National Insurance Commission (NAICOM) has warned that rising inflation in Nigeria remained a major concern for the insurance sector because of its impact on both insurers and the insureds.
Commissioner for Insurance/Chief Executive Officer of NAICOM, Olusegun Omosehin who spoke at the Insurance Meets Tech (IMT) 2024 with theme: ‘Revitalising the Insurance Industry to Risk-Manage Nigeria’s One-Trillion-Dollar Economic Aspiration’, in Lagos, said inflation makes it difficult to operate profitably, especially if claims costs increase due to inflation.
Nigeria’s headline inflation rate eased to 32.15per cent in August 2024 down from the 33.40per cent recorded in July 2024, reflecting a decrease of 1.25 percentage points.
This represents the second consecutive monthly slowdown in inflation after easing in the previous month.
This is according to the Consumer Price Index (CPI) report published by the National Bureau of Statistics (NBS).
However, on a year-on-year basis, the August 2024 inflation rate was 6.35 percentage points higher than the 25.80 per cent rate recorded in August 2023, indicating a significant increase over the past year.
Represented by the Head, Lagos Control Office NAICOM Julius Odidi, the Insurance Commissioner said to mitigate the challenges posed by inflation, insurers must carefully manage their investment portfolios, adapt pricing strategies and maintain adequate reserves.
He said the Commission plays a vital role in fostering innovative business solutions that address pressing economic and social issues in Nigeria’s insurance sector, adding that this commitment extends to ensuring prompt settlement of legitimate claims, promoting market growth through innovation, and driving commercial value within the industry.
He said: “In achieving the objective of revitalising the insurance industry, stakeholders must of necessity address the following fundamental issues plaguing the sector, which include among others; low insurance penetration: lack of public trust; market fragmentation; regulatory reforms and digital transformation and adaptation.
“While the surge of COVID-19 raged in the year 2020-2021 threatening global safety and testing the abilities, resilience and preparedness of nations globally to deal with the unexpected outbreak, the pandemic highlighted the need for digitalisation. In the insurance sector for instance, while lockdowns negatively impacted traditional distribution channels, they also encouraged insurers to develop digital offerings. This has come to show that investing in technology, online platforms, and mobile apps can improve customer experience and accessibility.”
He maintained that essentially, revitalising the Nigerian insurance industry to risk-manage the country’s $1trillion economy literally speaks to the insurance industry’s readiness and preparedness to de-risk the activities that is projected to galvanize productivity, innovations, economic growth and development.
“With the rapid changes in technology and economic/business environment, this discussion is not just timely but also topical to reawaken the need for our dear industry to rise up to the current realities of what is expected of us as an industry,” he stated.
