Middle-East Conflict: Nigerian insurers to face high reinsurance costs

By Rosemary Iwunze

As the conflict involving United States, Israel and Iran escalates in the Middle-East, Nigeria insurance industry may face rising reinsurance costs.

Commissioner for Insurance, Mr. Olusegun Omosehin, who disclosed this, noted that the crisis could trigger rising claims globally, leading to higher reinsurance pricing.

The development, according to Omosehin, would inevitably affect Nigerian insurers that depend heavily on offshore capacity to underwrite large and complex risks.

Omosehin explained that insurance operates within a global risk-sharing ecosystem where exposures are distributed among local and international reinsurers, many of whom determine the final pricing.

He stated: “The scale of destruction to businesses, oil installations and other strategic assets in the conflict zone could generate significant claims within the global insurance market, forcing reinsurers to reassess their risk appetite and pricing framework.

“Because of massive destruction of oil installations in Iran as a result of the war the global insurance and reinsurance market would be inundated with high claims rate which would cause reinsurers to upscale their reinsurance rate.

“This will have trickle-down effect on Nigerian insurers who will next year or even this year be visiting the global reinsurance arena for renewal of their reinsurance policies.”

Omosehin, however, assured policyholders that the ongoing reform and recapitalisation programme in Nigeria’s insurance industry would strengthen the sector’s ability to withstand external shocks and meet claims obligations.

He said: “I want to assure Nigerians that the recapitalisation exercise, which deadline remains July 31st, is aimed at building a stronger and more resilient insurance sector. The recapitalisation programme is a key pillar of the reform agenda aimed at strengthening insurers’ capital base, improving claims settlement capacity, and enhancing the ability of Nigerian insurance companies to underwrite larger risks across major sectors of the economy.”

He stated that the recapitalisation exercise would place insurance firms on a better standing to pay claims seamlessly.

“Our primary responsibility is to protect policyholders. We will ensure that no Nigerian who has entrusted his resources to insurance companies suffers because of the recapitalisation process,” Omosehin assured.

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