The United States’ recent 14% tariff increase on Nigerian exports is set to impact various sectors of the Nigerian economy, with the insurance industry facing both fresh challenges and new opportunities.
The move comes at a time when Nigeria’s insurance sector is on an upward trajectory. According to the National Insurance Commission’s 2023 market bulletin, the industry posted over N1 trillion in gross premiums—up 27% from the previous year. This growth surpasses Nigeria’s GDP increase of 3.46% in the same period. Non-life insurance dominated with N615.1 billion (61.3%), while life insurance contributed N388.1 billion (38.7%), driven largely by group life and annuity products.
Tariffs and Sector-Specific Impacts
Although oil and mineral exports—over 90% of Nigeria’s U.S.-bound exports—are exempt from the new tariffs, other categories will face increased costs, creating a ripple effect for insurers.
Marine Insurance
One of the first segments to feel the heat is marine insurance. Higher shipping costs due to tariffs could affect shipment volumes, forcing underwriters to adjust premiums and re-evaluate risk models. Exporters may ship less frequently or consolidate cargo to reduce expenses.
Trade Credit Insurance
With greater uncertainty in the U.S. market, demand for trade credit insurance may rise as exporters seek protection against buyer defaults. However, delayed payments or canceled contracts may increase claims, prompting insurers to revisit their pricing and risk assessments.
Property and Casualty Insurance
Manufacturers and agro-processors tied to U.S. exports may scale down operations, affecting asset values and insurance coverage limits. Casualty insurers might also need to review their underwriting for product liability insurance if export volumes drop or product lines are adjusted.
Business Interruption Insurance
Firms heavily reliant on the U.S. may face operational setbacks, potentially triggering claims under business interruption policies. Insurers will need to reassess policy terms and adjust pricing based on evolving risks.
Strategic Diversification Ahead
The tariff move may accelerate Nigeria’s push to diversify its export markets. For insurers, this means gaining expertise in new trade routes and market-specific risks, which could ultimately lead to a more balanced and globally diversified portfolio.
Industry Outlook and Regulatory Role
To adapt, insurers must boost their analytical capabilities, redesign products, and educate clients on risk mitigation. NAICOM, along with the Nigerian Insurance Association and the Nigerian Council of Registered Insurance Brokers, will play key roles in guiding the industry through these shifts.
Flexibility from regulators may be necessary to support innovation while maintaining consumer protection and financial stability. With insurance penetration in Nigeria still low—around 0.5% of GDP versus the African average of 2.8%—this environment could foster greater adoption.
ZdxA Test of Resilience
Finance Minister Wale Edun has assured the public that the tariff’s impact will be limited and that the government is engaging with both U.S. counterparts and the World Trade Organisation.
Ultimately, the Nigerian insurance industry faces a pivotal moment. Those insurers that adapt swiftly—through smarter underwriting, innovative products, and stronger client engagement—could emerge more resilient and better positioned to support Nigeria’s broader economic ambitions.
