In this piece, JOSEPH INOKOTONG writes about how insurance penetration rate in Nigeria can be deepened in a country that has a teeming population of over 200 million people.
The recent speech by the President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Prince Babatunde Adeleke Oguntade, has once again, thrown to the fore the need to deepen insurance penetration in the country.
According to him, “The insurance penetration rate in Nigeria remains abysmally low compared to its teeming population of over 200 million people. This is a challenge that we must collectively address.”
Stakeholders have a critical role to play in promoting insurance awareness and education. Deliberate efforts should be made to continue to shine the light on the importance of insurance and the benefits it provides to individuals, businesses, and the nation as a whole.
Insurance plays a critical role in mitigating risks and promoting economic growth in a nation.
Unfortunately, many Nigerians remain unaware of the benefits of insurance, but through concerted efforts of the regulator, and other measures the industry has put in place, more light can be shed on these important roles. It is necessary to continue to bring knowledge and information to the people.
It is worthy of note the efforts of the Federal Government in developing Nigeria’s infrastructure. The government’s commitment to investing in critical sectors such as transportation, energy and housing is laudable. Initiatives like the National Integrated Infrastructure Master Plan (NIIMP) and the Economic Recovery and Growth Plan (ERGP) demonstrate the government’s dedication to bridging the infrastructure gap in Nigeria. The huge expenditure of the government on building several highways, railways in this year’s budget is in order.
However, there is firm belief that insurance can play a vital role in mitigating the risks associated with developments of this nature, and promoting economic growth. In executing these laudable projects, we must emphasise the importance of ensuring that these projects are adequately insured.
Insurance is a critical component of any infrastructural development/projects, as it provides financial protection against unforeseen risks and losses.
The NCRIB has been working tirelessly to promote the development of the insurance industry in Nigeria. “We have engaged policymakers, regulators, and other stakeholders to create an enabling environment for insurance to thrive. In this regard, I would like to commend the National Insurance Commission (NAICOM) for its efforts in promoting the growth of the insurance industry,” Prince Oguntade said.
Deepening the insurance penetration rate in Nigeria, with its large population, requires a multifaceted approach that addresses cultural, economic, and infrastructural challenges. Some strategies to achieve this include increasing awareness and education through public campaigns. Launching massive awareness campaigns to educate the public about the benefits of insurance, addressing misconceptions and cultural barriers will enhance the growth of the industry.
Incorporating insurance in education by introducing insurance-related courses into the curriculum at secondary and tertiary levels can be a boost, just as leveraging community leaders through collaboration with religious and traditional leaders to build trust and promote insurance among communities.
Leveraging technology via mobile platforms by using mobile phones and digital apps to sell insurance products and process claims, given the high mobile phone penetration in Nigeria, can be of immense advantage to tackling the challenge.
Microinsurance offers low-cost, digital microinsurance products that cater to low-income earners. If adequately developed by making it accessible to subscription by people at the lower rungs of the ladder, it can help to deepen the penetration of insurance in the country.
Also, through data analytics, by using technology to understand customer behavior and tailor products to suit their needs, the sector can benefit a lot.
Developing tailored products relevant to the culture can play a vital role in growing the sector. Products that align with the socio-cultural and economic realities of Nigerians, such as health, agriculture, and funeral insurance should be designed. This should be in addition to making available flexible payment plans through the introduction of flexible and affordable premium payment structures, such as daily or weekly contributions.
Partnerships and collaborations – Banks and Telecoms should partner with financial institutions and telecom companies to distribute insurance products. Working with government bodies to integrate insurance into social protection programmes (e.g., health insurance for informal workers) is a good step to take.
Private Sector Engagement: Collaborate with businesses to offer group insurance for employees and members of cooperatives, and strengthen regulation and trust through improved claims processes by simplifying and expediting claim settlements to build trust in the insurance industry.
Enforce Mandatory Insurance: Strengthen enforcement of mandatory insurance policies like motor insurance and group life insurance. This is already in the offing as the Nigeria Police Force has announced its readiness to begin enforcement of the Third-party motor insurance policy from February 1, 2025.
A well-articulated insurance law can enhance insurance penetration. Already, the much-expected Insurance Law, it is no more news that the Bill has received a considerable recognition by the two arms of the National Assembly, and the stakeholders are expecting a favourable Law at the end of time. Prior to the passage, they had actively engaged with policymakers, industry stakeholders, and other relevant parties to advocate for the passage of this critical legislation.
According to the NCRIB President, “The Insurance Law will promote a more conducive business environment for our members and the industry at large, and we are committed to seeing it to fruition. Permit me to limit my report on this particular subject to what had been reported. We all hope that at the end, everything will turn out in the favour of the entire insurance industry”.
Consumer Protection: Strengthen regulations to ensure transparency, protect policyholders, and penalise defaulting insurers.
Target the Informal Sector: Since a significant portion of Nigerians work in the informal sector, insurers can partner with trade unions and cooperatives to offer group insurance. Use informal savings systems (like esusu and ajo) as channels to sell insurance.
Expand distribution channels: Use alternative distribution methods, such as microfinance institutions, retail outlets, and agent networks, to reach remote and underserved areas.
Incentivise insurance adoption: Provide tax incentives for individuals and businesses that purchase insurance, and offer discounts on premiums for bundled or long-term insurance policies.
Leverage the youth population: Target the youth population with affordable and appealing products, leveraging their familiarity with digital tools.
Focus on reinsurance and risk pooling: Strengthen reinsurance capacity to increase the ability of insurers to underwrite large risks. Establish risk pools for industries like agriculture and natural disasters.
A combination of these strategies, and working with stakeholders in the Nigerian insurance ecosystem can foster greater trust, accessibility, and relevance, ultimately boosting the insurance penetration rate.
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