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Chuks Udo Okonta
Increasing insurance penetration in Nigeria has the potential to be a game-changer in the fight against poverty, the Head, Energy and Special Risk, International Energy Insurance Kolade Awosanmi, has said.
He disclosed this while delivering a keynote paper entitled: ‘Insurance Penetration as a Catalyst for Poverty Eradication’ at the 2024 National Conference, Annual General Meeting, Election of Association of Registered Insurance Agents of Nigeria (ARIAN) in Lagos, adding that by providing financial protection to individuals and businesses, insurance can help create a more stable, predictable and sustainable economy.
He submitted that the industry has been doing, is still doing a lot in the areas of awareness creation to increase penetration, but there is always room for improvement and more collaborations to achieve the target.
Speaking on the role of insurance in economic stability, he noted that insurance has the potential to play a transformative role in Nigeria’s economy, particularly in enhancing economic stability, adding that insurance acts as a safety net that protects individuals and businesses from financial shocks, such as illness, accidents, natural disasters and economic downturns and that by providing this protection, insurance can prevent people from falling into poverty due to unexpected events.
He maintained that for businesses, insurance is essential for managing risks and ensuring continuity, stating that when businesses are insured, they are more likely to invest in expansion and innovation, knowing that they are protected against potential losses and that this, in turn, drives economic growth, creates jobs, and contributes to overall development.
“In countries where insurance penetration is high, there is a clear correlation between the availability of insurance and economic stability. For instance, in South Africa, the insurance sector contributes significantly to the country’s GDP and provides a robust safety net for individuals and businesses alike. Similarly, in India, microinsurance products have been successful in reaching low-income populations, providing them with much-needed financial protection.
“Insurance as a tool for poverty alleviation, let us delve deeper into how insurance can specifically contribute to poverty alleviation in Nigeria.
“One of the most promising avenues for this is through Microinsurance — a type of insurance designed to be accessible and affordable for low-income individuals and households,” he posited.
According to him microinsurance products typically cover health, life, property and agriculture and are tailored to the specific risks faced by low-income populations.
“In Nigeria, where a significant portion of the population works in the informal sector and relies on agriculture and artisanship for their livelihoods, microinsurance has the potential to provide critical financial protection. For example, agricultural insurance can help farmers mitigate the risks associated with crop failure due to adverse weather conditions,” he submitted.
He stated that by providing compensation in the event of a loss, agricultural insurance can prevent farmers from falling into poverty and enable them to reinvest in their farms. Similarly, microinsurance would provide succor to the artisan, whose shop was burnt, to place him back in the position before the loss occurred.
