Nigeria: Increasing Participation in Insurance

Sep 2014
Nigeria, September, 08 2014 - In recent years, some initiatives have been introduced into the insurance sector, which are geared towards making it to perform optimally and increase its contribution to the Gross Domestic Product of the country.

Some of the innovations include the introduction of the Market Development and Restructuring Initiative by the National Insurance Commission. This provided a structure for the enforcement of five out of the 15 compulsory insurance policies existing in the country’ statutory laws.

The commission also introduced microinsurance guideline to usher in microinsurance firms as part of effort to introduce more low income earners into insurance.

Immediate past Director-General, Chartered Insurance Institute of Nigeria, Mr. Adegboyega Adepegba, said insurance is the catalyst for economic development, adding that it is a business that is in place to ensure that other businesses remain.

“The Nation needs a strong and virile Insurance industry to stay afloat, therefore its relevance should not be underestimated, and can never be overestimated,” he said.

He noted that a big challenge in the industry was how to deepen insurance.

While speaking on to take insurance to the grass roots, he said that underwriting firms should bring up microinsurance products should be made more attractive and broken down into languages that the grass root can understand.

Managing Director, Equity Assurance Plc, Mr. Ekpe Ukpabio, said the country need a national policy on insurance.

“Government needs to be able to patronize us as insurance companies because there are compulsory insurances that government need to do which they are not doing, government assets are there, they are not insuring, all the public buildings that are owned by governments are not insured, and even the one that they say they want to do, there is no proper provision in terms of budgeting,” he said

He said the industry needs more of government support by ensuring that all of their assets are properly insured.

The managing director said that government should have the consciousness in all the parastatals, the sectors at the various levels, to ensure that they actually insure their assets beginning from physical assets to human assets and anything insurable.

“This can go a long way in moving insurance sector forward,” he said.

The President, Institute of Loss Adjuster of Nigeria, Chief Lebi Omoboyowa, said the industry needs to improve its operations in the area of penetration.

“ Our penetration is too low unlike advanced countries where the reverse is the case,” he said.

To deepen penetration, he noted that NAICOM constituted and followed up micro-insurance and Takaful structures, adding that these are areas which the industry needs to give more attention.

“In micro, we have small scale industry and numerous small business and thriving individuals in their various trades. The small scale industry plays a more important role in the development of the economy because that is where you have a large base of people,” he said.

From his observation, the insurance firms were actually trying to improve on what the commission has laid down.

Managing Director and Chief Executive Officer, Riskguard Africa Nigeria Limited, (Insurance and Pension), Mr. Yemi Soladoye, said the operators in widen insurance in Nigeria?

“The Nigerian insurance industry must activate the competing and collaborating opportunities of insurance with other financial services providers, recognize the power of insurance to stimulate the growth of the other sectors of the economy, exhibit the strategic importance of insurance in generating funds for projects of national development and in particular recognize the fact that social impact is a key objective in microinsurance operation,” he said.

According to him, there is huge opportunity for job creation in microinsurance in particular and in insurance in general not yet utilized at the federal, state and local government levels in Nigeria.

For microinsurance to be relevant to the low income people in Nigeria, Soladoye said it must be made simple.

“They must be staple bundled products, ankle risks and embeddable into many other trusted and every day-use products like telephone, banking, fertilizer, mass transit and so on,” he said.

The expert said that the products have to be developed in local languages at least in four languages – Pidgin English, Yoruba, Hausa and Ibo.

He said that the contract or application form which is the basis of an insurance contract must be a simple, maximum one page document eliciting simple pieces of information about the applicant.

Soladoye said the target groups for microinsurance are the farmers, the artisans, the market women in the rural, semi-urban and urban areas and the low-income people of Nigeria in general.

This set of people, he explained, could be divided into those already using financial services like microfinance banks and those who do not.

According to him, since the presentation of the Market Development Restructuring Initiative report in 2009 and identifying microinsurance as a new market to be explored, the National Insurance Commission has made remarkable progress in the area of introducing it in this big market with huge opportunities.

The Managing Director, Law Union & Rock Insurance Plc, Mrs. Toyin Ogunseye, said that apart from economic development, insurance is an instrument used effectively to cushion the impact of the risks people are exposed to every day.

“Even though we may have other survival strategies, insurance responds to the negative effects of insurable perils,” she said.

The managing director stressed the need to create more awareness, adding that the micro insurance policies have lots of benefits.

“Through prompt claims payment and efficient customer service, people will have more confidence and be attracted to the insurance industry,” Ogunseye said.

Source : Punch

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