For every NGN100 ($0.22) of premium collected from insurance customers in Nigeria, insurers pay out only NGN24 in customer benefits, consulting actuary of TAF Consulting Group consulting actuary Debo Ajayi.
Speaking on the topic, ‘Making Insurance Friendly in Nigeria’, at the investiture of the 13th President of the Institute of Loss Adjusters of Nigeria (ILAN) Diipo Olanrewaju in Lagos, Mr Ajayi said that the value of insurance, as perceived by the Nigerian public, forms the basis of their decision to buy voluntary insurance.
He expressed misgivings about the insurance loss ratio in Nigeria, stressing that this ratio is the primary measure of the financial value of an insurance product to customers, reported inspenonline.com.
In Nigeria, per GIZ and The Financial System Strategy 2020 (FSS 2020) reports, the loss ratio varies from ~2% to ~58%, most being in the range of 10-30%, and averaging around 24%.
Mr Ajayi said that in comparison, from OECD 2021 statistics, the loss ratio is 70% in the US, 52% in South Africa and 43% in Egypt.
“I am aware that some incorrectly consider that a low loss ratio is a reward for good underwriting. Such underwriting gains, if shared with the customers in reducing premiums, would have increased the loss ratio.
“This would suggest that the low loss ratio situation over a long period is not good for the customer and invariably not good for the industry.”
Claims
Separately, insurance commissioner Sunday Thomas said that insurance companies with unpaid claims would be mandated to publish the names of the related policyholders in two national newspapers.
He said that the National Insurance Commission had demanded the schedule of outstanding claims from insurers, adding that the regulator was following up with insurers to ensure that outstanding claims are paid. M