Insurance GDP Returns To Growth, there are signs that the insurance sector has recovered from the effects of COVID-19, with a YoY increase of 15.7 percent in contribution to gross domestic product, GDP, in the second quarter of 2021, Q2’21.
Vanguard’s findings from the financial performance of 17 insurance companies recently reported to the Nigerian Exchange Group reveal a 23.2 percent increase in Gross Premium Written, GPW, to N217.3 billion H1’21, from N176.4 billion in the similar period of 2020.
Profit after tax decreased by 5.1% to N16.8 billion in H1’21, compared to N17.7 billion in the same period of 2020.
According to the National Bureau of Statistics, the industry recovered from a -4.58 percent contraction in the first quarter of 2021, Q1’21, and grew by 15.68 percent in the second quarter of 2021, Q2’21, compared to a massive drop of -29.53 percent in Q2’20, amid COVID-19 lockdowns and other macro-economic headwinds.
An NBS analysis of the sector had stated: “Insurance under Financial and Insurance Sector grew by 15.68 per cent in Q2’2021 from -4.58 per cent in Q1’2021 and 29.53% in Q2 2020.
“The Finance and Insurance Sector consists of the two subsectors, Financial Institutions and Insurance, which accounted for 87.92% and 12.08% of the sector respectively in real terms in Q2 2021. As a whole the financial and insurance services sector grew at -1.86 per cent in nominal terms (year on year), with financial institutions growing at -3.93 per cent while insurance recorded a growth rate of 16.41%.
“The overall rate was lower than that in Q2 2020 by –22.68 per cent points and by -4.01 per cent points than the preceding quarter.
“Quarter-on-quarter growth was -3.45 per cent. The sector’s contribution to the aggregate nominal GDP was 3.21 per cent in Q2’2021, lower than the 3.76 per cent it represented a year earlier, and the contribution of 3.25 per cent it made in the preceding quarter.
“Growth in this sector in real terms totaled –2.48 per cent, lower by –20.97 per cent points from the rate recorded in the second quarter of 2020 and -2.02 per cent points from the rate recorded in the preceding quarter.
“For the first half of 2021, growth in financial and insurance services stood at -1.47 per cent year on year, compared to 19.63 per cent year on year for 2020.”
Speaking on the industry performance, Managing Director of FBN Insurance Brokers, Mr. Olumide Ibidapo, said that it has been a fair performance considering the challenging economic environment.
He stated: “If you look at Q1 of the 2021, the industry witnessed a contraction of more than four per cent. In Q2 2021, we are now having a growth of more than 15 per cent which to me is a good performance even though 2020 was a lockdown year. So any major performance in 2021 will reflect this positive growth. So looking at the industry as a whole, it has been a fair performance considering the challenging economic environment that we are operating in.”
“It has been a difficult trip most especially looking at the event of 2020 and the conclusion of the EndSARS issue and economic lockdown,” Ibidapo remarked of the remainder of the year. In terms of insurance, the majority of the claims filed in the aftermath of the EndSARS outbreak are being resolved to a larger extent, with the insurance industry settling billions of naira in claims. The future appears to be bright. The second part of the year will be better than the first.”
Covid-19 has caused the Insurance GDP Returns To Growth, Increasing By 15.7 Percent Year Over Year