The objective of the Nigeria Insurance for Growth Study is to understand the role insurance has played, and can play, to support sustainable development and economic growth in Nigeria. It forms part of a broader set of insurance diagnostic studies being conducted in Ghana, Kenya and Rwanda as a partnership between DFID, the World Bank, FSDA and Cenfri to investigate how insurance is contributing to growth and development.

1. Stakeholder workshop
Lagos | 17 September 2018
Insurance for
inclusive growth

2. Why are we here?
2
How does – and can – the insurance market
contribute to sustainable and
inclusive growth in Nigeria?

3. Three lenses
How does insurance affect growth and development?
Source: Chamberlain et al. (2017) | 3
Insurance
Household
resilience
Risk transfer
Productive risk-taking
Peace of mind
Access to critical
services
Business
resilience
Risk transfer
Risk management
Credit market
development
Capital market
development
Mobilising capital
Pooling capital
Allocating capital
Building institutions
Welfare
improvements
Business growth,
investment
LT investment
allocations, incl
infrastructure
Growthandpovertyreduction

4. About this study
4
Commissioned by DFID, part of four-country project
Method:
• 60-plus in-country consultations
• NIA 2016 data analysis, EFInA A2F 2016 data analysis, desktop research
Purpose of workshop:
• Feedback and discussion

5. 1. Context drivers
2. Market overview
3. Unpacking the three roles:
• Insurance for household resilience
• Insurance for business resilience and enterprise development
• Role in capital market development and investment
4. Imperatives for market development
Outline
5

6. Context drivers

7. Context drivers
Significant opportunities despite tough conditions
Source: various | 7
197 million, 2.6% growth; 50% urbanised, 28% smartphone and 46% internet
= large-scale opportunity.
Large, growing
and connected
population
Low mobile FS, poor electricity and other service delivery.
Regional and economic divisions fuel terrorism.
But constraints
and divides exist
“Transformative” recession to reduce oil dependency;
economic recovery with slowing inflation.
Diversification
imperative
Important role in economy and livelihoods, untapped opportunities.
Overcoming value chain constraints and risks central.
Agriculture core
to diversification
Strong entrepreneurial spirit large informal MSME economy. Tough, but
improving business environment (145th worldwide).
Self-starter
economy

8. Market overview

9. Financial sector overview
Substantial financial sector reaching many, but insurance small component
Source: SEC (2017); NIA (2016); CBN (2016); EFInA (2016) | 9
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E]
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E]
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E]
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0%
10%
20%
30%
40%
Percentageofadults
Financial inclusion
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]
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], Insurers
[CELLR
ANGE]
Share of financial sector assets
Commercial
banks
Pension
schemes

10. Adapted from Webb (USAID, 2006); Lester (2009);
OECD (n.d.); Dickinson (2000); Axco | 10
Stage 1
Nascent
Stage 2
Early growth and
compulsory
Stage 3
Early retail
Stage 4
Diversified retail
Economic development
Insurancepenetration
Nigeria
0.3%
Insurance sector in context
Typical “Stage 2” features

11. Insurance sector
Gross written premiums are not growing as a percentage of GDP
0
0.1
0.2
0.3
0.4
0.5
0.6
1996 2001 2006 2011 2016
PercentageofGDP
Life General
Source: Swiss Re (2017) | 11
2003: Capital requirements increase 2007: Capital requirements increase
2018: Tiering
117 insurers reduced to 103 103 insurers reduced to 49

12. Insurance market landscape
Many providers, significant recent foreign entry, broker-driven
Source: NAICOM (2018); NHIS (n.d.);
PWC (2015); Guardian (2018) | 12
14
28
2 2
60
13
13
0
10
20
30
40
50
60
70
Life insurers General
insurers
Takaful
insurers
Local
reinsurers
Health
maintenance
organisations
(HMOs)
Registeredoperators
Composite insurers
70%
30%
Gross-written premiums (2015)
451 brokers
Five compulsory lines:
• Motor third-party insurance
• Statutory group life insurance
• Builders’ liability insurance
• Occupiers liability insurance
• Healthcare professional liability insurance
13 foreign
acquisitions in
recent years
~20k agents

