According to the Financial System Strategy of Nigeria, in its presentation to the Central Bank of Nigeria in 2020, the Nigeria insurance sector only contributes about 0.44% toward Gross Domestic Product (GDP) and is ranked 65th globally with-an average premium per capita of $4.3.
The above stats are a clear reflection of an insurance market that is still caught in the early stages of development, despite decades of operation in the country. Approximately, only 1.9% of all Nigerian adults were covered by insurance in 2020 and a report by Fitch Findings indicated that the insurance industry in Nigeria has declined in real terms and in recent years as high inflation has eroded modest nominal gross written premium (GWP) growth.
In the course of this study, experts have identified the factors militating against the insurance industry to include lack of adequate government support, poor regulation, lack of constitutional support, poor consumer trust, inadequate data, poor pricing of the industry’s product (rate undercutting), low implementation of compulsory insurance and the lack of professionals that are adequately skilled in the sector.
More importantly, the need for adequate insurance education among the populace and insurance policy acquisition for small and medium scaled enterprises cannot be overemphasized.
Modion Communications, a multiple national and international award-winning PR agency surveyed the population to ascertain the penetration level of insurance among affected businesses during the recent civil unrest in Nigeria.
The insights generated showed that 70% of respondents do not own an insurance policy while 30% affirmed that they own an insurance policy. The insights were driven by the need to fill the lacuna in insurance knowledge and spark off a conversation that would lead to citizens becoming more interested in insurance, and businesses taking policies to protect their investments.
In view of the prevalent challenges identified within the industry, our survey results assert that 62% of respondents would have an insurance cover as a proactive measure; while 17% would leave their business in the hands of the Almighty God than have an insurance policy in place, for their business. The remaining 21% indicated that they do not believe insurance would help their business.
Moreso, 68% of respondents believe that insurance would aid their business to bounce back if affected by the civil unrest while 32% do not believe in insurance as a support for their business even if they were affected during the unrest.Among the 57 registered insurance companies in Nigeria, our survey results showed Leadway Assurance, who recently won the Great Place to Work Awards as the most subscribed insurance company by respondents. This was represented by 36% of the sample size seconded by AIICO Insurance with 29%; AXA Mansard with 13%; Consolidated Hallmark with 12%, and Old Mutual Nigeria with 10%.
The survey has shown that low penetration of insurance is still at a record high in the sector as 70% of respondents in this survey do not own an insurance policy.
Creative and deliberate strategies must be adopted via public and private sector collaborations to build and sustain awareness, education, and product engagement from the grassroots level upwards. The educational sector must also be engaged to drive simple but relatable conversations among learners on the importance of insurance. There is an urgent need for the media and other stakeholders to build synergies that can give amplification to insurance-related matters across various channels to target audiences.
In addition, fast-tracking of innovative insurance products would aid in galvanizing people in obtaining an insurance policy. Lastly, Regulators should license more reinsurance companies as a means of insulating itself from the risk of major claims events. As of today, there are just two reinsurance companies in Nigeria, a major indicator of the conservativeness/ stuntedness of the Industry in the country.