Expert: Insurance Sector Has Biggest Untapped Opportunities in Nigeria Economy

Ayodele Akinwunmi, Chief Economist at United Capital Plc, highlighted that Nigeria's insurance sector possesses significant untapped potential within the country's economy. During the National Conference of the Nigerian Association of Insurance and Pension Editors (NAIPE), Akinwunmi emphasized that the key to success for insurance companies in Nigeria's upcoming decade will be focusing on capital deployment in underwriting excellence, inclusive products, digital infrastructure, and productive long-term investments.

Nigeria's insurance industry currently only accounts for 0.4 percent to 0.5 percent of GDP, making it one of the lowest globally and a major untapped opportunity.

A post-recapitalization approach in Nigeria's insurance sector is anticipated to yield stronger insurers, deeper markets, and a more resilient economy. The recapitalization process would lead to a stronger capital base and risk-based solvency, resulting in higher minimum capital and improved balance sheets. Additionally, adherence to risk-based capital requirements would enhance resilience against shocks.

With the additional capital, Nigerian underwriters would be able to manage larger and more complex risks, retain a greater portion of domestic risks, and reduce reliance on foreign reinsurers. This new capital would also facilitate the adoption of digital platforms and wider distribution networks, data-driven pricing and underwriting, innovative products catering to micro, retail, parametric, Takaful, and specialized sectors, ultimately improving the operators' services, including automated claims processing and enhanced customer experience and operational efficiency.