The Commissioner of Insurance, Olusegun Omosehin has revealed that Insurance brokers contributed to more than 70% of insurance businesses each year. Omosehin, who is also the CEO of the National Insurance Commission (NAICOM), stated in a statement during a Lagos event. Under its new leadership, Mr. Omosehin declared that the commission is prepared to take advantage of the brokers’ potential and push the required sector growth measures. According to the head of NAICOM, the industry has the ability to boost the country’s economy.
A large portion of the insurance product distribution is controlled by brokers in the country. Due to their capacity to represent numerous insurers and link them to a wide range of customers, they frequently hold the highest percentage of business premiums. Given that they are in charge of a sizable amount of the policies offered, this makes them important participants in the market. Brokers assist clients in identifying possible hazards and recommending appropriate coverage by offering professional advice on risk management. This is valuable, particularly for companies whose operations depend on reducing risks.
Over 90% of the premium revenue is maintained by brokers.
Approximately 15,000 agents and about 500 registered brokers are in the industry. The industry has been referred to as a “broker’s market” since brokers maintain over 90% of the premium revenue, with less than 10% going to agents and insurer direct marketing. Nonetheless, the market for individual life insurance is dominated by agents. The fact that brokers facilitate and represent clients throughout the claims process is one of the reasons they dominate the market. Customers favor brokers as they make sure claims are resolved quickly and fairly, which may be difficult when working directly with insurers.
Moreover, the primary rationale for broker domination in the market stems from their strong client ties, control over the distribution of insurance products, and the capacity to offer knowledgeable counsel and advocacy for claims. Their ability to shape the sector and propel its expansion is made possible by their expertise and control over market practices. A large percentage of claims settlements are handled by them. Over 60% of the ₦224 billion in claims that the sector paid out in 2021 included broker assistance, which ensured prompt processing and raised consumer satisfaction.
Adoption of digital platforms drives development.
Introduction and expansion of microinsurance, which is predominantly provided by brokers, has expanded the market. Brokers that focus on rural and low-income communities drove the microinsurance market’s yearly growth of over 10% in 2022. One of the main forces behind development has been their adoption of digital platforms. Approximately 60% of brokers used digital platforms as of 2022 for processing claims, engaging with customers, and collecting premiums. Insurance is now more widely available due to this shift, especially to younger, tech-savvy populations. About 70–80% of the premiums for non-life insurance are generated by brokers.
According to an Agusto & Co. analysis, despite disruptions, the industry upheld its double-digit growth pattern in 2023, with expected gross premium income surpassing one trillion naira. This growth was fueled by robust regulatory backing and modifications to premium rates on some plans. According to a forecast by Statista, the gross written premium (GWR) of the industry is expected to reach US$8.08 billion by 2024. The industry’s growth and projection are directly related to the substantial contributions provided by brokers.
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One of the more prominent brokerage companies at the forefront in the industry, the Insurance Brokers of Nigeria Limited (IBN), manage a sizable chunk of the nation’s insurance premium market, especially in the corporate sector. Through its partnership with Willis Towers Watson (WTW), the firm has access to a global network of best practices and a larger clientele, making it highly connected globally as well. Regardless of the wide landscape of brokers in the country, all their operations and practices are regulated by the Nigerian Council of Registered Insurance Brokers (NCRIB), a key professional body.