THE INSURANCE INDUSTRY IN NIGERIA AND CAPACITY FOR BUSINESS EXPANSION A PRESENTATION BY: Eddie A. Efekoha Managing Director/CEO Consolidated Hallmark Insurance Plc THE CHARTERED INSURANCE INSTITUTE OF NIGERIA 2016 INSURANCE PROFESSIONAL FORUM ABEOKUTA NIGERIA

THE NIGERIAN INSURANCE MARKET STRUCTURE Source: Agusto & Co – 2016 Insurance industry report Nigerian Insurance Industry Primary Segment 29 Non-Life Underwriters 15 Life Underwriters 12 Composite Underwriters 2 Reinsurance Firms Secondary Segment 2 Actuaries 54 Loss Adjusters 577 insurance Brokers 1,900 Registered Agents

M & A ACTIVITIES; 2007 POST CONSOLIDATION EXCERCISE AXA GROUP - MANSARD INSURANCE PLC NSIA HOLDING - ADIC INSURANCE LIMITED GREENOAKS GLOBAL HOLDING - UNION ASSURANCE PLC OLD MUTUAL – OCEANIC INSURANCE LIMITED SANLAM – FBN LIFE ASSURANCE LIMITED NEW INDIA INSURANCE COMPANY – PRESTIGE ASSURANCE PLC SUNU ASSURANCE – EQUITY ASSURANCE PLC CORNERSTONE INSURANCE PLC – FIN INSURANCE FBN GENERAL INSURANCE PLC – OASIS INSURANCE PLC

REINSURANCE ARRANGEMENT FINANCIAL CAPACITY OF AN INSURANCE COMPANY CAPACITY DEFINED THE ABILITY TO SAFELY ASSUME (FINANCIAL) AND UNDERWRITE (UNDERWRITING SKILL) THE INSURABLE RISKS EMANATING FROM OUR LOCAL MARKET FINANCIAL CAPACITY IS A FUNCTION OF : CAPITAL BASE FREE RESERVE REINSURANCE ARRANGEMENT CAPITAL BASE FREE RESERVE REINSURANCE ARRANGEMENT FINANCIAL CAPACITY OF AN INSURANCE COMPANY

FACTORS IMPACTING INSURANCE INDUSTRY CAPACITY & BUSINESS EXPANSION

CURRENT ECONOMIC REALITIES

THE NIGERIAN ECONOMY Terrorism, insecurity & kidnapping amongst other social maladies Devaluation of the Naira and its effects on insurance stock price and capital base Slump in the global price of crude oil & Crude oil over-supply. Continued devaluation of the Naira against other currencies. Scarcity of petroleum products. Weakening of the country’s external reserves position. Insurgency in the North East Region. Vandalisation of Oil Installations/ scale back of exploration by oil firms Rationing of Forex amongst eligible applicants Poverty- reducing consumer purchasing power Inconsistent economic policies Volatile capital market

The Insurance Market Technology Culture & Education Dearth of Skills/Expertise Rising Claims Cost Premium Flight and Rate Cutting Delay or non-payment of claims High cost of accessing reinsurance in international market

The Insuring Public Huge Population, Low Insurance penetration Poverty/Inability to afford Traditional Insurance Cultural & Religious inclinations- Insurance as a service for the Wealthy.

WAY FORWARD ECONOMIC STRATEGIES FOR INSURANCE BUSINESS EXPANSION Creation of employment thus increasing the purchasing power of Nigerians. Curbing inflation and Implementation of economic policies to stimulate the economic growth Tax incentive for certain insurances GOVERNMENT/REGULATORY STRATEGIES Enforcement of compulsory insurances Creation of stricter solvency regulation Implementation of risk based supervision Review of Insurance Act 2003 for industry growth Increase accessibility to credits Broaden distribution Channels

THE WAY FORWARD CONT’D INDUSTRY / MARKET STRATEGIES Human capital development to address emerging insurable risks from agriculture, solid mineral, infrastructure, housing and power. Encourage operators to grow reserve from annual operational profits in other to increase their financial / underwriting capacity. Speedy implementation of NIA/NCRIB sub-committee recommendations on rating. Relentless awareness and publicity campaign. Collaborative investment in technology to improve insurance distribution, reduce administrative cost and thus increase profitability. Right pricing of our products to be profitable and thus enhance our financial capacity. Development of Innovative Insurance Solutions/Products to Increase penetration. Review of treaty arrangement for better coverage, reduce risk volatility and use of reinsurance pools to provide cover for new risks in the market such as sabotage, kidnap etc. Form strategic alliance through mergers and acquisition.

CONCLUSION Insurance is all about sharing of risks guided by laid down principles and given our population, right leadership that is focused on the issues of power, infrastructural development/renewal, broadening of revenue base, the dogged stance of NAICOM to drive growth and ensure strict compliance with relevant laws and operators who are determined to play according to the rules then Insurance Industry cannot but be the toast of investors and grow at double digits