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Chuks Udo Okonta
The number of Nigerians living in poverty has been pegged at over 133 million by the National Bureau of Statistics (NBS) an indication that they would not be able to access insurance to mitigate their risks.
According to the NBS, the said figure represents 63 per cent of the nation’s population, which is estimated to be above 200 million.
The NBS had in its “Nigeria Multidimensional Poverty Index” released on Thursday, last week, said over half of the population who are poor cook with dung, wood or charcoal, rather than cleaner energy.
It said high deprivations are also apparent in sanitation, time to healthcare, food insecurity and housing.
The report noted that multidimensional poverty is higher in rural areas, where 72 per cent of people are poor, compared to 42 per cent of people in urban areas.
Approximately, the bureau said, 70 per cent of Nigeria’s population live in rural areas, yet these areas are home to 80 per cent of poor people.
The report which was the first poverty index survey published by the statistics bureau since 2010, noted that 65 per cent of the poor (86 million people) live in the North, while 35 per cent (nearly 47 million) live in the South.
“Poverty levels across states vary significantly, with the incidence of multidimensional poverty ranging from a low of 27 per cent in Ondo to a high of 91 per cent in Sokoto,” it said.
To ascertain the implication of the poverty figure on insurance operations, Inspenonline interviewed some insurance practitioners, who said the figure has far reaching negative impacts on underwriting business.
The Managing Director Universal Insurance Plc, Ben Ujoatuonu, said it is quite worrisome because poverty will impact on ability of the affected Nigerians to pay for any insurance services, especially personal line insurances.
He submitted that people buy insurance when they have disposable income, adding that if they are living in poverty it means their income is not enough let alone disposable income.
“More worrisome is the number, 133 million out of 200 million people. This is about 63 per cent of the entire population. This will negatively impact on the insurance business and will affect the industry’s effort in deepening insurance penetration in Nigeria,” he said.
An Insurance Consultant, Peter Abe, said the poverty figure showed that most of those potential customers do not have the means to pay premium due to low income.
He expressed that however, if insurers can design needs-meeting low priced retail products that appeals to the target customers, they could make good businesses from the situation.
The President, Chartered Insurance Institute of Nigeria (CIIN) and former Group Managing Director, AIICO Insurance Plc, Edwin Igbiti, submitted that Gross Domestic Product (GDP) per capita is the largest driver for insurance penetration, stressing that higher poverty levels implies lower GDP per capita except there’s increased inequality, which leads to lower addressable and potential market size for insurance demand – reducing growth for the industry.
He noted that poverty brings about increased financial exclusion, as people who are unable to eat or provide for basic needs will see insurance as a luxury product.
He noted that in spite the situation, insurers could still reach this people by developing products using the SUAVE methodology – Simple, Understood, Accessible, Valuable and Efficient, at an affordable price point for applicable risks such as health insurance, adding that the new NHIA, provides a platform for vulnerable groups stressing that -this gives insurers and opportunity to collaborate with state governments to cover vulnerable groups so they can come out of poverty.
Igbiti posited that the situation necessitates a strong case for more policies around micro insurance.
