The Nigerian insurance indus-try is performing below its risk capacity evident by the low patronage of insurance services in the country.
PriceWaterHouse analysts stated this in a report titled: Insurance penetration in Nigeria.
The analysts are of the view that if the growth in the insurance industry can be achieved, it will aid development and growth in the economy, encourage savings and investment, aid job creation and growth in capital markets and financial assets.
The insurance stocks on the Nigerian Stock Exchange, NSE, are not performing well as they should, given the apathy of investors who believe that insurance firms are not well managed, thus affecting profitability.
Aside from the regulatory issues which operators in the industry are grappling with, poor patronage of insurance in Nigeria could be blamed on relationship management by some insurance companies which sometimes is below par because an average customer simply wants to be comfortable. Such relationship challenges have their basis in weak corporate governance and risk management framework which sometimes make the companies seem unfriendly particularly when there are claims to be made by customers thus creating doubts about how well the insurance companies may be trusted.
“At the heart of this, customers often complain about the lack of flexibility and technology-driven innovation in terms of the kind of insurance policies and packages that meets today’s upwardly mobile audience of contemporary insurance,” analysts stated.
According to analysts: “The implications of these challenges on the industry are rife. For instance, in 2018, the Enhancing Financial Innovation & Access, EFinA report stated that of the 99.6 million adult population in Nigeria, only 1.6% have insurance covers even though nearly 40% of them have access to financial services. According to the survey, lack of awareness remains a key barrier as a massive 77.2% of the adult population are not aware of insurance. Although largely due to the knowledge gap, the low-income level of the citizens makes it difficult to be convinced of buying insurance on a risk that may not happen, the benefits notwithstanding.
Essentially, there is an urgent need to address these issues and grow the insurance industry in Nigeria.”
To this development, insurance experts have opined that insurance companies in Nigeria must be deliberate and diligent in addressing these issues to curate the lethargy in patronage.
They emphasised that the Nigeria populace has more to gain within a thriving insurance industry but first, they must be assured or better still reassured of a new dawn. New dawn would mean building trust and friendship that would enhance reliability. Amidst this would be the desire for the professionalism that would drive excellence among practitioners in the industry.
It would be visible when insurance companies develop innovative policies and packages that are driven by technology and adequately incorporate people in the formal and informal sectors. Nigerians would then breath fresh air of a new life, new opportunities and new experiences that would make them prime to gaining the benefits of the new-look insurance industry.