Insurance business remains unviable and its products hard to sell in the Nigerian market place. This unpalatable news raised worries for the captains of industry, who gathered at just concluded 2018 Insurance Industry Consultative Council (IICC) in Abuja, few weeks ago.They described the challenge as “bad message” in the ears of insurance companies and allied stakeholders, given the fact that the industry has been in existence in the country for nearly a century.
Although the desirability of insurance policy has always been a hotly debated issue, a new study does appear to have driven the message home: “More Nigerians won’t and don’t intend to take up any form of insurance cover if given the choice.”
Outcome of new study
The available records in the industry indicate that 86.6 million Nigerians have no form of insurance, while 1.3 million adults, representing 1.5 per cent of the entire Nigerian adult population, maintain some category of formal insurance cover.While the jury is still out contesting the veracity or otherwise, of the survey, which has shown that the nation is probably recording a recurring decimal in the insurance sub-sector as a result of diminishing patronage, a recent survey by NOIPolls, further underscored the situation, saying that nine out of 10 Nigerians do not have any form of insurance.
According to the survey, among those that have insurance policy, 63 per cent has vehicle/car insurance, 20 per cent has life insurance, 17 per cent have property insurance, 16 per cent has health insurance and 16 percent have fire, burglary and travel insurance.Also, few years ago, a survey by Enhancing Financial Innovation and Access (EFInA) indicated that Nigerians are not insured against the most vulnerable risks- life, health and agriculture, adding that death and ill-health are the top two risks, with an economic impact, but the most widely experienced.
It is anybody’s guess why there is growing apathy for insurance by Nigerians. While giving plausible explanations as to why many Nigerians don’t consider acquiring an insurance cover as a priority, the Founder/Chairman of Zenith Bank Plc, Jim Ovia, during an interactive session at IICC conference in Abuja, affirmed that a number of factors were responsible.
The major hiccup, which is responsible for the growing apathy for insurance, according to him is the low level of disposable income. “The only problem we see in the Nigerian market is that per capita income of the people is very low and people tend not to take insurance as a priority against other things related to them,” he said.He, however, said it was heartening to note that the Federal Government has made group life insurance compulsory for all employers of labour, with a minimum of five employees. The banker said there has been a turnaround in the fortunes of that class of insurance business.“I believe with the improvement in income, regulation and other things, many people will come to take insurance and gradually, we will get an increased participation by the insuring public in the country.
“Again, with the awareness campaign being embarked upon by the regulator, the Nigerian Insurers Association and some industry players, showcasing the need for individuals to be protected and have life insurance cover for their own benefit and the benefits of members of their families, I believe in the next five years, there will be a turnaround in the way and manner people take up life insurance in Nigeria.
“With the coming of retail businesses set up by the various underwriters and microinsurance, this awareness will get to the people at the grassroots and they will embrace insurance as a way of life. Despite the low per capital income, there should be an increase in the rate at which people patronise the insurance industry,” he said.
What NAICOM is doing
To revamp the insurance sector, the National Insurance Commission (NAICOM) had in the past, come up with a number of measures, including raising the capital base of insurance companies in line with current economic realities.Commenting on the different initiatives by NAICOM, which is the apex regulating body of the sector, the Chairman, Planning Committee for the 2018 IICC Conference, Alhaji Femi Hassan, said the commission under the headship of Mohammed Kari, has not done badly thus far.
“NAICOM is currently doing very well. The commission has been coming up with good regulations that are now moving the industry forward. All that is required is continuous cooperation among the members of the Nigerian Insurers Association, so that we can be united and able to turnaround the image and fortunes of the industry in Nigeria,” he said.
Besides, NAICOM has introduced the Market Development and Restructuring Initiative (MDRI), retail insurance, microinsurance, compulsory insurance and others.
Hassan said: “There are lots of things being done to make the people aware of what they stand to gain by taking insurance. It is not something that will automatically impact on the industry immediately, but overtime, the impacts will surely be felt.
“The MDRI revolution has been on ground for years now, and in the next few years, all these things would have come to pass as people will now have more knowledge about insurance. The industry is also trying to create more insurance awareness through advert placement and by sending people to the grassroots.”In line with the Insurance Act 2003, NAICOM introduced the “no premium, no cover”, all aimed at not just improvement in the industry but to achieve integrity and quality of income generated by the industry.