Leading insurance companies in Nigeria paid N129.93 billion in net claims in 2022, compared to N109.63 billion in 2021.
The insurance companies earned N335.04 billion in gross premium income in 2022, up from N267.66 billion in 2021.
The high claims have impacted the premium growth rate and profitability of insurance firms, with economic challenges, inflation, and fraudulent claims being contributing factors.
Leading insurance companies in Nigeria paid a total of N129.93 billion in net claims in the full year of 2022 as against N109.63 billion recorded during the comparable period in 2021.
This is according to data compiled by Nairametrics from the financial reports of Custodian Insurance, NEM Insurance, Coronation, Mansard Plc, AIICO, Mutual Benefits Assurance, and Cornerstone Insurance, all of which are among the largest insurance companies quoted on the Nigerian Exchange.
The insurance companies also earned a total of N335.04 billion in gross premium income during the period under review, compared to N267.66 billion in 2021.
What this means is that the insurance companies paid 39% of their premium income as claims expenses compared to 41% in the same period last year, a marginal decrease of 2%.
What you should know
According to experts, the high claims recorded by insurance firms in recent years have affected their premium growth rate as well as profitability.
Economic challenges such as access to forex became very difficult as the year progressed, and the gap between the interbank and parallel market rose sharply, compounded by the security challenges in the country.
Also, economic headwinds occasioned by the ripple effects of Russia’s invasion of Ukraine played a huge role.
Inflationary pressure adversely affected many Nigerian household wallets during the year under review.
This inflationary environment heightened the challenges already being faced by insurance companies in Nigeria. Also, shrinking federal/state government revenues, devaluation of the Naira, and high energy costs increased challenges being faced by insurance companies in Nigeria.
Nigerian insurance companies and their claims
Highlighted below are the seven Nigerian insurance firms by claims, based on published financial statements.
7. Coronation Insurance – N2.927 billion
Coronation Insurance Plc trailed with a claim payment of N2.927 billion from N5.113 billion reported in 2021. Its gross premium income stood at N18.688 billion in 2022, a 32.16% increase over the N14.440 billion reported in 2021. Notably, 15.66% of its total gross premium income was incurred on claims in the review year.
However, it reported a profit after tax of N1.345 billion in 2022 from a loss of N2.583 billion recorded in 2021.
6. Cornerstone Insurance Plc – N3.368 billion
Cornerstone Insurance incurred a total of N3.368 billion in claims in 2022, which is 29.78% higher than the N2.595 billion spent in the corresponding period of 2021. Meanwhile, gross premium written rose by 21.27% to N21.678 billion from N17.793 billion in 2021.
It should be noted that 15.54% of the total gross premium income was incurred as claims in the period under review.
Cornerstone Insurance’s Profit after tax, however, came under pressure from growth in claims as the firm reported a 28% drop in net earnings to N2.547 billion from N3.536 billion recorded in 2021.
5. NEM Insurance Plc – N7.647 billion
NEM Insurance followed with a net claim payment of N7.647 billion in 2022 from N5.561 billion recorded in 2021, an increase of 37.51%. Similarly, the gross premium income for the period was N31.434 billion as against N26.545 billion in the corresponding period of 2021, a year-on-year increase of 19.14%.
This indicates that the company paid 24.33% of its gross premium income as claims in the year.
NEM Insurance reported a profit after tax of N5.440 billion, a 22.74% increase from N4.432 billion posted in 2021.
Mutual Benefits Assurance Plc recorded net claims of N15.163 billion in 2022, a 26.88% increase compared to N11.951 billion incurred in the corresponding period of 2021. The insurance firm recorded a gross premium income of N33.613 billion from N26.129 billion, accounting for a growth of 32.47%.
The company reported a profit after tax of N4.064 billion in 2022 from a loss of N5.425 billion declared in 2021.
3. Custodian and Allied Investment Plc – N22.655 billion
Custodian and Allied Investment Plc saw its claims rise to N22.655 billion in 2022 from N20.179 billion in the same period of 2021, a growth of 12.27%. Its gross premium rose by 11.94% to N74.137 billion from N66.228 billion recorded in 2021.
Meanwhile, 30.56% of its gross premium income was used as claims during the review period.
The company recorded a 9.74% increase in profit after tax to N11.162 billion in 2022 as against N10.171 billion posted in 2021.
2. AXA Mansard Plc – N33.180 billion
AXA Mansard paid a whopping claim of N33.180 billion during the quarter as against N24.317 billion in 2021 an increase of 36.45%, Its gross premium income stood at N69.445 billion in the review period from N55.723 billion in the comparable period 2021, an increase of 24.63%.
Notably, 47.78% of the gross premium income was spent as net claims in the review period.
The insurance firm reported a 34.81% decline in net earnings to N2.435 billion for 2022 from N3.735 billion recorded in 2021.
1. AIICO Insurance Plc – N44.987 billion
AIICO Insurance incurred a net sum of N44.987 billion on claims in 2022, a 12.71% increase compared to N39.914 billion spent in the previous year (2021).
The gross premium income for the period grew by 40.82% to N86.043 billion in 2022 from N61.103 billion in 2021, indicating that 52.28% of its gross earnings was used in paying claims in the review period.
AIICO Insurance Plc recorded a profit for the year of N7.552 billion in 2022 as against its previous earnings of N4.916 billion recorded in 2021.
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.
“We noticed that people’s maintenance culture has gone down due to the high cost of living spiked by inflation. 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 its 12th Annual General Meeting held in Lagos, Adetola Adegbayi, Chairman of the Nigeria Liability Insurance Pool, said that the hyperinflation has significantly increased living costs and insurance claims in Nigeria due to high dependence on importation.
She noted that the incidence of fraudulent claims is also on the increase due to the impact of inflationary trends and unemployment.
“To abate this, the industry is advised to be proactive and more dynamic in its claims management, especially with the increased cover granted under the motor policy due to recently released rate review guidelines.
“The need for the industry to be more dynamic and pro-active in its claims management and administration is therefore of the essence,” Adegbayi stated.
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