The total assets of Nigeria’s insurance industry rose to N2.7 trillion in the second quarter of 2023 (Q2, 2023). This was revealed in the latest bulletin of the insurance market performance released by the National Insurance Commission (NAICOM) for Q2 2023.
The data indicates that the insurance sector’s assets grew by 17.4% from N2.3 trillion in Q2 2022. Along the business line, non-life insurance businesses accounted for 60.4% of the industry’s total assets, while life business for 39.6%.
The growth in assets, said industry analysts, mirrors the growth in output in the insurance industry.
The most recent Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS) revealed that the insurance sector grew by 7.31% in Q2 2023.
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The insurance sector is critically important to the economy as it provides individuals, businesses, and organisations with a mechanism to mitigate and transfer risks while also preserving wealth from unforeseen events.
The sector’s expansion demonstrates that more individuals and businesses are utilizing insurance in the face of the country’s mounting hazards, such as insecurity.
It also indicates higher investment in the sector, which benefits overall economic growth. With the significant growth in assets, there is a need for robust regulatory oversight by the National Insurance Commission (NAICOM) to ensure that insurers are managing their assets prudently and in compliance with regulations. Insurance industry assets represented less than 1% of total GDP, suggesting a need to drive industry growth further and increase insurance penetration.
However, Insurance companies must continue to invest in product development to meet the evolving needs of consumers. Also, in collaboration with the government, insurance companies should invest in literacy programs to educate the public on the benefits of purchasing insurance products.
Meanwhile, according to the latest Transport Fare Watch of the National Bureau of Statistics (NBS), transportation costs increased significantly in August 2023.
The average fare paid by bus passengers within the city increased by 121.81% year-on-year from N602.48 in August 2022 to N1,336.38 in August 2023.
Similarly, the average fare paid by commuters for intercity bus journeys rose by 56.6% year-on-year from N3,779.96 in August 2022 to N5,918.18 in August 2023. The rising transport costs was attributed to the removal of subsidies on petrol.
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While the development is expected to improve the government’s fiscal position, it imposes a heavy financial burden on the people.
Analysts agreed that without significant government intervention, the rising transportation costs might increase the proportion of Nigerians who are poor.
The high transportation costs also contribute to the economy’s inflationary pressures as businesses pass on their increased transportation expenses to consumers through increased prices.
To mitigate the effect of the high transportation cost on the standard of living, there is an urgent need for the government to implement social protection schemes, especially for the most susceptible households, and communicate regularly to the public on the progress of the schemes.
In addition, the savings from the subsidy should be invested in transport infrastructure and other basic infrastructure such as health and education, which, in turn, would improve the quality of life of an average Nigerian.
