By Henry Uche
Every year, multi-sectoral conversations are held regarding the urgent need to boost insurance penetration in Nigeria, which has remained at about one per cent.
The stagnation, according to experts, is primarily because the insurance industry has often focused on traditional demographics and established markets.
However, a critical piece of the puzzle has been consistently overlooked: the nation’s vibrant youth.
Analysts note that this dynamic and increasingly financially aware segment holds immense potential to drive substantial growth, yet their needs and preferences remain largely unaddressed by insurers. They insist that Nigeria cannot posture as the giant of Africa with the abysmal record of one percent insurance penetration, when other smaller African countries are doing better.
To this end, they are pushing Nigerian youths as the next viable but untapped market which the regulator, operators, insurance brokers, agents and other strategic stakeholders can explore to stand competitively in the global market.
Nigeria’s persistently low insurance penetration stems from a confluence of interconnected issues: limited public awareness and understanding of insurance principles, restricted distribution networks, the prevalence of low disposable incomes, a significant lack of trust and confidence in insurance providers, and a generally negative public perception of the industry.
In response, governmental bodies and regulatory agencies are actively promoting initiatives such as microinsurance schemes, the development of digital insurance platforms, and public awareness campaigns aimed at enhancing insurance literacy and uptake. Furthermore, the burgeoning popularity of Insurtech solutions and mobile-based insurance products holds considerable promise for expanding penetration rates in the coming years.
Current data (circa 2022-2023) reveals a stark contrast in insurance penetration across Africa. South Africa leads the continent with an impressive 13% contribution of total premiums to its GDP, followed by Morocco at approximately 3.9% (contributing 4.2% to GDP), and Kenya, the frontrunner in East Africa, with about 2.4% penetration and a 2.8% GDP contribution. These figures, as reported by their respective Insurance Regulatory Authorities, significantly surpass the sub-Saharan African average, which remains below 3%. South Africa’s robust market notably skews the continental average upwards.
Globally, the average insurance penetration stands at 7% of GDP, with life and non-life insurance each accounting for 3.5%. The United States, China, and Germany represent the world’s largest and most developed insurance markets by premium volume.
However, industry stakeholders express concern over Nigeria’s lagging position in insurance adoption and penetration, particularly given its status as the “Giant of Africa” and a substantial market within sub-Saharan Africa. Experts are increasingly focused on critically analyzing the underlying challenges hindering insurance growth in the continent’s most populous nation.
A significant area of focus is Nigeria’s youth, identified as a vast and largely untapped market. Overcoming deeply ingrained negative perceptions and misinformation about insurance is considered a crucial task for all stakeholders, especially insurers. Some professionals suggest that rectifying decades of negative narratives could take another decade due to the deeply rooted distrust in some segments of the population.
Given the immense potential of the youth demographic, the question arises: whose responsibility is it to effectively engage this burgeoning market to drive growth in the insurance sector and the broader Nigerian economy? Is it the regulator, the insurance operators themselves, brokers, agents, actuaries, loss adjusters, or the media?
The Commissioner for Insurance/Chief Executive Officer, Mr. Olusegun Ayo Omosehin, has said that insurance penetration in Nigeria must be deepened further. This, he said, would be done by underwriters across strata who must come up with what he described as tailor-made (fit-for-purpose) products and services for their potential and prospective customers, as well for the untapped millions of youths in the country.
The CFI equally encouraged insurance companies who are already offering research-based products and services to sustain the tempo innovatively to attract more market share. The Commissioner gave this charge at the 9th Insurance and Pension Conference and Exhibition, put together by BusinessToday media group in Lagos.
With the theme: “Banking On The Future: Youths, Pension & Insurance Penetration,” experts drawn from the aforementioned sectors, as well as risk management professionals, analysts, and industry watchers, looked into the future of the insurance and pension sector in Nigeria in relation to the readiness of Nigerian youths.
Meanwhile, some experts believe that Nigerian youths, who make up about 60 percent of Nigeria’s total population, are not ready to embrace insurance and pension plans—not today, not ever. Within the same population bracket, industry watchers and observers believe that, following the agonizing economic situation in the country in the last nine years, it’s not surprising to see an average young person displaying ignorance of what insurance and pension are all about. Moreover, to even talk about insurance in their respective places of hustle is a waste of time, because to them, one must eat before one thinks about insuring life or property.
To be specific, the get-quick-syndrome has beclouded the minds of many youths because of the scorching economy that has rendered almost every family helpless. So, telling them about insurance is like a folktale; without equivocation, it’s an opportunity cost. But then, would you blame them? This is a question that has sparked public debate among collegiate and professionals in the industry.