13. General insurance market: snapshot
A fragmented market vulnerable to economic shocks
Source: NIA (2016); Swiss Re (2016) | 13
43 insurers
HHI: 474
Zenith General
5%
Royal Exchange
5%
NEM
6%
AXA Mansard
7%
Custodian and Allied
9%
Leadway Assurance
11%
1996 2000 2004 2008 2012 2016
General insurance premiums writtenLegend
Top tier (five largest by market share)
Middle tier (remainder)
Bottom tier (less than 1% market share) NGN189 bn

14. General insurance market: performance
Market share a strong predicter of profitability
Source: NIA (2016) | 14
Operators Claims ratio
Market share Expense ratio
Underwriting profit
Net profit
5
16 16
Top tier Middle
tier
Bottom
tier
37%
41%
22%
Top tier
Middle tier
37% 33%
25%
Top tier Middle
tier
Bottom
tier
60%
104
% 96%
Top tier Middle
tier
Bottom
tier
3%
-37%
-21%
Top
tier
Middle
tier
Bottom
tier
[CEL
LRA
NG…
2% 1%
Top tier Middle
tier
Bottom
tier

15. Life insurance market: snapshot
Growth off low base, clear market leaders and large tail-end
Source: NIA (2016); Swiss Re (2016) | 15
FBN Life
8%
Custodian
Life 10%
African
Alliance
10%
AIICO
15%
Leadway
25%
1996 2000 2004 2008 2012 2016
Life insurance premiums written:
27 insurers
HHI: 1173
Legend
Top tier (5 largest by market share)
Middle tier (remainder)
Bottom tier (less than 1% market share)
NGN 127 bn

16. Life insurance market: performance
Market share a strong predicter of profitability
Source: NIA (2016) | 16
68%
10%
22%
Top tier Middle tier
Bottom tier
5
9 9
Top tier Middle
tier
Bottom
tier
Operators Claims ratio
41%
51%
80%
Top
tier
Middle
tier
Bottom
tier
Market share Expense ratio
25%
54%
63%
Top tier Middle
tier
Bottom
tier
Underwriting profit
Net profit
34%
-6%
-43%
Top tier Middle
tier
Bottom
tier
21%
1%
-24%
Top tier Middle
tier
Bottom
tier

17. Health insurance market
Fragmentation and structural constraints
Source: Omomia (2018) | 17
[CELLRANGE
]
[CELLRANGE
]
Market share (policyholders)
HMOs NHIS
55%
45%
HMOs
Top 10 The rest
70
60
34
2015 2017 2018
Number of registered
HMOs

18. Unpacking the
three roles of insurance
in growth and
development

19. Insurance for household resilience
19
Insurance
Household
resilience
Risk transfer
Productive risk-taking
Peace of mind
Access to critical
services
Business
resilience
Risk transfer
Risk management
Credit market
development
Capital market
development
Mobilising capital
Pooling capital
Allocating capital
Building institutions

20. Insurance for household resilience
Key findings
20
• High risk experience and low insurance uptake
suggests limited risk transfer role for most.
• Compulsory insurance value-add often unclear, with
low claims ratios.
• Health a key need with much untapped potential for
ensuring access to health services.
Household
resilience
Risk transfer
Productive risk-
taking
Peace of mind
Access to critical
services

21. Household risk experience
Health risks identified as the most pervasive risk for Nigerians
Source: EFInA A2F (2016);
National Bureau of Statistics (2016) | 21
43%
18%
17%
12%
5% 4%
2%
Health Death and
disability
Family and
friends
Business Theft Natural
disaster
Other
Percentageofadults

22. Household risk experience
Welfare reducing risk mitigation strategies employed by households
Source: EFInA A2F (2016);
National Bureau of Statistics (2016) | 22
33%
26%
24% 24%
7%
2%
27%
Credit Sale of assets Family and
friends
Reduce food
consumption
Rely on savings Insurance Do nothing
Percentageofhouseholds
Reported coping mechanisms to shocks

