The insurance industry is
currently experiencing low patronage. Most insurance companies declaring
significant income are dependent on government patronage. Premiums collected from government and government
agencies account for about 70% of their gross premium income. Without these government
accounts, most insurance companies would be declaring heavy losses.
Unfortunately, government income has started to dwindle as revealed in current
events. Some state governments can no longer pay salaries regularly. Some
governments are diverting pension funds for other uses. Oil income is reducing
daily.
Insurance practitioners
must, therefore, start thinking of how to break this jinx of low insurance
penetration in Nigeria once and for all. The industry must begin to think of
how to strategically and aggressively put insurance on the fore front of human needs
for all Nigerians.
Dependence on government
accounts has made many insurers to become laid-back on the issue of market development
and market penetration. Even the practitioners do not have any form of
insurance except those made compulsory by government. With very few corporate
bodies and individuals taking up insurance, insurers scramble for the little
available and are ready to do anything in order to win the few available
accounts.
NAICOM has done so much as
regulator in providing enabling environment for market growth. Training and retraining
has been made available. Premium payment issues has been finally resolved. Some
insurance products have become compulsory but without adequate willpower and
innovative strategies from underwriters nobody is buying those products. These
products remain on the shelves of insurance companies unsold.
Poor and bad publicity has
been the origin of the industry’s problem. Unfortunately most insurers go
through the years without reaching out to the outside world. They are satisfied
with two or three adverts in insurance magazines read only by insurers. No
effort is made to reach out to Nigerians out there.
An international survey team,
EFinA, recently published information on insurance penetration among adult
population in Nigeria. The following are their findings in a survey carried out
in all parts of Nigeria in 2014
Ø Estimated
Population of Nigeria 150m
Ø No
of people in rural area 63.5m
Ø Total
no of adult population 93.5m
Ø 49.4m
adults (52.8m of Adult population) are below 33years old
Ø 20m
adults (21.3% of adult population) get their main source of income from
subsistence/commercial farming
Ø 17.6m
adults (18.8% of adult population) get their
main source of income from their private business
Ø 8.6m
adults (9.2% of adult population) get their main source of income from the
formal sector
Ø 21.5m
(23% of adult education) adults have no
education
Ø 33.9m
people have bank accounts (33.3% of adult population.)
Ø 57.1m adults has never used the bank (that is 61.0%
of adult population)
Ø 2.6m
adults have a micro finance account (2.8% of adult population)
Ø Only Im adults have insurance (1.1%
of adult population)
o Of
the 1m people with insurance
§ 47.8 % have Motor Vehicle insurance
§ 26.2% have Life Insurance
§ 8% have Insurance on their Building
§ 6.9% have Medical Insurance
§ 6.2% have Household content insurance
§ 4.2% have Group Life
§ 3.9% have Education Plan for Children
§ 3% have Livestock insurance
§ Others 7.3%
There is nothing to cheer about. Even micro finance
that started more recently has overtaken insurance in penetrating the market. As
revealed by their findings, there are huge potentials in the Nigerian market
for the insurance sector.
To improve insurance penetration
among adult population, practitioners must be strategic about consumer
education. Determined effort must be made to clean up bad publicity and wipe
out fake insurances. Training and retraining of personnel on customer service and
prompt claims payment are keys to changing Nigerian’s perception of insurance
services.
Practitioners need to
create partnerships and alliances with governments and government agencies to enforce
compulsory insurance. NIA/NCRIB need to enforce compulsory consumer education among
member companies by insisting that each companies spend a certain amount of
their income on consumer education each year. All sectors of the industry must work towards achieving
these common goals. This is the only way to go.
Rotimi Olukorede
