Insurance

Experts hinge insurance sector survival on 99% untapped uninsured potentials

Mrs Ilori

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Chuks Udo Okonta

Insurance industry’s survival largely depends on ability of government and operators to unlock and harness the 99 per cent uninsured population of of the economy, experts have said.

According to them, the industry would never take its rightful place in the economy when only one per cent of the nation’s population have insurance covers.

The Managing Director/Chief Executive Officer, Infrastructure Bank Plc, Adekunle Oyinloye, while speaking recently at a forum in Lagos, called on the government and underwriters to make concerted effort to bring more people into insurance web.

He maintained that if the economy is in a better shape, the prospective assured will have the liquidity to procure insurance.

He urged underwriting firms to improve on their customer services, adding that companies are constrained by customer-service related issues, typically relating to product offerings, quality of services and sophistication of products offered.

“Customer service is clearly important for winning new customers and retaining existing ones. The first step of changing the face of the industry is ensuring an exceptional customer experience. Insurance companies must find a way to provide customers with an internet based self-service insurance platform where customers can view policy coverage, pay bills, make changes to policies, submit claims and check the status of claim progress. Brokers should be able to obtain online quotes, proposal and plans, design for their customers,” he stated.

He posited that employing more adequate staff with related professional background is also key and that it is also important that the Chartered institute of Insurance of Nigeria (CIIN) must regularly review and expand their curriculum to meet with the present market need and build the capacity of student members.

Insurance companies must also allocate a percentage of its budget to Continuous Professional Development to keep staff abreast of professional standards and practices, he said.

“Insurance companies must also find ways to sensitize the populace about the use of insurance. The government also has a role to play in this by making relevant laws that will help make certain insurance policies compulsory and harsh sanctions for non-compliance of same,” he added.

He noted that essentially, for the Industry to survive, thrive and attain its potentials, the government must be sincere in promoting a favourable environment that will allow the financial service industries thrive. This, according to him, will help increase the operational efficiency of the insurance industry.

He called on the industry operators to make concerted effort to play more actively in the real sector of the economy.

Oyinloye, also expressed misgivings on the implementation of insurance law as, stating that Insurance Act 2003 and the National Insurance Commission (NAICOM) Act 1997 in particular require better implementation and enforcement.

“For instance, Section 64 of the Insurance Act makes compulsory insurance of building under construction which is more than two floors. The general implementation of the Insurance Act has left more to be desired. The limitation of liability on third party insurance is too small in line with the present day economy. Several sections of the insurance Act have also been badly implemented. We cannot overemphasize the need for an adequate legislation and policy to create operational environment,” he said.

He stated that the formulation of economic policies which will give room for investment will also help the industry, stressing that where there are investment friendly policies, insurance companies would also be able to make long term investment for better returns on such investments.

The Director-General, Nigerian Insurers Association (NIA), Mrs Yetunde Ilori, posited that despite the growth of financial inclusion to about 60 per cent of the adult population, insurance penetration remains at less than one per cent (0.3% in 2015).

She urged operators to change the development and attract the 99 percent uninsured by creating a broad range of relevant products that will be channeled through digital and non-digital channels.

She canvassed the need to focus on SMEs, women, youths, agricultural producers, households and individuals, especially those in the informal sector.

Mrs Ilori called for a reform of the distribution channels, stressing that the present channels limits effective utilisation of alternative distribution channels.

She noted that the total adult population of Nigeria is 96.4 million, of which 59.6 million (61.9 per cent) dwell in rural areas, stressing that efforts should be made to take insurance business to these people.

Commissioner for Insurance, Mohammed Kari, on why insurance should be extended to the uninsured said insurance sector plays a vital role as it helps to reduce the poverty line, helps entities and individuals manage their risks and protects them from negative adverse effects of unforeseeable events.
“The poor do not have access to basic financial services such as payments, savings and insurance. Accessing financial services will help families increase investment and consumption, help in insuring against unfavorable events thus reducing the poverty level during any occurrence,” he said.

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