Represented by NAICOM’s Head of the NAICOM Lagos Control Office, Mr. Julius Odidi, the Commissioner, in a keynote remark, urged operators to look into the future needs of insurance products and services while making plans today, taking decisions, and designing policies.
The Commissioner said: “I commend Business Today for driving these conversations which will inform policies, encourage innovation, and expand financial penetration. Through such engagements, we can empower the next generation with the tools and knowledge necessary for long-term financial security.”
NAICOM Chief highlighted the crucial role of financial inclusion in empowering the younger generation, adding, “As the future depends on how we engage and equip our youth, it’s essential to prioritize their exposure and relevance in the financial sector. To achieve this, the Commission is focusing on building trust and driving innovation to cater to the evolving needs of our growing young population.”
“By that, we encourage the insurance industry to ensure that insurance products and services are tailored to meet the unique requirements of younger generations, promoting financial inclusion, stability, and greater adoption of digital insurance solutions.”
By emphasizing youth engagement and promoting financial literacy, he believes that there is a huge opportunity to unlock the potential for growth and development in the insurance sector. This, he confirmed, would contribute to the overall economic prosperity of Nigeria, as the insurance industry plays a vital role in mobilizing long-term savings, financing infrastructure projects, and promoting risk management.
“As a Commission, we are committed to building trust and driving innovation which will pave the way for a more inclusive, resilient, and sustainable financial system, where the needs of the young generation are at the forefront,” he added.
In a paper presentation, the MD/CEO of Marble Capital Limited, Dr. Akeem Oyewale, explored the readiness and roles of Nigerian youths in relation to financial security and survival in a Volatile, Uncertain, Complex, and Ambiguous economic environment.
According to him, there would be a general shift and wealth transfer in the nearest future; thus, young people need to be incorporated into insurance, pension, financial, and pension education for their economic security. To him, most young people are not prepared for financial uncertainty, hence the need to channel their energies in the right direction.
Oyewale decried the dearth of awareness and financial literacy, saying, “Youths need to know the value of having pension and insurance, not only for themselves but for the entire economy and children unborn.
However, they need to trust the system. This is where NAICOM and operators come in. It’s been an issue for long. So, we must change this narrative.”
The lead paper presenter notified that the vagaries and vicissitudes of life are inevitable, but most young people are either ignorant of it or have resorted to their faith, hence the need to fill in the knowledge gap. “There is a need to demystify strong negative narratives. We must debunk wrong perceptions if we must make headway.”
He advised corporates to adopt the push marketing strategy to reach out to the uncovered markets, not forgetting the use of digital channels. While advocating that pension and insurance should be disciplines young people should study from primary to university level, he implored insurers to deploy workplace incentives and initiatives to encourage policyholders.
“There are a lot to do to take the insurance and pension sectors to enviable heights. Young people should be carried along now because of what awaits us tomorrow,” he submitted.
In a panel session, the MD/CEO of Rex Insurance Ltd., Mrs. Ebelechukwu Nwachukwu, kicked the ball to young people, urging them to come up with creative and innovative ideas (products and services) which they (youths) think would meet their needs.
According to her, since nobody has a monopoly on knowledge, engaging youths in the product and service design process would help to provide fit-for-purpose (tailor-made) offerings for young people in the country. To her, a cross-pollination and fertilization of ideas from different spectra is the way forward; therefore, young people should be allowed to come up with great ideas for consideration. Moreover, she explained that there are many channels through which Nigerian youths can communicate their ideas to different insurance companies that would meet their particular insurance needs.
“Insurance for them is not just a product that they can buy, but it’s also an industry they can engage with, generate revenue from, educate their friends and families about insurance, and plan for the future in a sustainable way.”
Still, in a bid to capture a reasonable number of youths in the insurance net, the Chairman of Sanlam Life Insurance Nig. Ltd., Mr. Femi Oyetunji, who corroborated what Mrs. Ebelechukwu earlier said, equally maintained that it was high time insurance companies began to diligently pay attention to young people to find out what their challenges are with respect to insurance adoption and solve them. “It’s important for us to listen to them and to provide what they need and speak to them in their own language they understand and meet them on the platform where they usually go—the social media,” he pointed out.
For Mr. Olamide Olajolo, MD/CEO of Coronation Insurance Plc, Nigerians must cultivate a culture of risk awareness, savings, and prudent spending. Most importantly, insurers should make their products and services affordable and accessible to cover the under-served market. “We must build a risk awareness culture,” he opined.
On his part, Mr. Stephen Alangbo, Group Managing Director of Cornerstone Insurance Plc, maintained that insurance is a very big industry that could accommodate millions of Nigerians for employment if only they could see the opportunities therein. “Youths have no need to complain because the insurance sector can absorb them; when you work as an agent, you earn your commissions, so you need to start now to save and make investments for the future,” he counselled.