23. Uptake of insurance products corresponds with risks experienced
Role of insurance in managing risk
Source: EFInA A2F (2016) | 23
0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70%
Medical/critical illness
Vehicle insurance
Household contents
Building insurance
Livestock
Other
Life insurance
Endowment/investment saving plan
Education savings
Credit life/loan protect
Personal accident
Group life
Mortgage protection
Group accident
Travel
Annuities
Percentage of adults
Life insurance General insurance Health insurance

24. Source of insurance mainly through existing relationships
Role of insurance in managing risk
Source: EFInA A2F (2016) | 24
34%
27%
16%
13%
6%
4%
Employer Family member Agent Bank Broker Other
Percentageofinsured

25. A target market lens
Market segmentation a useful tool for identifying resilience needs
Source: EFInA A2F (2016) | 25
Urban Rural
8 million
5.4 million
10 million
21 million
18.5 million
32.2 million
Salaried employees
Informal employees
Non-agri businesses
Agric businesses
Farmers
Dependants
NGN 30,800
NGN 20,000
NGN 5,000
NGN 16,000
NGN 10,100
NGN 8,000
Medianmonthlyincome

26. Role of insurance in managing risk
How does the role of insurance differ for different target market groups?
Insurancepenetration
1.9%
10.6%
1.3% 1.0% 0.6% 0.9% 1.3%
Population Salaried
employee
Bus./trader:
non-agriculture
Dependant Farmer Bus./trader:
agri
Informal
employee
Source: EFInA A2F (2016) | 26

27. 0 170 340 510 680 850 1,020 1,190 1,360 1,530 1,700
Thousands of adults
Role of insurance in managing risk
Insured
Source: EFInA A2F (2016) | 27
Insurancepenetration
1.9%
10.6%
1.3% 1.0% 0.6% 0.9% 1.3%
Population Salaried
employee
Bus./trader:
non-agriculture
Dependant Farmer Bus./trader:
agri
Informal
employee

28. • Compulsory insurance facilitates scale: ~12 million registered vehicles
– If successful, can generate trust and trigger voluntary uptake.
– If poor value proposition, low claims ratios and patchy enforcement entrench
distrust.
– The current value proposition to customers is not clear.
Individual and household insurance: opportunities
Role of compulsory
28

29. • Health Insurance is the largest need (43% of risk experienced).
– Low public expenditure on health care (0.6% GDP)
– Only 600,000 adults covered by health plans
– Health is an asset everyone seeks to protect
Individual and household insurance: opportunities
Untapped opportunity in health insurance
29

30. • Bancassurance has potential: 38% of adults have a bank account
– Leverage strong client base of banking sector
– Regulatory restrictions limit reach
Individual and household insurance: opportunities
Large bancassurance opportunity
30

31. • Mobile technology presents potential to reach mass market
– 58.2 million adults have access to mobile phones
– Regulatory restrictions and uncertainties inhibits this opportunity
Individual and household insurance: opportunities
Mobile insurance scope for scale
31

32. • Annuities a growth area for life market
– NGN71 billion premiums in 2017
– 22% of retires chose annuities in 2017
– PENCOM’s micro-pension plan poses significant opportunity
Individual and household insurance: opportunities
Growing annuities market
32

33. • Takaful potential considering large Muslim population
– Insurance penetration in Northern regions very limited
– Takaful insurance can help generate trust in insurance in northern markets
Individual and household insurance: opportunities
Takaful still nascent market
33

34. Individual and household insurance: opportunities
Large untapped opportunities
4,600,000
17,300,000
11,800,000
41,700,000
21,900,000
Prime target market Easy to reach Moderate to reach Hard to reach The rest
35,000 20,000 10,000 10,000 5,800
Monthly median income in NGN
EFInA A2F (2016): 34
Salaried
employee
Banked Urban
Access to
mobile phone
Prime target market x x x x
Easy to reach x x x
Moderate to reach x x
Hard to reach x

35. 14% 3% 1% 1% 0%
Prime target market Easy to reach Moderate to reach Hard to reach The rest
Insured
Uninsured
Individual and household insurance: opportunities
Large untapped opportunities
EFInA A2F (2016) | 35
35,000 20,000 10,000 10,000 5,800
Monthly median income in NGN
4,000,000
16,800,000
11,700,000
41,100,000
21,900,000

