• Wednesday, May 29, 2024
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BusinessDay

Insecurity: Nigerians’ preference for personal security exposes low confidence in insurance sector

The penchant of wealthy Nigerians for acquiring bullet proof vehicles and security gadgets, instead of insurance policies, in the face of heightened insecurity in the country has exposed the low level of confidence reposed by the public in that industry and the benefits derivable from the sector, BusinessDay investigations reveal.

Analysts say that while expenditure on bullet proof cars, security doors, dogs and personal guards keep rising in the wake of the ongoing Boko Haram insurgency in some northern states of the country, outlays on insurance protection is not rising with the trend.

Sunday Thomas, director-general, Nigerian Insurers Association (NIA) says it is unfortunate that people do not understand the benefits of insurance because it would profit them more in situations like this, to take up policies, so that the welfare of their dependants could be guaranteed should the unexpected happen.

“Instead, what we are seeing is self insurance with bullet-proof cars, security dogs and the likes, being imported with a passion. All of these do not prevent insurance or take the place of insurance for the benefit of your family, rather it should complement it.”

Thomas observes that “insurance will help the family or dependants continue in the standard of life they are used to, when the breadwinner is  no longer there to provide for them. It will guaranty the children’s education is unhampered and even pay for the outstandings on mortgage. So it cannot be replaced with bullet-proof cars and security dogs”.

Commenting on the low level of public confidence in the industry, Thomas observes that the insurance industry has continued to be bedeviled by several challenges relating to image and public perception. Among these challenges he said, are relative absence of insurance from public consciousness. “Most often they do not conceive insurance services as being as fundamental to their existence as banking services.”

Security experts say the annual expenditure on Armoured Vehicles’ has risen to over N10 billion annually, and may go higher, following the onslaught of Boko Haram, as well as the coming 2015 general elections.

Adetokunbo Ogundeyin, group managing director, Proforce Defence Limited, Ode Remo, Ogun State, makers of armoured vehicles in Nigeria, was quoted as saying in an interview that many high networth individuals, as well as military formations, among others, are currently owners of state-of-the art bullet-proof cars.

“When you talk about armoured vehicles in Nigeria, we’re not only talking about the individual, we’re talking about the military, about the police, and paramilitary”, he said.

“You are talking about a business that is worth close to, I would say, about $50m to $60m in Nigeria alone. Don’t forget that all these vehicles need to be maintained. We’re not just talking about importing of armoured vehicles, we’re talking of after-sales.

“Even when you look at the number of individuals that import armoured vehicles into Nigeria in a year, it would go up to 1,000”. This, he said does not take into account armoured stock imported by quasi-government parastatals.

Nigeria is also witnessing a growing influx of private security companies whose role is basically the provision of security services to individuals and firms, both private and public.

Godfrey Onwuchekwa, a new entrant into the business says there has been growing demand for house and personal security in recent times, and that existing security companies can hardly cope with the trend. “We feel this is an opportunity to start our firm, which is just a few months old now, even though we have just begun the process of licensing.

According to Onwucheka, many security companies are springing up, some with international affiliations, better skills, better infrastructure and more technology driven systems. All of these go beyond just security challenges, but also indicate that the economy is growing, he says.

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