Boom in fire insurance, high net worth individuals reap all benefits

2026-03-02 - 15:47

...As small businesses, individuals bear brunt of fire disasters —-Fire premium income rises 398%, claims grows —-Insurance designed to benefit mostly big players — Experts —-Govt. must be intentional about insurance penetration — operators By Rosemary Iwunze There are indications that insurance industry efforts to secure lives and property through fire insurance may have started yielding results. But the results appear skewed in favour of corporate entities and high networth individuals more than small businesses and low income individuals. Financial Vanguard findings from data at the National Insurance Commission, NAICOM, as well as the financial statements of insurance firms show significant increases in the premium income of the firms on their fire insurance business as well as rising claims payment from that market segment. Further details show that insurers are now making more money from fire insurance than other lines of their businesses. Also the data shows that fire insurance is growing at faster rate than all their other lines of business put together. However, industry operators said the bulk of the increases are coming from big companies, while small businesses and individuals are nearly zero. NAICOM data shows that fire insurance premium income which began a steady year-on-year rise at N68.1 billion in 2021 had skyrocketed to N238.7 billion by end of 2024, while 2025 figure is forecast at near N350 billion, after recording N154 billion in the first half of the year, H1’25. The development in the fire insurance business is seen more in the growth rate in the past four years. The industry recorded 42.2 percent growth in premium in 2021 while the combined growth rate in all their businesses put together was 30.9 percent. In 2022 the fire business grew by 47.9 percent while all lines of their business put together grew by 25.1 percent. Income from fire business grew by 54.8 percent while other lines of business grew by 31.7 percent, and their 2024 income statement show fire business growth rate at 51 percent as against 50 percent for all their businesses put together. Meanwhile, in the H1’25, fire insurance premium increased by 57.2 per cent, outpacing growth in total premium which rose by 47.5 per cent. Experts’ insight The sharp rise in fire premium income, according to experts, reflects increased uptake of fire insurance by corporate organisations, while individuals and small businesses remain ignorant and vulnerable. The industry experts stressed that a significant portion of the fire premium income and claims payout are mostly from corporate clients as many shop owners in markets remain uninsured despite the growing spate of market fires across the country. Vanguard interactions with some small business owners reveal that many of them are still ignorant about the workings of insurance, even as many don’t trust insurance yet. Operators and analysts say that the government has to be intentional about deepening insurance penetration particularly fire insurance among individuals and small businesses. They argue that the fire outbreaks in markets and building collapses across the country are losses that could have been mitigated if enforcement of compulsory insurance has come to stay. Meanwhile, alluding to the skewed profile of fire insurance in favour of big corporate and high networth individuals, Mr. Casmir Azubuike, Managing Director of Afriglobal Insurance Brokers said: “Corporates pay a higher percentage of total premium income and also receive a bigger percentage of claims in any financial year. From my experience, corporates pay about 75 per cent of premium and receive claims payment of about 70 per cent compared to other insurance consumers.” Also speaking on the development, immediate past Managing Director of Universal Insurance Plc, Mr. Ben Ujoatuonu, stated: “Of the insurance industry total premium income and claims paid, corporates pay about 80 per cent premium and receive claims payment of about 70 per cent.” He also said that although fire insurance premium is recording steady growth, insurance acceptance in the country is still very low. He stated further: “Yes, fire insurance is recording steady growth, however, the uptake we are seeing is from high networth individuals and corporate clients that understand the benefits of insurance to an extent. “The market woman and man that need insurance the most are not forthcoming with taking up insurance covers. Many of them don’t understand insurance because operators are not taking the awareness to them. “The experience of Nigerians with insurance is a question of, ‘insurance is sold not bought’. So you have to force it. They are not buying it willingly except there is an attachment of what they need to do and they require insurance. This is why the penetration is still low.” Ujoatuonu however said that the insurance industry needs to do more and create more awareness. He stated: “It is for the industry and companies to keep pushing for awareness, nothing more. Persuading the public and also taking advantage of the provisions of the new Insurance Act on the need for everybody to be insured.” Also speaking, Rashidat Adebisi, a former Executive Director at AXA Mansard Insurance Plc stated that the insurance industry designed a system that benefits corporate organisations more. She