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History of Insurance in Nigeria

History of Insurance in Nigeria

– A Peep at Olden Times
To understand how insurance operates in Nigeria, it is
important to know the history of insurance in Nigeria. The
birth of modern insurance in Nigeria is closely associated
with the arrival of British Trading Companies. These
companies facilitated inter-regional trade in the country.
These foreign companies, therefore, needed to deal with
some of their risks at a local level. This changed the shape
of the insurance sector in Nigeria.
These trading companies were given insurance agency
licenses by their foreign authorities from abroad. The
licenses allowed the firms to facilitate claims supervision
and issue covers.
In 1918, Africa and East trade companies inaugurated the
Royal Exchange Assurance Agency. This was the first
insurance company in the history of insurance in Nigeria.
Other agencies included:
BEWAC’s Legal and General Assurance
Patterson Zochonis (PZ) Liverpool
Law Union and Rock
Due to the tragic effects of the Second World War, trade
and commerce suffered both in the United Kingdom and in
Nigeria. The initial years of Nigerian insurance companies
witnessed slow growth between the 1920s and 1940s. Once
the war got over, the insurance industry in Nigeria picked
up its pace and made progress that would be embedded
forever in the history of insurance in Nigeria .
The first insurance company indigenous to Nigeria was the
African Insurance Company Limited. This was established
in 1958. On October 1, 1960, the country gained
Independence from the British. At the time of Independence
there were twenty five insurance companies in Nigeria.
Only four of these were owned by Nigerians. In 1961 the
J.C. Obande Commission report, a milestone in the history
of insurance in Nigeria, was released. This led to the
formation of the Nigerian Department of Insurance as part
of the Federal Ministry of Trade. This department was
later transferred to the Ministry of Finance. The Insurance
Companies Act of 1961 made it necessary for insurance
businesses to be grouped into various classes for
registration. According to provisions of the Act, the office
of the Registrar of Insurance was created. The purpose was
to manage insurance practice in the country. Minimum
capital requirement and other regulations for registration,
monitoring, and control of insurance operations- these are
some other provisions that fall under the other provisions
of the Act.
In 1976, an Insurance Decree was released. This gave
authorization to insurers, transfers, modes of operation,
administrative, enforcement guidelines and penalties. By
this time, the number of indigenous companies had
outnumbered the foreign insurance companies.
In 1997, the National Insurance Commission was
established. It was given the duty of overseeing and
organizing insurance in Nigeria. This body is functioning
as the main insurance regulator in Nigeria. An Insurance
Special Supervisory Fund was set up in 1989, which made
it compulsory for insurance companies to give in 1 percent
of their gross earnings to the fund. This also strengthened
the Insurance Supervisory Board.
The insurance industry in Nigeria has been steadily
growing ever since.

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