By Marianne Lehnis
The tendency for most insurance brokers to focus on big ticket government business is responsible for the low level of insurance penetration in the country, the Executive Vice Chairman of Insurance Brokers of Nigeria, (IBN), Prosper Okpue, said in an interview with Financial Vanguard.
The IBN executive commented that small businesses had been overlooked by brokers, but these held the potential to move the country forward with increased insurance penetration levels.
Okpue stated; “The small businesses in this environment have been very much ignored by the insurance broking market. But those small businesses are the engine room of every economy.
“If you go to Europe, America and our neighbours like Ghana and South Africa or Egypt and those countries that are used to insurance, commercial industrial insurances account for less than 40 percent of their revenue.
“The private insurances of the man who wants to insure his family, health, funeral for parents, his expensive or cheap wrist watches, his personal effects, and life insurances account for over 70 percent of the global insurance market revenue.”
Okpue suggested insurers market their own products throughout the more remote regions, instead of relying on brokers for business deals in Nigeria; “I don’t see anything wrong with direct retail business of insurance companies because the brokers themselves are lazy. What does it take to do personal insurances?
“It requires a lot of critical mass and high level of technology. The reason why brokers are not maximizing that opportunity is apathy because they are satisfied with what they are getting from government business,” he commented.
As a fast-growing country with a population of 180 million, the potential for the personal and life insurance market share is still largely untapped by the re/insurance industry.
Nigeria’s fairly stable macroeconomic environment offers potential for rapid economic and insurance market growth, and technological advancement has acted as a further expansion mechanism through improved opportunities to manage and grow insurable risks, according to PricewaterhouseCoopers.
However, the nation’s low per capital income, and low insurance literacy as well as cultural constraints have proven to be major drawbacks – that, according to Okpue – could be pushed through if insurers in the region take greater responsibility for marketing efforts.