said: “The insurance industry has been very generic. We have designed a system that supports mostly corporate organisations. Corporate organisations are ‘chop and clean mouth’ crew because they have been collecting insurance claims for years. Insurance companies are serving large corporates a lot. “But who is more vulnerable between corporate organisations, individuals or SMEs? The individual and SMEs are definitely more vulnerable. “Unfortunately for us, because we designed a system for a small number of privileged individuals, there is less number of people protected with higher volumes of fire claims, but we have not been able to have the right resilience. So that is where the risk awareness and the risks actions should come in. “When market fires happen, the government is responsible to compensate the victims but they hardly do that. We have to move responsibility from the government to ourselves. We must encourage people to actually start to insure. What if the government doesn’t have funds? “So this is where we have to create that balance between moving responsibility from the government to ourselves, so that when fire events happen, insurance companies will first take charge, then the government can help as icing on the cake.” Also speaking, Managing Director of Afriglobal Insurance Brokers, Mr. Casmir Azubuike, said that beyond the insurance industry, the government has to be intentional about deepening insurance penetration. He stated: “With the Nigerian Insurance Industry Reform Act, NIIRA, the insurance industry has been strategising to ensure that the compulsory insurance policies are enforced, but then, it is not as easy as people may think. “You and I know very well that any law without enforcement or penalty is just as good as an academic exercise. The insurance industry on its own cannot successfully enforce or implement the compulsory insurance policies including insurance on public buildings. The government has to be intentional about it. “The fire outbreaks and building collapses that we have been experiencing are losses that could have been mitigated by way of insurance if only the enforcement has come to stay. But that hasn’t come to stay. So it’s like we are still doing business as usual. “How many government assets are insured? The government should at least start by showing example by ensuring that all public assets, the buildings are insured against all the covers described under the public building cover. “By the time they do it they will now have that moral standing to enforce it on the private sector. You can’t make a law, expecting citizens to comply, whereas you the lawmaker can’t even comply or implement the aspect that concerns you. “If you are asking the owner of a premises to insure the building mandatorily and the person fails or refuses to do so, what are you ready to do? The government that came up with this law, are they ready to enforce it? Do they have the apparatus? Have they activated the various agencies that will go all out to make sure that the enforcement is carried out? If the answer is no, then I can tell you that the law for now can best be described as an academic exercise. “But never the less, the NIIRA is actually a very big relief to the insurance industry and we know quite well that no matter how long it takes, at the end of the day, the industry is going to be better off the moment it is fully enforced.” Small business owners’ views Meanwhile, a shop owner at Balogun market in Lagos Island, Mr. Cletus Ude, told Financial Vanguard that he does not believe in insurance because he has not seen any beneficiary of insurance. He said: “I have been in this market for over 20 years and have witnessed many fire disasters. I have not seen any shop owner that insurance restored back to their initial position. We only hear insurance but we don’t know how it works or what it entails.” Another shop owner, Mr. Kelechi Madu, said that while the banks come around to market their products and services, insurance companies rarely do same. “I see a lot of bank marketers coming around to market their banks’ services, but we don’t usually see insurance people. If insurance people can come around like the banks, I believe some traders will like to do business with them. “Even with the recent fire that affected the Great Nigeria Insurance building, insurance people have not come around to market themselves. So we don’t do insurance because we really don’t understand how it works,” he stated. Also Mr. Vincent Okeke, a trader at Idumota Market, said that insurance companies avoid insuring shops and businesses at big markets because they are afraid to pay huge claims. His words: “There was a time that I was to travel to China. I was asked to get travel insurance from an insurance company. After I got the travel insurance, I made enquiries about insuring my business, and the company said they will get back to me. “When I returned back to Nigeria, I followed up with my contact at the insurance company, but he said that they could not insure my business because they are yet to commence insurance for markets due to incessant fires and the huge claims that could crystallise from such businesses.” Another businessman, Mr. Bethel Ugwu, said that he has heard that insurance don’t pay claims so he is not interested in insurance. According to him, he prefers to save his money himself and take care of unforeseen occurrence.