36. Insurance for business resilience and
enterprise development
36
Insurance
Household
resilience
Risk transfer
Productive risk-taking
Peace of mind
Access to critical
services
Business
resilience
Risk transfer
Risk management
Credit market
development
Capital market
development
Mobilising capital
Pooling capital
Allocating capital
Building institutions

37. Risk management needs of corporates and SMEs
Key messages
• Corporate and industrial risk cover plays a prominent
role in the general insurance market.
• Limited focus on loss prevention, safety and risk
management advice
• Absence of tailored SME insurance products
• SME access to credit limited by suboptimal risk
management mechanisms
37
Business
resilience
Risk transfer
Risk management
Credit market
development

38. Dominant corporate insurance lines driven by compulsion and regulation
Distribution of general insurance
Source: NIA (2016) | 38
Oil and gas
Motor
Fire
General accident
Marine and aviation
Miscellaneous
Engineering
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Gross premium income (% of general insurance business)

39. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Gross premium income (% of general insurance business)
Dominant business lines driven by compulsion and regulation
Distribution of general insurance
50%
Source: NIA (2016) | 39
Motor vehicle
Oil and gas

40. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Gross premium income (% of general insurance business)
Dominant business lines driven by compulsion and regulation
Distribution of general insurance
Fire
General accident
82.4%
Source: NIA (2016) | 40
Motor vehicle
Oil and gas

41. Case study: Oil and gas
Oil-and-gas industry is critical for the economy and lucrative for insurers
12.9 17.4
31.6
26.1
34.1
55.8
66.8
52.9 51.1 54.1
34.5
81.5
-17.4
30.8
63.4
19.8
-20.9
-3.3
5.9
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Oil and Gas GWP (NGN billion) y-o-y growth (%)
Source: NIA (2016) | 41

42. Large oil-and-gas insurance claims
Infrequent – yet relatively large – risk experience in oil and gas
376260 157114 96 7627
Number of
large claims
Source: NIA (2016) | 42
0
100
200
300
400
500
600
Oil and Gas Marine &
aviation
Fire Miscellaneous Engineering General
accident
Motor
ValueofLargeclaimspaid
(NGNmillion)
Maximum claim size Average claim size Minimum claim size

43. Nigerian oil-and-gas insurance arrangements
In principle
• The Nigeria Oil and Gas Guidelines encourages
local risk retention.
• Small asset base of insurers, taking on large
oil-and-gas risk
• Reinsurance capacity is considered as part of
insurer or pool capacity for oil-and-gas policies.
43
30%
70%
Local content requirement
Offshore Retained locally
Offshore
Retained
locally

44. 29.4%
4.6%
66.0%
2016
Nigerian oil-and-gas insurance arrangements
In practice
In principle In practice
Source: Authors’ own based on stakeholder interviews
and NIA data | 44
49.9%
3.5%
46.6%
2013
Retained
locally
Offshore
reinsurance
Domestic
reinsurance
30%
70%
Local content requirement
Offshore Retained locally
Offshore
Retained
locally

45. Case study: Agriculture
Risk management needs along the cocoa value chain
Inputs Production Warehousing Marketing Processing
Industrial
Political
Transport
Weather-related
Biological
Related to illegal activities
Economic
Direct
negative
effect
Indirect
negative
effect
Source: Monastyrnaya (2016) | 45

46. Risk exposure of agribusinesses and farmers
A combination of personal and business risks are top of mind
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Agri-business Farmer
%ofpopulationsubgroupreportingrisk
experience
Health Death and disability Family and friends Business Theft Natural disaster Other
Personal risks
80%
Agri-business risks
20%
EFInA 2016 | 46

47. Provision of agricultural insurance
Limited private sector participation
Crops Livestock
Other
agricultural
items and
enterprises
Farm buildings,
machinery and
equipment
Premium subsidies
on selected crops
and livestock items
NAIC
Private
insurers
NAIC

