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University of LagosAKOKA, YABA.
AN ANALYSIS OF THE INSURANCE INDUSTRY IN NIGERIA THAT DETERMINES THE DEGREE OF RIVALRY AND COMPETITIVE BALANCE USING PORTER'S 5 FORCES INDUSTRY ANALYSIS FRAMEWORK
SUBMITTED TO: DR IFERE S.E
STRATEGIC MANAGEMENT (BUS 814) MAY 2015
● Ogundele Abiodun, S. 149023139● Akinlemi Akinson, O. 149023147● Obanye Tony Hunter 149023149● Akeke Olushola, S. 149023150● Adekunle Agbaje, I. 149023152● Odehi Okuofo 149023156● Aforfem Afobunor 149023159
GROUP G MEMBERS
● Nwosu Samuel 149023163 ● Lawal Adeshola 149023165● Olanrewaju Maleek 149023173● Jinadu Babatunde 149023181● Agbanyim Anosike 149023185● Ishaka Paulette 149023186
EXECUTIVE SUMMARY
➢ The insurance industry in Nigeria and their functions:
➢ Protect the insured in case of loss➢ Risk Pooling ➢ Risk Allocation➢ Pension scheme
➢ Analysis of the industry using the porter's five forces.
THE PORTER’S FIVE FORCES
A tool to examine the forces that influence the industry
RIVALRY AMONG EXISTING COMPETITORS - Average
● Insignificant or no differentiation in insurance, Hence, competition relies on price .
● Number of competitors, (62)● Slow rate of industry growth.● High exit barriers.● Merger is used as a strategy to compete.
THREAT OF NEW ENTRANTS - High
●Low entry barrier●The industry life is still at growth
stage, with an estimated annual growth rate of 7.5%.
● Low switching cost
BARGAINING POWER OF BUYERS - Average
●Buyers are few and concentrated.●Buyers are informed and
knowledgeable.●Availability of substitute.
BARGAINING POWER OF SUPPLIERS – Very high
●Just 3 suppliers in Nigeria, resulting in a very high bargaining power.
●Differentiated products.●Forward integration is possible for
the suppliers.
THREAT OF SUBSTITUTE
●Commercial banks offer substitute product and services e.g. thrift contribution.
● Insurance is a “Do without” for individual consumers.
●Risk retention group instead of purchase of commercial insurance.
Conclusion
The industry has a prospect for further growth because it is not yet saturated, however, activities in the industry are subject to the regulations of the National Insurance Commission (NAICOM). Protecting the interest of industry participants'.
Questions
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