims management, particularly with the increased coverage under motor policies due to recently released rate review guidelines,” Adegbayi stated. “The need for the industry to be more dynamic and proactive in its claims management and administration is therefore essential.”
The Chairman of the Nigerian Insurers Association (NIA), Mr. Olusegun Omosehin, acknowledged that despite the various challenges facing the sector, the industry has remained resilient. He stated:
He noted that despite the economic downturn in Nigeria, which has had a significant impact on all aspects of national life, the Nigerian insurance industry continues to hold its position as an economic driver, restorer of businesses, and a reliable safeguard for national assets.
“It is important to note that, as a part of the national financial system, the insurance industry has also faced its share of the economic and socio-political problems affecting the country over the past year,” he said.
Omosehin emphasized that despite these challenges, insurance companies continue to fulfill their roles as financial intermediaries and business restorers, in line with their mandate.
He added that the Association is working closely with the National Insurance Commission (NAICOM) and other stakeholders within the financial services and technology sectors to promote the insurance business and increase its contribution to the National Gross Domestic Product (GDP).