Why foreign re-insurers dominates Nigeria’s insurance market

Source- Vanguard

THE prevalence of foreign re-insurers, mostly European, that are presently taking about 65 percent share of the Nigerian reinsurance market has been attributed to low underwriting capacity and shareholders’ funds of local reinsurers which are not sufficient to cater for the size of risk exposures.

Africa Re, continental reinsurers, has indicated that it enjoys about 20 percent of Nigeria’s reinsurance market share, while other Nigerian local reinsurers write about 15 percent and the remaining 65   percent are ceded to foreign reinsurers.

The reinsurance company stated: “In Nigeria, the biggest market in the West African region, Africa Re enjoys about 20 percent of the reinsurance market share.

Other Nigerian local reinsurers write about 15 percent market share, while foreign reinsurers have on the average about 65 percent market share. The predominance of foreign reinsurers, mostly European, in the Nigerian reinsurance market has to do with the total low underwriting capacity (and shareholders’ funds) compared to the size of total risk exposures.

The continental reinsurer, however, said it was partnering with local operators to moderate the situation.

It stated: “Standing with Nigerian insurers, the Corporation has developed diverse partnerships to support the market development, for example in the mitigation of the forex risk. Unlike the foreign reinsurers, Africa Re accepts payment of reinsurance premiums in Nigerian bank accounts and in the national currency (Naira).”

The Corporation maintained that as efforts to support Nigerian economy, it has also invested over US$ 90 million in various Nigerian companies and indirectly created over 570 jobs, stressing that besides its involvement in the development of the insurance industry through in-house and market insurance training, it is also working with the National Insurance Commission (NAICOM) to enhance public awareness of insurance products in order to boost insurance penetration in the country.

Of the Corporation’s gross turnover which exceeded US$ 642 million in 2016, only 9.5% of this income is from mandatory sessions (in 41 member countries) of 5% on treaty business, the bulk coming from North Africa. This attests to the fact that the Corporation’s income is obtained on a voluntary, competitive and value-for-money basis.

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