Economic experts have predicted that insurance industry would experience a bumper premium income generation for the year 2016, just as they have they have noted that operators would witness major drop in Third party motor insurance business during the year.
The experts, however, said the bumper premium income for the industry would depend on federal government’s ability and willingness to pay its outstanding premium of N10 billion to the industry as promised in November last year by the Minister of Finance, Kemi Adeosun.
The experts, however, said insurers, especially underwriters of non life insurance, will experience a drop in premium generating from third party motor insurance if some state governments, go ahead with their planned retrenchment in 2016.
They also expressed fears that scramble for customers may further force prices of insurance products down and may also increase cases of unprofessional practices like rate cutting except there is intervention from the industry regulator.
One of the experts, Bismark Rewane, said during the year, construction companies would return to site and this would lead to growth in premium income from Construction and Engineering All Risk premium income.
The experts however said merger and acquisitions are not expected to occur in the industry this year except the regulator calls for fresh recapitalisation but predicted that there will be increase in foreign company’s participation in Nigerian insurance market.
According to them, innovation through Information Technology, would remain a tool for driving the micro insurance product distribution during the year while NAICOM’s commitment to the policy of ‘no premium no cover’, is expected to boost the overall premium income of the industry during the year.
They also highlighted other events that would shape insurance industry during the year, saying that the commitment of the Chartered Insurance Institute of Nigeria (CIIN) to insurance education would further popularise insurance and deepen the market.
According to the experts, there will be establishment of more branches and more job opportunities in the industry through regulatory impacts.
The experts however warned that with delay in salaries and retrenchment of workers at both state and federal government levels, there will be slow down in micro insurance business as most of the policy holders are lower and middle class income earners from public and private sectors.
This, according to them would lead to drop in third party motor insurance business because insurance will definitely not be part of their priorities.
They also said High Life and pension claims would be expected from the public during the year just as there will be boost on Terrorism Insurance, kidnapping and ransom for expatriates in the face of the inauguration of committee for rehabilitation of North-East.