Nigeria’s low insurance patronage
Last week, a group of industry experts lamented the country’s low insurance penetration. According to them, not more than five per cent of Nigeria’s population is currently subscribed to a legitimate insurance policy. The experts spoke during a colloquium tagged “The Insurance Industry: National Savings and Financial Market Reaching for Higher Levels of Performance” organised by the founder, Centre for Value in Leadership, Professor Pat Utomi and held in Lagos State. According to a professional reinsurer who spoke at the colloquium, Professor Joe Irukwu (SAN), the Nigerian insurance industry is not where it should be. He added: “This, unfortunately, is due to the relatively low level of insurance awareness in Nigeria and the poor state of the economy over the years, hence we are not yet able to realise the full benefits of this aspect of fund mobilisation.”
To overcome this challenge, Utomi reportedly charged insurance firms to stand out in their delivery. In his view, “If we achieve the promises of insurance, it will transform investment in the economy, because the pull of savings that comes from insurance can lead to structural development, venture capital and other significant roles in the economy. There is the need for the government to encourage insurance industries by creating policies that mandate people to have life insurance, orientation exercises that can inculcate insurance as a settled habit of community, and institutional plays that will lead to insurance contributing as it should in our community.”
No doubt, the figure provided by the experts on the country’s insurance patronage is dismal. With an estimated population of 180 million people, Nigeria ordinarily ought to provide a viable market for the insurance sector, especially considering the numerous advantages that the sector ideally offers. We agree with the experts that insurance awareness in the country is low, although this need not be the case. This low insurance awareness has fostered unnecessary dependence on the government during adverse situations, particularly in the informal sector. For instance, when markets get burnt, traders look up to the state governments for succour. But such assistance, where any has beeen forthcoming at all, has often proved to be grossly inadequate, with the result that many a trader’s life is shattered, often irreparably. However, insurance policies can, and should, take care of such exigencies as fire outbreaks in the country’s markets.
It is important to reiterate, however, that the misfortune of insurance companies in the country is not essentially down to low insurance awareness, whether among the very educated or less educated citizenry. The hard fact is that the sad stories told in the insurance industry is part of the larger story of the downturn in the country’s economy. The vagaries of the country’s economy have hampered insurance coverage and growth. Given the high rate of job losses, the poor infrastructure outlay and the appallingly low industrialisation, it would have been entirely unrealistic to expect the insurance industry to thrive. Thus, even though insurance is ideally a core component of the economy that should receive the support of the government and the citizenry, the appalling conditions in which Nigerians are currently trapped cannot engender its growth. Insurance inhabits the service sector and cannot be expected to thrive when nothing significant is happening in the real sector.
In any case, the operators of the insurance companies themselves cannot claim ignorance of the fact that a major factor responsible for the low insurance patronage is the belief by Nigerians that the insurance companies are fraudulent. This belief, while seemingly harsh, is in our view not without foundation. Time and again, policy holders have expressed dismay at the attitude of the insurance companies. They accuse the companies of foot-dragging and wasting their time at their hour of need.Thus, for the sad situation of low insurance patronage to change, the lack of fidelity between policy holders and insurance companies must be addressed. The companies must show that they are demonstrably committed to the terms of the agreements entered into with policy holders and would not circumvent them under any circumstances. Positive testimonies by policy holders would no doubt lure other Nigerians into getting insurance coverage for their lives and properties.
Above all, however, the economic fortunes of Nigerians must change. In spite of the rhetoric by those in government at all levels, Nigeria is currently the poverty capital of the world. An extremely poor population with a thriving insurance industry would be a world record. The fact is that in order to take out insurance policies, people must have something to insure. What kind of people take out life insurance policies when their lives do not even matter to those in government, and when nobody can be trusted? Governments across all levels should strive to make life better for the citizenry. After all, they got into government after promising the people a better deal. It is only when this has been done that the insurance industry can have its pride of place.