The insurance industry has always taken a back seat within Nigeria’s financial landscape. While the banking and fintech sector is experiencing major growth in payments and account openings, insurance penetration has remained low.
Banks and fintechs in Nigeria are currently in the front race to closing the gap of financial inclusion. However, this gap can not be completely closed unless insurance companies run at par with their banking and insurance counterparts.
However, despite reports of low penetration, insurance companies are recording high revenue and profits. Although not the end goal, it is a step in the right direction. An example of such can be gleaned from the end-of-year financial reports and statement of accounts released by Cornerstone Insurance Plc.
The insurance and its subsidiaries recorded a tremendous 51.9% increase in profit as the group’s comprehensive income totalled ₦23.4 billion ($15 million) in 2024 as against the ₦15.4 billion ($9.9 million) recorded in 2023. The insurance company also recorded an impressive 26.9% profit increase as it recorded a ₦13.3 billion profit ($8.8 million) in 2024 as against its ₦10.4 billion ($6.8 million) profit in 2023.
Cornerstone Insurance Plc, the insurer with high profits
Cornerstone Insurance Plc was incorporated on 26 July 1991 and became a Plc on 17 June 1997. The company carries out core insurance activities, including life and non-life insurance services for both corporate and individual customers
.Its subsidiaries – Fin Insurance Company Limited, Hilal Takaful Nigeria Limited and Cornerstone Leasing & Investment Limited – also provide similar insurance services for businesses.
Fin Insurance Company Ltd carries on general insurance business ranging from marine, motor, accident, fire insurance, and other non-life insurance services. Hilal Takaful (Nig) Ltd also undertakes insurance business while Cornerstone Leasing and Investment Ltd provides convenient asset acquisition options for both corporations and individuals.
The Group witnessed an impressive revenue growth of ₦38.4 billion ($25.4 million), signalling a 48.4% increase in 2024 compared to ₦25.9 billion ($17.1 million) in 2023. The growth in revenue can be attributed to increase in the volume of premium paid by insurance customers of the company and its subsidiaries.
Another notable contributor to the Group’s profit was its investment return, the profit (or loss) from investments made by the entity, which recorded a 26.5% increase to the recorded ₦31 billion ($20 million) from ₦24.5 billion ($16.2 million) recorded in its 2023 financial statement.
The dominance of the dollar against the Naira proved profitable for the group as its net gain from foreign exchange significantly shored up the recorded investment return, contributing ₦25.1 billion ($16.6 million) to the total ₦31 billion recorded for 2024.
The total gross profit stood at ₦25.1 billion from ₦17.1 billion ($11.2 million) gross profit recorded in 2023. This points to a significant increase in insurance premium in 2024 for the company.
The company’s profit also translates to increased dividends for the Group and Company shareholders. The Basic and diluted Earnings Per Share (EPS) for the Group increased significantly by 59.0% to 124 Kobo in 2024 from 78 Kobo in 2023.
Why this is a big deal?
The insurance industry in Nigeria has continued to remain at the bottom end of the hierarchy of penetrated and lucrative components of the country’s financial sector.
Since the establishment of the Royal Exchange Assurance Company, the very first insurance company in Nigeria, in 1921, the insurance industry can only boast of 0.5% penetration rate.
According to the 2021 Access to Financial Services in Nigeria Survey report by EFInA, only about 2 million Nigerians have any form of insurance coverage. In the report’s comparison of Nigeria with five other African countries, it found that Nigeria has the highest proportion of uninsured adults.
Nigerian businesses do not fare any better in the insurance rankings. Of the 388 businesses sampled by Interpoint Africa in January 2024, a whopping 96.4% of them had no insurance coverage.
Per the report, the most popular reason for businesses not having any form of insurance was that the business owners didn’t know where to start. However, the more compelling reason was insurance products being too expensive. Simply put, Nigerians are not taking insurance as seriously as they should.
However, the reports of improved revenue from Cornerstone point to one fact – with the right exposure and marketing, more Nigerians and/or Nigerian businesses may begin to embrace insurance and subscribe to insurance products.
By embracing insurance, Nigerians can mitigate risks and recoup financial losses resulting from the events insured against. This is particularly helpful for medium to low-income people who are one insurable event away from losing all their income and running into debt.
To drive insurance penetration, insurance companies can borrow a leaf from banks and fintechs – reach out to more customers using technology just as banks have done.
