The Nigerian Insurance Industry contributes only less than 1% (gross underperformance) of the nation’s gross domestic product in a country of over 160 million people.
A number of myths have been blamed for the underperforming nature of the industry. The most commonly debated factor is that of the low income/earning per cap of the population ($2,600/annum) 1 is responsible for low industry gross premium income. We considered this a myth because, although, 70% of Nigerians are poor (according to National Bureau of statistics), the top 20% of the population are responsible for more than 59% of the national consumption expenditure (see chart below).
A report by the Nigerian Association of Insurers shows that life and motor policies is the highest contributor to premium incomes by 26% and 21% respectively. This indicates the low penetration of insurance given that less than 2 million Nigerians have life insurance 2. The key to unlocking the potential of the industry lies in tapping into the retail sector where the insurance penetration is extremely low with huge service gaps.