Yemisi Izuora
Nigeria, has been tipped to be among top global contenders in the insurance life segment given the size and value of its market.
MAPFRE’s Global Insurance Potential Index (MAPFRE GIP), in a report monitored by Oriental News Nigeria, indicated that Nigeria, Egypt and Pakistan in the next few years would be top contenders in that space given the scale of its market.
Currently, China, the US, and India top the list of countries with the highest insurance potential in both life and non-life lines, according to a new report from MAPFRE Economics.
However, MAPFRE also recognised the value of markets that have capacity to close their own IPG, but have relatively little economic weight.
“For example, there are three countries Nigeria, Egypt and Pakistan that, in the next few years could be contenders in the life segment for the top 10 positions currently occupied by other emerging markets,” MAPFRE said in a statement. “Within the non-life line, Pakistan, Egypt, Bangladesh, Nigeria and the Philippines (in that order) have been identified as countries with huge potential to reduce their domestic insurance gap.”
MAPFRE’s Global Insurance Potential Index (MAPFRE GIP) has been updated with the latest available data from 2019.
The index is calculated for 96 insurance markets, including both developed and emerging markets, with the aim of measuring the insurance protection gap worldwide by creating a metric that summarises the markets offering the highest insurance potential in the medium and long-term.
The index is built through estimates of the size of the insurance protection gap (IPG) in these markets and their ability to consume it. The IPG represents the difference between the insurance coverage that is necessary and beneficial to the market, and the amount of that coverage actually purchased.
The global IPG has reached $5.77 trillion (around £4.3 trillion), or 658 basis points of global GDP, according to MAPFRE. The life segment accounts for 70.8 per cent, $4.09 trillion) of the IPG, with the non-life segment accounting for the remaining 29.2 per cent or $1.7 trillion.
“More than 70 per cent of the current gap is explained by the underinsurance of emerging countries,” said Manuel Aguilera, MAPFRE Economics general manager. “In this sense, the aging populations, their income growth, and size are factors that determine the widening insurance gap for the life business in these countries. The IPG in the non-life business has also grown over the last three decades, although significantly less.”
The MAPFRE GIP also accounts for other variables, including penetration, economy size, and population size, in order to rank markets based on their contribution to closing the global insurance gap. In order to be ranked highly, markets need to be large (as measured by GDP) and also need to have adequate capacity to close their own IPG.