48. Agricultural credit schemes
Unlocking access to credit through broad-based insurance provision
Bank of
Agriculture
(BOA)
Agricultural Credit
Guarantee Scheme
(ACGSF)
Interest Drawback
Programme
(IDP)
2009
1973
2010
1977
2012
2002
2015
2006
Agricultural Credit
Support Scheme
(ACSS)
Commercial Agricultural
Credit Scheme
(CACS)
Nigeria Incentive-Based
Sharing System for
Agricultural Lending
(NIRSAL)
Refinancing and
Rediscounting Scheme
(RRF)
Anchor Borrowers’
Programme
(ABP)
Action Aid (2017) | 48
2010
Nigeria Incentive-Based
Sharing System for
Agricultural Lending
(NIRSAL)

49. Area yield insurance
An opportunity for scale
Source: Stakeholder interviews | 49
Royal exchange
IGI
Leadway (assistant lead)
NAIC (lead)
AXA Mansard
Africa Re
Reinsurance Consortium

50. • 10,000 – 30,000 farmers
• Maize, rice, wheat, cassava
Area yield insurance
An opportunity for scale
Source: Stakeholder interviews | 50
Royal exchange
IGI
Leadway (assistant lead)
NAIC (lead)
AXA Mansard
Africa Re
Reinsurance Consortium
Coverage
Mechanics
Challenges
• Pre-determined index
• Limited data
• Premium perceived as too high

51. Enterprise development
Challenges and opportunities
Focus on corporate sector Untapped SME market
Limited domestic capacity to carry large
oil-and-gas risks
Imperative to revisit local content
requirements
Credit constraints limit SME and
agricultural development
Holistic risk management solutions
essential for business resilience
51

52. Role in capital market development and investment
52
Insurance
Household
resilience
Risk transfer
Productive risk-taking
Peace of mind
Access to critical
services
Business
resilience
Risk transfer
Risk management
Credit market
development
Capital market
development
Mobilising capital
Pooling capital
Allocating capital
Building institutions

53. Capital market development
Key messages
• Insurers not attractive investments or large
institutional investors
• Pensions greatly enlarging the investment
footprint
• Bulk of investments allocated to government
debt
• Government debt allocations moderating the
economic multiplier of institutional investments
53
Capital market
development
Mobilising capital
Pooling capital
Allocating capital
Building institutions

54. Raising capital from public capital markets
Limited growth opportunities in the insurance sector
-8.6
5.8
10.4
23.8
37.0
39.0
42.4
46.1
51.2
70.3
73.3
-1.6
21.9
-11.4
-26.4
49.7
-7.9
-10.0
-7.2
7.0
-0.6
2.2
NSE ASeM INDEX
NSE Oil/Gas Index
NSE Insurance Index
NSE Industrial Index
NSE Consumer Goods Index
NSE Lotus Islamic Index
NSE Main-Board Index
NSE 30 Index
NSE Premium Index
NSE Pension Index
NSE Banking Index
YOY percentage change
2016
2017
Source: NSE | 54

55. Increased interest from foreign direct investors
No fewer than 13 transactions since 2010
2010 2011 2012 2013 2014 2015 2016 2017 2018
South Africa
South Africa
Côte d’Ivoire
Mauritius
South Africa
South Africa
France India Côte d’Ivoire South Africa
Germany
United Kingdom
United States
55

56. Insurance and pension asset pools, NGN billion
Significant investment potential
Insurance AUM: 774
• Insurance industry itself is still too small to
play a substantive role as an institutional
investor
56 | Source: Authors’ own estimates (SEC, NIA, CBN)

57. • Significant assets under management, when
pensions sector is included
• Direct linkage between the insurance and
pensions sector in the form of the annuities
market
Insurance and pension asset pools, NGN billion
Significant investment potential
Pension AUM: 6,159
Insurance AUM: 774
• Insurance industry itself is still too small to
play a substantive role as an institutional
investor
57 | Source: Authors’ own estimates (SEC, NIA, CBN)

58. Sources and allocations of institutional assets
Cautious investment allocations
Pension AUM: 6,159
Government bonds: 3,669
Short term investments: 1,548
Ordinary shares: 585
Corporate debt securities: 249
State government securities: 148
Collective investment schemes: 40
Real estate: 375
Liquid assets: 242
Other investments: 77
Source of funds Target investments
NGN,billion
Insurance AUM: 774
58 | Source: Authors’ own estimates (SEC, NIA, CBN)

