CORONATION Insurance has enumerated seven reasons why many Nigerians are sceptical in taking an insurance policy.
In a recent article titled, “Why Many Nigerians Shun Insurance,” the firm gave the reasons to include lack of knowledge or low income; Complete dependency on divine protection; Lack of faith in insurance companies to pay claim; Ignorance; Economic consideration and price of insurance; Lack of knowledge about the availability of insurance products and process involved in buying insurance.
It stated that Nigerians are known for their entrepreneurial spirit and willingness to invest in a wide range of products and services but insurance remains a less popular choice.
This, it noted raises the question: why do Nigerians shy away from insurance when it offers protection against financial loss?
In essence, insurance is a risk-transfer mechanism where, (for an affordable fee) a company (insurer) agrees to compensate the policyholder (insured) for financial losses resulting from specific events like accidents, illness, or property damage.
It reckoned that the low penetration is underscored by a 2018 survey by Chartered Insurance Institute of Nigeria (CIIN), indicating that an 86.6 million adults do not have any form of insurance coverage.
Further, Agusto & Co.’s 2022 report paints a grimmer picture, disclosing that only 0.5 percent of Nigerians have insurance.
It added that these figures emphasize the urgent need to examine the factors driving the low adoption of insurance among Nigerians.
Globally, insurance has been a safety net for many, however, Nigeria presents a drastic contrast.
According to Chartered Insurance Institute of Nigeria (CIIN), only 13.4 percent of its population is insured, equating to approximately 13.4 million individuals out of a total adult population of approximately 100 million.
Nigerians are known for deep religious faith, and the devoutness can influence decisions, including those related to insurance and financial planning.
Another factor hindering insurance uptake in Nigeria is the public’s perception of slow claim settlements by insurance companies, while past issues existed due to inadequate capital and other factors, the National Insurance Commission (NAICOM) has taken steps to address them.
The firm stated that many Nigerians, despite experiencing losses, struggle to grasp the benefits insurance offer, noting that it can provide much-needed stability in the face of unexpected events, helping individuals bounce back from financial shocks.
It highlighted that a complex insurance buying process and difficult-to-understand policy are often cited by many Nigerians as deterrents to purchasing insurance, stressing that faster turnaround times for receiving policy documents, both upon onboarding and during claims processing, would be a welcome improvement.
Coronation Insurance noted that the industry is, however, actively working to address these concerns as service delivery has improved significantly, as evidenced by the steady rise of the sector’s Gross Written Premium (GWP), which reached N1 trillion at the end of 2023.
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