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By Henry Uche, [email protected]
Insurance business in Nigeria predates the country’s independence. As one of the most profitable business in the world, it has remained a controversial one in Nigeria as most citizens still have a negative perception of dealing with insurance companies, and as a result, the sector has not been able to contribute meaningfully to the overall economy like other sectors.
The oldest insurance company in Nigeria is Royal Exchange Assurance Agency, established in 1918, but at the indigenous level, the oldest insurance company is the African Insurance Company Ltd, which started operation in 1958. The Insurance Act was signed in 1976, from then till date, it has passed several amendments, with the new Act of 2003, amended in 2007, The Consolidated Insurance Bill 2020 (which is believed to address the loopholes in the 2003 Insurance Act), was rejected by former President Muhammadu Buhari.
After coming on board in 1997, the regulator, the National Insurance Commission (NAICOM) was saddled with the responsibility of ensuring effective administration, supervision and control of insurance business in Nigeria and protection of insurance policyholders, beneficiaries and third parties to insurance contracts.
Experts gave NAICOM thumbs- up for its efforts in performing its functions but said that more work lies ahead not only for NAICOM, but for every stakeholders in the value chain in other to position the sector to stand shoulder to shoulder with the insurance sectors of developed countries.
An insurance educator, Dr. Abass Olufemi, who spoke to Daily Sun said NAICOM has done well in chasing away fake insurance companies out of Nigeria, increase capital base, open the space for competition, and foster overall management and administration of the sector. For operators, he affirmed they have not done bad either in rebranding, offering innovative products and services, and building confidence and trust of Nigerians towards insurance through prompt claims payment. Howbeit, penetration remains a big challenge as 97% of total population of Nigeria (about 197 million) have no personal life insurance cover.
Olufemi who is the Head of Department (HOD), Lagos State University (LASU), said countries that relegate insurance wallow in poverty, given the indispensability of insurance to businesses and the economy. “There is relationship between insurance and poverty. Show me a poverty – ridden country, I will show you a country with low insurance penetration.
“On this independence celebration, we are not doing badly, but we’re not up there when compared to other African countries. Operators need to offer tailor-made products to cover more markets. This can be done through thorough research on the people’s need. More importantly, we are lacking in value added services. For instance, when an insurer educates a policyholder (third party motor insurance) on how to drive safely, it’s to the advantage of the insurance company, because when there is no accident (covered), he won’t come for claims. There are so many value added services we can offer to both potential and prospective policy holders. We can do cash back, no claim discount and many more. Nigerians are suffering, they are thinking about their daily bread, but then we can’t do away with risks and hazards, hence the need for insurance, so we must work on the psyche to make them see reasons to adopt insurance as a lifestyle,” he said.
The insurance expert assured that there is prospect for the sector under review given Nigeria’s overwhelming population and sizable number of people in the micro, small and medium scale businesses. “It’s not all gloomy for the sector. We have the numbers, the challenge is the inability of some insurers to think critically. We need to move away from conventional insurance practice. We should stop eyeing the blue chips. There is a huge untapped market at the grassroots with micro -insurance needs. Insurance thrives with numbers. Before now, did anyone see COVID-19 coming, or EndSARS, but now people have learnt that they can buy insurance to wage against such civil uprising and pandemic,” he said.
He added that more teachers of insurance studies are needed across all level of education which has ripple effect on the subject matter. “If I have my way, I would make insurance a compulsory subject in primary and secondary schools. Then introduce it in every tertiary institute in Nigeria. In the whole universities in Nigeria, only about nine are offering insurance. Nigerians see insurance like fraud, but the onus rest on practitioners to disabuse their minds. Some countries fall back on premium accumulated in critical times, but here, how much premium do we have? Sadly professionals like engineers, lawyers do not have insurance,” he said.
Contributing, the former Rector of College of Insurance and Financial Management (CIFM), Dr. Yeside Oyetayo, speaking on the position of insurance in Nigeria economy, reiterated that the sector remains the main risk bearer of the economy and the most viable subsector to beckon on to alleviate poverty especially with the current economic downturn.
He expressed optimism in the sector following series of market expansion initiatives on the part of the industry and the regulator and asserted that other sectors need to partner with insurance sector to provide risk management functions for the economy. He warned that any government that relegate risk and hazards management does so that at its peril.
“Some initiatives like increased consumer education, partnerships with various state governments and agencies of government to enforce compulsory insurance, among others are commendable.
“Today, the troubled global economy, negative perceptions and poor performance of some insurance companies are some of the major challenges that we see, however Nigeria’s insurance industry has grown in the last few years”
She alerted that there are a lot of untapped market opportunities for insurance business, saying “When more inclusive insurance products with identifiable client value are offered to the informal sector, the insurance penetration figures in Nigeria will change drastically” she assured.
Meanwhile, NAICOM had at different fora assured that it would leave no stone unturned in ensuring that operators, brokers, agents, loss adjusters, and other stakeholders in the insurance value chain play by the rules spelt out by Insurance Act. The Commissioner for Insurance, Mr. Thomas Sunday has pledged to work assiduously with relevant persons and groups to see that the Consolidated Insurance Bill 2020 see the light of the day by this administration. Though efforts to speak with the him and other major operators on salient issues as Nigeria celebrate 63 independence anniversary was futile.
