Insurance operators in Nigeria, after closing annual transaction books for 2022 and opening a fresh one for 2023, said that they were entering 2023 with optimistic thoughts that the new year will be a good one although not without lots of challenges to combat. This expectation by Nigerian insurers is based on the fact that early passage of the budget of the new year would hasten operations because of the awarding and payment of new contracts likewise benefits made from massive investments in technology due to COVID-19 outbreak.
Also noteworthy is that the federal government’s timely approval of N9.24 billion for payment of group life insurance of government workers will improve operations of insurers. These expectations have made Nigerian insurers view the year as a vibrant and prosperous one rather than a stagnated one. This belief is visible in the statement of Mr. Sunday Olorundare Thomas who declared, in the last quarter of 2022, that the insurance sector was advancing towards a new landscape and in 2023, it would be prepared for achievement of insurance inclusiveness in the country.
Achievement of 2023 goals depend on a 12-point initiative.
The insurance commissioner, with great optimism about the new year, approved 200 percent increase in motor insurance premium effect starting from January 1, 2023, two weeks to the new year. Indications also show that there are more upward review of other policy premium rates to be approved which will improve premium generations of operators in 2023. Amidst listing out developments that will bring about positive business initiatives for insurers, he said the commission would keep on with execution of regulatory and market development initiatives to accelerate the insurance industry to a global standard.
Achievement of these goals depend on a 12-point initiative that has its focus on engagement of stakeholders, inclusion of state governments to ensure domestication of the laws and compliance with mandatory insurances and improvement of the insurance business in respective states. It also involves ensuring the market development and Restructuring Initiative for promotion of compulsory insurance products; assessment of feasibility for Index Based Risk Transfer Solution in the agricultural industry; and financial inclusion drive through insurance awareness campaign for financially excluded persons.
Deloitte report affirms challenges for the sector in the new year.
Global insurers are of the opinion that in previous years, many insurance carriers have reflected extraordinary flexibility and resilience in conquering many obstacles, particularly the effect of the pandemic and the economic fallout caused by the Russia-Ukraine war. While systems and abilities improved, vibrant talent and technology were also useful. With this, stakeholders express their concern as to whether the sector is ready for emerging challenges as it progresses into the new year, 2023, and beyond.
An observation by Deloitte in its outlook for insurance sector in 2023 reveals that there are many challenges ahead such as rising inflation, threats of recession, interest rates and loss costs, climate change and geopolitical upheaval, competition from InsurTechs and non-insurance entities. Insurers are therefore advised to work towards longer-term reinvention, top-line growth, group insurers sourcing innovative and shifting dynamics. In aspects of human capital, insurers should ensure reinvention of workplace strategies and movement from infrastructure investment to value realization.
Deloitte report advises that the industry sets strategic plans.
According to the Deloitte report, insurers are confronted by various macroeconomic and geopolitical challenges likely to hinder profitability during the year as well as the increasing threat of global recession, continual economic fallout from Russia-Ukraine conflict and existing COVID-19 concerns. Thus, the report suggests that to set strategic plans, investment priorities and budgets, insurers should work to maintain the momentum of creative adaptation that have been since the past few years, boost upgrades in systems, talent and culture while being customer-centric.
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