Insurance companies in Nigeria incurred a sum of N35.6 billion in net claims in the first quarter of 2022 which compares to about N13.5 billion same period in 2021.
Nairametrics compiled claims from Custodian Insurance, 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 first quarter of the year. However, the insurance companies also ended up earning a total of N56.5 billion in the first quarter of the year compared to N45.8 billion same period last year.
This means the insurance companies incurred 63% of their Net Premium as claims expenses in the first quarter of this year compared to 29.47% same period last year.
The rising claims experienced in recent times by these companies have upstaged the rate of growth in premium, 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 high compounded by the COVID-19 pandemic ravaging the world.
The effect was low-capacity utilization by industries and outright shut down of many plants with attendant layoffs impacting the ability of businesses, individuals and governments to enter into insurance contracts and pay appropriate insurance premiums. Business productivity was generally stifled.
What the operators are saying
- 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 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 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.
- Mr. Pekun Talabi, Managing Director, Regent Alliance Insurance Brokers Limited reacting to the development linked the cause of increase to inflation-induced and rising insecurity in the country.
- “The increased in claims during the quarter 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.
This is a list of the top seven insurance firms by claims in Nigeria based on published financial statements.
7. Coronation Insurance – N587 million
- Coronation Insurance Plc trailed a claim payment of N587 million from N1.253 billion reported in Q1 2021. Its gross premium written stood at N4.75 billion in the first quarter of the year, a 37.28% increase over N3.46 billion reported in Q1 2021. Notably, 12.36% of its total gross premium was incurred on claims in the review quarter.
- However, it reported a 25% growth in its profit after tax to N810 million in Q1 2022 from N648 million recorded in Q1 2021.
6. Cornerstone Insurance Plc – N865 million
- Cornerstone Insurance incurred a total of N865 million in claims in Q1 2022, which is 27.1% lower than the N1.19 billion spent in the corresponding period of 2021. Meanwhile, gross premium written rose by 6.84% to N5.95 billion from N5.57 billion in Q1 2021.
- It is worth noting that 14.54% 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 88.14% drop in net earnings to N78 million from N658 million recorded in Q1 2021.
5. Consolidated Hallmark Insurance Plc – N1.12 billion
- Consolidated Hallmark Insurance recorded net claims of N1.12 billion in Q1 2022, a 60.2% increase compared to N698 million incurred in the corresponding period of 2021. The insurance firm recorded a gross premium of N3.69 billion from N3.23 billion, accounting for a growth of 14.4%.
- The company reported 51.89% growth in profit after tax to N442 million in Q1 2022 from N291 million declared in Q1 2021.
4. NEM Insurance Plc – N3.36 billion
- NEM Insurance followed with a net claim payment of N3.36 billion in Q1 2022 from N2.53 billion recorded in Q1 2021. Similarly, the gross premium written for the period was N11.88 billion as against N9.36 billion in the corresponding period of 2021, a year-on-year increase of 26.91%.
- This indicates that the company paid 28.3% of its gross premium as net claims in the first quarter of the year.
- NEM Insurance reported a profit after tax of N1.55 billion, a 41.57% increase from N1.09 billion posted in Q1 2021.
3. AXA Mansard Plc – N7.71 billion
- AXA Mansard paid a whopping claim of N7.7 billion during the quarter as against N5.41 billion in Q1 2021. Its gross premium written stood at N17.26 billion in the review period from N12.81 billion in the comparable period 2021, an increase of 34.69%. Notably, 44.7% of the gross premium was spent as net claims in the review period.
- The insurance firm reported 85.33% decline in net earnings to N386 million for Q1 2022 from N2.63 billion recorded in Q1 2021.
2. Custodian and Allied Investment Plc – N10.91 billion
- Custodian and Allied Investment Plc saw its claims rise to N10.91 billion in Q1 2022 from an inflow of N8.54 billion in the same period of 2021. Its gross premium rose by 13.79% to N17.23 billion from N15.14 billion recorded in Q1 2021. Meanwhile, 63.3% of its gross premium was used as net claims during the review period.
- The company recorded a 64.48% increase in profit after tax to N2.19 billion in Q1 2022 as against N1.33 billion posted in Q1 2021.
1. AIICO Insurance Plc – N11.08 billion
- AIICO Insurance incurred a net sum of N11.08 billion on claims in Q1 2022, a marginal increase compared to N10.98 billion spent in the previous year (Q1 2021). Although, the gross premium for the period grew by 16.56% to N20.22 billion in Q1 2022 from N17.35 billion in Q1 2021, indicating that 54.8% of its gross earnings was used in paying claims in the review period.
- AIICO Insurance Plc recorded a profit after tax of N1.35 billion in Q1 2022, a decrease of 10.69% when compared to its previous net earnings of N1.51 billion recorded in Q1 2021.