The Nigeria Liability Insurance Pool (NLIP) reported 51.6% increase in its gross premium earnings for 2023, attributed to the rise in third-party insurance premiums.
The annual earnings soared from N1.18bn in 2022 to N1.79bn, driven by the National Insurance Commission’s (NAICOM) directive to increase motor insurance premiums effective January 1, 2023.
In the new directive, premiums for private vehicles increased from N5,000 for a N1m Third Party Property Damage Limit to N15,000 for N3m claims. Similarly, owner good vehicles saw their premiums rise to N20m for N5m claims, while staff buses were directed to pay N20,000 premium for N3m claims.
Gboyega Lesi, Chairman of the NLIP, highlighted the substantial impact of this revision at the 14th Annual General Meeting held in Lagos. Lesi stated, “The growth in the gross premium of the pool can directly be attributed to the review of third-party premium by NAICOM which took effect from January 1, 2023.”
Claims expenses for the year also surged by 61%, from N297.3m in 2022 to N478.6m in 2023, due to the increased liability limits and the country’s high inflation rate. Despite this rise in claims expenses, the Pool achieved an underwriting surplus of N533.4m in 2023, demonstrating operational efficiency and prudent risk management.
Additionally, the adoption of the fire tariff with a four-year moratorium contributed significantly to the premium income growth. By the end of the year, the Pool’s total assets had risen by 39%, from N1.3bn in 2022 to N1.8bn in 2023.
Lesi stated his optimism for the Nigerian insurance sector in 2024. He emphasized the potential for growth despite the industry’s current underdevelopment, citing increasing disposable incomes and growing confidence among businesses and consumers.
The expansion of the middle class, contingent on continued economic growth and inflation stabilization, will be pivotal for the sector’s development.
The recent leadership changes within the industry, spurred by the implementation of the Code of Corporate Governance, are expected to enhance transparency, accountability, and effectiveness.
Lesi noted that these changes have brought fresh perspectives and innovative approaches, likely to invigorate the industry and foster a culture of innovation and adaptability.
In 2023, the Nigerian insurance industry reached a milestone with gross written premiums exceeding N1tn for the first time, up from N790bn in the previous year. The industry’s total assets reached N2.67tn, with capitalization amounting to N851bn as of December 31, 2023.