59. Significant government debt allocations
Full potential of institutional investment remains unrealised
59 | Source: Authors’ own estimates (SEC, NIA, CBN)
Pension AUM: 6,159
Insurance AUM: 774
Government debt
allocations
NGN,billion
Government bonds: 3,669
Short term investments: 1,548
Ordinary shares: 585
Corporate debt securities: 249
State government securities: 148
Collective investment schemes: 40
Real estate: 375
Liquid assets: 242
Other investments: 77

60. Capital intermediation
Challenges and opportunities
Capital raising constrained Increased foreign investor interest
Small insurance investable assets Pension and annuity market development
Cautious investment allocations
Appropriate investment strategies,
guidelines, and behaviours
Government debt allocations suboptimal
60

61. Imperatives for
development

62. Gaps and opportunities
Large opportunities despite tough conditions
Insurance
Household
resilience
Business
resilience
Capital
mkt devt
• Limited current role, large constraints to serve broad base, but substantial scope
for easy to reach groups, aggregator-based distribution, takaful, MI.
• Important role in corporate sector, but bulk of risk not carried domestically
• Can serve as enabler for SME industrialisation, but current role limited
• Scope to tap into agriculture value chain opportunities
• Limited ability to raise capital to strengthen core business
• Small premium pool limiting institutional investor role
• Pensions sector larger role in capital market development
62
Stage 1 Stage 2 Stage 3 Stage 4
Nigeria
0.3%
Market prognosis – Stage 2:
• Low insurance penetration
• Fragmented market with often poor performance
• Limited asset-base constraining capacity to absorb risk
• Skills constraints
• Trust deficit

63. Gaps and opportunities
Large opportunities despite tough conditions
Stage 1
Nascent
Stage 2
Group and
bundled
Stage 3
Early retail
Stage 4
Diversified retail
Insurance
Household
resilience
Business
resilience
Capital
mkt devt
Limited current role, large constraints to serve broad base, but substantial low-hanging fruit in the
interim (easy to reach groups, aggregator-based distribution, takaful, MI).
Important to corporate and industrial sectors, notably oil and gas, but bulk of risk not carried
domestically. Insurance can serve as an enabler for SME industrialisation, but current role limited;
scope for PPPs to tap into agriculture value chain opportunities.
Limited ability to raise capital to strengthen core business. Small insurance premium pool limiting
the insurance sector’s institutional investor role. Pensions sector larger role in capital market
development.
63
A long-term game considering fundamental market constraints
Several low-hanging fruit in the interim
Market prognosis – Stage 2:
• Low insurance penetration
• Fragmented market with often poor performance
• Limited asset-base constraining capacity to absorb risk
• Skills constraints
• Trust deficit

64. Imperatives for market development
Cross-cutting market changes to promote insurance market development
64
1. Improve market fundamentals
2. Enforcement of compulsory insurance
3. Broaden distribution options
4. Consider and address unintended regulatory consequences
5. Skill transfer and development
6. Revisit implications of local content requirements
7. Anchor inclusive insurance approach in broader insurance sector development
64

65. 1. Improve market fundamentals
A healthy insurance industry to achieve growth
Underwriting profit: general
3%
-37%
-21%
Top tier Middle tier Bottom tier
Underwriting profit: life
34%
-6%
-43%
Top tier Middle tier Bottom tier
65
Mergers and exit of poor performers required to build trust and capacity to
underwrite large industrial risks

66. 1. Improve market fundamentals
A healthy insurance industry to achieve growth
5.6 3.4 1.2 1.5
8.3
3.4 1.2 3
0
10
20
30
40
Nigeria Ghana South Africa Kenya
USDmillion
Capital requirements
Life General
17
25
42
8
13
21
6
8
14
0
10
20
30
40
Life General Composite
New tiered capital requirements
Tier 1 Tier 2 Tier 3
Mergers and exit of poor performers required to build trust and capacity to
underwrite large industrial risks
Raising capital requirements, in itself, not sufficient to improve market
performance and conduct – merely higher entry barriers
66

