Report: 29 of 58 insurance firms have negative reserves

Recent data released by the Nigeria Insurers Association (NIA) show that 29 insurance firms out of the 58 existing in the country reported negative reserves at the end of 2016.

This makes up more than 50 percent of the insurance companies in the country.

The negative reserves amounted to N93.15 billion in 2016.

According to the report,15 non-life operators posted N51.79 billion, while 14 life operators posted N41.36 billion.

ThisDay reports that the negative results are connected to the 2016 recession where firms, who issue dollar-denominated policies, paid the claims from their reserves due to the high inflation rate and rise in the exchange rate of naira to dollar.

During the recession, which was the worst Nigeria had experienced in 29 years, the value of the naira dropped to N500 for N180.

There had been multiple exchange rates before the Central Bank of Nigeria announced a forex provision for school fees, medical and basic travel allowance.

With weekly interventions to bureaux de change operators from the CBN, the naira had been stable at N360 to a dollar for months.