Under-pricing of insurance risks, described in the Nigerian market as rate cutting has been identified as major drawback to growth of the insurance industry in Africa’s most populous nation, Nigeria.
Experts say low premium rates and lack of collaboration among the players is the bane of insurance growth, noting that the premium charged in Nigeria is too meagre compared to what is applicable in other parts of the world.
Nigeria’s insurance penetration is abysmally low at 0.5 percent to the GDP, when compared with penetration levels in other parts of Africa, including South Africa, Kenya, Egypt, and Ghana among others.
Speaking at this year’s Claim Advocacy Conference, organised by Carefirst Consult, with the theme, ‘Understanding Insurance Beyond Claims Payment’, Prisca Soares, chairman of the occasion and former secretary general of the African Insurance Organisation (AIO) said, “the premium charged in Nigeria is too meagre compared to what is applicable in other parts of the world and something needs to be done about that.”
“A situation where some companies give so much as discounts to their clients is one thing that is not allowing the industry to grow the way it should. This is a suicidal tendency, which we have to do something about. We really do need to cooperate in this market so that there would be sustainability because if insurance goes down, everything else does,” she appealed.
Other speakers at the conference include Reginald Egbuniwe, managing director, Grand Metropolitan Associates; Rashidat Adebisi, chief client officer, AXA Mansard and Richard Ogunmodede, financial/fintech expert and insurance consumer.
In his presentation on ‘Claim is the Best Teacher in Insurance/Life After Claims’ Richard Ogunmodede, highlighted the industry’s problems and the negative effect on its growth.
He said, “Insurance has been mispriced in Nigeria. There is a mismatch in the system. In the industry, you have bad insurers and bad consumers and so you have big systemic problems.
“Insurers talk all the talk but they never do the work. They just compete based on agreed premium and at a zero rate and the consumer assumes there are implicit guarantee that even when the insurer goes down, they will still get their indemnity so they don’t care about the rate too.
He said the growth rate of the Nigerian insurance industry and its contribution to the nation’s GDP is very small and called on the operators to do something, especially on the issue of rate.
Earlier in his welcome address, the founder/principal Consultant, Carefirst Consult Limited, Gus Wiggle, highlighted the objective of the conference, which he said is “to ease discussions about claims amongst insurance stakeholders thereby filling the void in the insurance ecosystem and adding to the value chain of insurance. We are purposed to be the bridge between the consumers and the insurance providers.
“Claim will remain the anchor of insurance business and will remain on the front burner while communication will become the point of impact of expressing consumers’ impressions…”
He said paying claims is part of the insurance proposition, adding that a lot needs to be done to boost communication with customers on claims issues.