Insurance Market Optimism Swells in Nigeria

In this final of five “First Monday” episodes for August 2015, A.M. Best Associate Director, Analytics Deniese Imoukhuede explains how fluctuating oil prices are hampering Nigeria’s insurance market amid significant growth potential given shifting demographics.

“First Monday” is A.M. Best’s monthly program featuring commentary by the company’s leading analysts.

Fluctuating oil prices have been a drag on Nigeria’s economic expansion. This has created a difficult operating environment for the country’s insurance market. However, significant potentials still exist for insurers, since Nigeria has the largest economy in Africa, with an estimated gross domestic product of $574 billion. Additionally, oil production continues to play a heavy role in Nigeria, since more than 90% of its exports are derived from the trade of petroleum.

“Nigeria’s insurance industry has grown significantly over the past decade, boosted by economic expansion,” said Imoukhuede. “Given that the country’s economy is dependent upon commodity pricing, the current low levels of oil pricing are having and continue to have an impact on Nigeria’s economy, since the government is reliant on these oil revenues for 70% of its annual budget.”

Imoukhuede believes Nigeria’s economy is still a positive for the insurance industry, since the country’s economy is still predicted to grow, although at a slower rate; however, Imoukhuede said investors should be cautious since there are a lot of uncertainties within the Nigerian market.

Source: A.M. Best Company

A.M. Best Special Report: Nigeria’s Insurance Sector Faces Economic Challenges, but New Government Improves Prospects

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