•Says 80% businesses without insurance, back-up plan
•We’re deepening insurance education-NAICOM
By Chinelo Obogo
Despite having 610 insurance companies in Nigeria, with 510 of them being licensed insurance brokers, insurance penetration in Nigeria is still at one percent, a report has revealed.
A survey carried out by Intelpoint, a research and data firm, on the Nigerian insurance industry, shows that the sector collected over N750 billion in premiums from just 3.1 million customers, while the GDP penetration of insurance is just 0.32%. Premiums and claims paid have also been rising over the years. The industry paid out N318 billion in 2022, while the loss ratio over the last 12 years is an average of 44. This means that for every naira collected in premiums, 44 kobo is given back to customers in claims.
About 27 insurance companies and 87 insurance agents were interviewed for this report, while data was also gotten from Lagos State Employment Trust Fund, Insurance Nigeria Group and Insurecentric. Nigeria’s insurance market size, which is the industry’s total assets, was N2.2 trillion as at 2021 and according to the Enhancing Financial Innovation and Access to Financial Services in Nigeria, only 2.1 million adults had insurance in 2020.
Intelpoint also interviewed 388 business owners in Lagos who lost their means of livelihood during the EndSARS event of October 2020 and the information gotten showed that more than half of the affected SMEs have a staff strength of two to four employees. The fashion, agriculture, brevages and retail trading were the most affected, while 60% of surveyed business owners claimed to have lost more than half a million naira.
Most businesses without insurance in the survey do not have a backup plan for their business in case of fire or theft. Where they do, they plan to rely on family and friends to help them out in the event of an untoward event. Only 3.6% of surveyed business owners have insurance coverage for their businesses, while 96.4% don’t have. Out of the number, only 13.1% of people with no insurance coverage for their business have other backup plans.
Of the affected businesses, 31.3% of those with insurance were female, while 68.7% were male. Seven in 10 of those with no insurance coverage for their businesses have never been approached by an insurance agent and this aligns with two of the top reasons people don’t have coverage; not knowing where to start and the agents not coming around.
The data also showed that the higher the level of education, the more likely a business owner is to have insurance. About 1.03% of those affected have no formal education, 0.26% have only primary education, 33.51% have secondary education, while 52.06% have a bachelors degree and 13.14% have a post graduate degree.
The research lead for Intelpoint, Yinka Awosanya, said: “Nigerians are averse to picking up insurance cover for their business, property or lives. Nigeria is not leading the African Insurance market by turnover. It has the 5th largest turnover in 2021 on the continent after South Africa, Morocco, Egypt and Kenya.”
About 82% of the 27 insurance companies surveyed said it takes a couple of working days to file an insurance claim with them, which is paid within a month. Most insurance agents report that auto insurance as the easiest to sell and health insurance as the hardest.
Meanwhile, the Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission (NAICOM), Mr Olorundare Sunday Thomas said the Commission was aggressively deepening insurance education and ensuring prompt insurance claims payments by operators as these remain its main priorities in the urgent task of building a strong economy.
He gave the assurance at a recent interface with insurance journalists.
According to him, insurance education remains a very critical issue, especially now that a lot of states, especially in the north, were outside the insurance net.
“So, we want to spread insurance education all over the country. We visited Katsina twice. On our first visit, the Governor was sincere that he was hearing insurance takaful for the very first time.
“On our second visit, we had a fuller engagement involving the grand khadi, emirs and all the rest of the influencers and we taught the gathering about takaful. They researched about it and showed them where the takaful was talked about in quran.
“We will visit all the states of the country because the insurance business is an integral part of the economy”, he noted.
He added that NAICOM has projected the insurance industry Gross Premium Income (GPI) to grow from N630 billion in 2021 to N6 trillion by 2030.
The insurance sector regulator said the projection rides on the crest of carefully-tailored initiatives meant to stimulate growth in the sector.