The Nigeria Liability Insurance Pool (NLIP) reported a 51.6% increase in gross premium earnings for 2023, rising to N1.79 billion from N1.18 billion in the previous year. This surge was primarily driven by the hike in premiums for third-party motor insurance, effective from January 2023.
The National Insurance Commission (NAICOM) implemented the new premium rates for motor insurance starting January 1, 2023. Under the revised rates, private vehicle owners saw their premiums increase from N5,000 for N1 million Third Party Property Damage coverage to N15,000 for N3 million coverage. Similarly, owners of goods vehicles were directed to pay N20 million in premiums for N5 million claims, while staff buses had their premiums set at N20,000 for N3 million claims.
During the 14th Annual General Meeting of the Pool in Lagos, NLIP Chairman Gboyega Lesi attributed the premium growth directly to NAICOM’s revised third-party premium rates.
“Claims expenses grew by 61% from N297.3 million in 2022 to N478.6 million in 2023. This increase is primarily due to the higher third-party liability limits, which rose from N1 million to N3 million for private motor vehicles and to N5 million for third-party property damage, as well as the country’s high inflation rate,” Lesi explained.
He also noted that the increase in property pricing, driven by the adoption of the fire tariff with a four-year moratorium for full implementation, significantly contributed to the growth in premium income. Despite the rise in claims expenses, the Pool achieved an impressive underwriting surplus of N533.4 million in 2023, demonstrating operational efficiency and prudent risk management.
The Pool’s total assets grew by 39%, from N1.3 billion in 2022 to N1.8 billion in 2023.
Looking ahead to 2024, Lesi expressed optimism about the Nigerian insurance sector’s growth potential, albeit from a low base. He acknowledged the industry’s underdevelopment due to economic challenges and income disparities but highlighted the potential for growth driven by increasing disposable incomes and rising business and consumer confidence.
“The sector’s development will depend on the expansion of Nigeria’s middle class, which requires sustained economic growth and a stable inflationary environment,” Lesi said.
Lesi also emphasized the positive impact of leadership changes across the industry in late 2023, following the implementation of the Code of Corporate Governance. These changes are expected to enhance transparency, accountability, and effectiveness within the sector, ushering in a new era of leadership marked by fresh perspectives and innovative approaches.
“The restructuring at the executive level and the appointment of new leaders to spearhead strategic initiatives will invigorate the industry, fostering a culture of innovation and adaptability in response to evolving market dynamics,” Lesi added.
The NLIP provides reinsurance services for its members’ third-party liabilities, including motor and general third-party liabilities, workmen’s compensation, employer’s contingent liabilities, and builders and occupiers liabilities, among others.
In 2023, the Nigerian insurance industry saw significant growth, with gross written premiums surpassing N1 trillion for the first time, up from N790 billion the previous year. Total industry assets reached N2.67 trillion, with capitalization amounting to N851 billion as of December 31, 2023.
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