Competition, innovation and efficient management of insurance-specific risks are the main drivers of the financial performance of insurance companies in Nigeria, according to a study on whether competition is a significant driver of the financial performance of insurance companies in Nigeria.
An article on the findings of the study, carried out by Dr Toluwa Oladele of the Monetary Policy Department of the Central Bank of Nigeria (CBN), was published in the April-June 2025 edition of Bullion, a quarterly publication by the central bank. The study was based on data from the audited financial reports of 20 general insurance companies covering the years 2013 to 2023.
Claim adjustment may have a further impact on the financial performance of insurance companies, says the article. In contrast, average cost does not affect the financial performance of insurance companies in Nigeria.
Consequently, the study recommends that greater effort should be put into innovation. That is, introducing a new product or service to existing and prospective customers can retain existing customers while also attracting new ones.
The article also proposes that the regulatory authority implement measures to promote healthy competition among insurance companies. “While there may be a need for mergers and acquisitions at some point, the regulatory authority should put measures in place to guard against monopolistic tendencies. Finally, efficient management of the companies is key to the survival of the insurance companies in Nigeria.
The study also maintains that efficient management of the companies is key to the survival of the insurance companies in Nigeria.
“Hence, every insurance company in Nigeria should be encouraged to adopt corporate governance practices, and the regulatory authority should continue to conduct periodic and on-site assessments to ensure that companies operate in line with global best practices in corporate governance,” the article reads.
To read the article, please click on this link.