67. 2. Skills transfer and development
Fundamental to fixing market fundamentals
• Imperative for concerted effort
- Underwriting, cost management and actuarial; product design and delivery
• Better cost management particularly important
25%
54%
63%
Top tier Middle tier Bottom tier
60%
104%
96%
Top tier Middle tier Bottom tier
General insurance – expense ratioLife insurance – expense ratio
67

68. • Sets tone for public perception
• Can create scale, trigger voluntary uptake – OR can undermine reputation
• Compliance by government to lead by example an important starting point
3. Enforcement of compulsory insurance
Compulsory insurance key to market perceptions
• Poor enforcement
• Low claims ratio
• Claims capped at NGN1m
68

69. 4. Broaden retail distribution options
Diversifying distribution necessary for unlocking retail market
• Caps favour broker-led market
• Incentives for big-ticket contracts
• Regulatory options limited so far
• Brokers will remain important in corporate market, but accessing retail
client base outside immediate urban areas requires alternatives
‐ Some life insurers making successful use of agents
‐ M-insurance, bancassurance as yet underutilised
‐ MI guidelines broaden options, but commissions constrain incentives
‐ Upcoming guidelines for web aggregators, etc.
69

70. 5. Address unintended regulatory consequences
Important regulatory developments do not go full circle
• Proactive market development support by regulators, but
unintended disincentive effects
-For example: bancassurance, mobile insurance, MI commissions,
product approval process
Government already coordinating around m-distribution and MI
bottlenecks
70

71. • Small balance sheets compromise local insurers’ ability to safely carry large
oil-and-gas risks; large corporate risks require a global risk pool
• Proportion ceded offshore indicates industry awareness of own limitations
• Negative impact of failure greater than upside of keeping premiums
on-shore
6. Revisit implications of local content requirements
Local content requirements may inhibit risk transfer function for business growth
In principle In practice
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29.4%
4.6%
66.0%
2016
30%
70%
Local content requirement
Offshore Retained locally

72. • While the opportunities for microinsurance are large, so are the challenges
• Unlocking opportunities requires a strong and innovative insurance market
• Embed inclusive insurance efforts in understanding of drivers of broader
market development
7. Anchor inclusive insurance in sector development
Understanding full impact requires broader lens
Finance for all
Finance for markets
Finance for growth
72

73. About Cenfri
The Centre for Financial Regulation & Inclusion (Cenfri) is a global
think-tank and non-profit enterprise that bridges the gap between
insights and impact in the financial sector. Cenfri’s people are driven
by a vision of a world where all people live their financial lives
optimally to enhance welfare and grow the economy. Its core focus is
on generating insights that can inform policymakers, market players
and donors who seek to unlock development outcomes through
inclusive financial services and the financial sector more broadly.
About FSD Africa
FSD Africa is a non-profit company that aims to increase prosperity,
create jobs and reduce poverty by bringing about a transformation in
financial markets in sub-Saharan Africa (SSA) and in the economies they
serve. It provides know-how and capital to champions of change whose
ideas, influence and actions will make finance more useful to African
businesses and households. It is funded by the UK aid from the UK
Government. FSD Africa also provides technical and operational support
to a family of 10 financial market development agencies or “FSDs” across
SSA called the FSD Network.
Thank you
Please engage with us:
Albert van der Linden
Email: albert@cenfri.org
Christine Hougaard
Email: christine@cenfri.org
Baraka Msulwa
Email: baraka@cenfri.org

74. Discussion
Questions received
Likely impact of new capital requirements?
How to make private agri insurance work for small-scale farmers?
How to serve MSMEs?
How to get to better health penetration and distribution?
How to achieve profitability amidst strong competition on low-priced policies?
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75. Discussion
What resonates? What is missing? What can be done? What is planned?
1. Improve market fundamentals
2. Enforcement of compulsory insurance
3. Broaden distribution options
4. Consider and address unintended regulatory consequences
5. Skill transfer and development
6. Revisit implications of local content requirements
7. Anchor inclusive insurance approach in broader insurance sector development
75