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Chuks Udo Okonta
The Insurance Inclusion Studies approximated that only 1.5 per cent – 1.63 million, of all Nigerian adults put at 108.78 million are covered by insurance, the National Insurance Commission (NAICOM), has said.
The Commissioner for Insurance/CEO NAICOM Sunday Thomas, said this in a keynote address at the maiden Independent Newspaper Insurance Summit tagged: Inclusive Insurance: Navigating The New Narratives For Sectoral Growth” held yesterday in Lagos.
The population of Nigeria was 228,047,006 as of Friday, April 19, 2024, based on Worldometer elaboration of the latest United Nations data 1.
The population of Nigerians aged between 18-64 years – adult, was 108.78 million.
Nigeria 2023 population is estimated at 223,804,632 people at mid year.
Nigeria population is equivalent to 2.78 per cent of the total world population.
Thomas, who represented by Deputy Director at NAICOM Ajibola Bankole, noted that the uninsured Nigerians face risks and require better mechanisms to mitigate these risks as an alternative to the informal arrangements currently in use. The low insurance penetration in Nigeria, he said is in part, a consequence of the lack of trust and confidence in insurance companies. A contributor to this perception of the market is the limited knowledge of insurance amongst the public.
According to him, this new narrative demands a multi-pronged approach around Product Innovation, Distribution Channels leverage technology and partnerships and Financial Literacy by investing in financial literacy campaigns that educate Nigerians about the benefits of insurance and empower them to make informed choices.
“The landscape of insurance is evolving rapidly, presenting us with both challenges and opportunities. From climate change-induced risks to emerging digital disruptions, our resilience and adaptability will be tested.” Thomas pointed out.
According to the CFI, the Nigerian Insurance industry has sustained its progressive trend of positive market performance recording a milestone growth to close at N1.003trillion, representing about 27 per cent growth compared to the N790 billion recorded in 2022.
He stressed that despite this achievements, Nigeria’s insurance sector is still largely underexplored, with the industry’s penetration at less than one per cent of gross domestic product (GDP).
“I am highly honoured to be invited to this maiden edition of the Insurance Summit hosted by the Independent Newspapers limited to deliver the keynote address.
“The theme for this Summit: “Inclusive Insurance: Navigating the New Narratives for Sectorial Growth”, could not have come at a better time, as it is very pertinent to our current national and institutional growth and development aspirations.
“As we convene today, I am encouraged by the diverse representation from various sectors here present, this underscores the collective commitment to harnessing the full potential of insurance for our nation’s growth and development.
“The Nigerian Insurance industry has sustained its progressive trend of positive market performance and at the close of 2023 fourth quarter, it recorded a milestone growth to close at N1.003 trillion, representing about 27 per cent growth compared to the N790 billion recorded in 2022. However, despite this achievements, Nigeria’s insurance sector is still largely underexplored, with the industry’s penetration at less than one per cent of GDP.”
He noted that the progressive trend of the sector occasioned by positive market performance at the close of 2023 fourth quarter.
“At the National Insurance Commission we are committed to creating an enabling regulatory environment by streamlining regulations, encouraging innovation, and promotion of fair pricing practices for inclusive products and therefore urge insurance companies to embrace this shift by: leveraging technology, developing inclusive products, investing in alternative distribution channels and prioritizing customer education.
“Let us also prioritize education and awareness campaigns to empower individuals with the knowledge they need to make informed decisions about risk management and financial protection,” said Thomas.
The Commissioner maintained that as part of the NAICOM’s Financial Inclusion drive, the commission has issued new operating licenses to new Micro insurance and Takaful Insurance operators and revised Guidelines on Bancassurance, Web aggregators and provided a Regulatory Sandbox to help drive more inclusiveness for insurance.
He underscored the commission’s commitment to encourage institutions to develop business models and products targeted at the excluded or underserved segments of the populace, and license additional entities that are willing to participate in the Takaful and Micro insurance segment.
This, he said, will facilitate attainment of the national financial inclusion target for the insurance industry and development of the industry.
Thomas urged that the narrative around insurance should shift saying; “we must move beyond the perception of insurance as a complex, elite product, and instead, position it as a foundational tool for financial security, accessible to all Nigerians.”
In his remark at the summit, Eddie Efekoha, Group Chief Executive Officer, Consolidated Hallmark Holdings Plc, the chairman of the accession noted that since the National Insurance Commission came up with an insurance bill in 2003, the public understanding of insurance, particularly among the retail service, has gradually improved while its penetration rate has increased.
He stressed the need for the sector to consistently create insurance awareness across all segment of the society through partnership and joint initiatives.
“It is vital for the insurance industry to consistently create insurance awareness, with private sector, individually and through joint initiatives to underscore the importance of the insurance industry. Among other things we must do within the industry value chain, attention is needed in sustaining of products, and services, as well as strategies to ensure increased penetration rate.
He acknowledged the fact that the sector has seen growth away from what it used to be adding that “we are ahead of the banking industry, when I say we are ahead, it is because our capital is increasing on daily basis because we are trying to index it and link it to the risks in life. It’s a function of what you do that determines what you get.” He said.
Ebelechukwu Nwachukwu, Managing Director/Chief Executive Officer, Royal Exchange General Insurance Company Limited, who spoke to the theme paper believes that the industry has evolved in the past 10 years.
According to her, the industry has come a long way from a focus to serve the corporate market to focusing, very significantly, on serving the retail market and the other side of the economy with particular shift agriculture insurance.
“What we do is to create awareness to make people know that they do not need to have a lot of money before they do insurance. We have done a lot in creating awareness on the role of insurance in protecting businesses and people’s assets.
Over the past decade, the insurance industry has experienced relative growth in premium income and contributions to our individual lives. We are providing financial security; we have seen an increased demand for insurance. One of the things that the insurance industry has focused on over the years is improving personal experiences both from the regulators; paying attention to personal experiences has become the vocal point. Making sure that the customers are happy, the clients are paying and paying on time has been a focus of the insurance industry.
Technology and digitalization has helped our inclusion journey significantly, as we are continually driving.
Why should the public embrace insurance as a form of financial security; it’s a form of risk management, as it gives the insured peace of mind; it’s a form of community resilience; financial literacy: making people to understand the concept, the regulators have put in more….We need a lot of collaboration and partnership to drive insurance message. Increasing awareness and diversifying products is a major challenge of the insurance industry.” Said Mrs Nwachukwu.
On the way out, she called on the insurance industry to collaborate with the regulators, the banking sector, entertainment industry as well as agriculture and other sectors noting that by so doing insurance sector will drive the desired change.
“We have to send a message that insurance is a culture and culture is insurance. Insurance is a tool that every Nigerian must consider the subject matter as more of inclusive insurance. The insurance sector is including all other sectors and will continue to do so,” she submitted.
Ayodele Adio, Lead Strategist at Avalon Media Group and panelist at the event called for a deliberate policy action by the insurance operators to ensure strategic marketing and campaign that would reposition the industry for its desired growth.
The event attracted insurance industry chieftains, regulators, Lagos State Police Command, students of higher institutions, industry analysts and women entrepreneurs as well as other trade groups across the country identified low insurance awareness, education and penetration as the bane of the sector while canvassing a strong need for the operators to think innovations leveraging technology to chart new distribution channels for insurance products and services.
While lack of trained and adequate manpower development, financial illiteracy and lack of trust were also noted as challenges bedeviling the sectors, the panelists urged the operators to change the narratives and reposition the industry for global competitiveness.
