Lack of trust and low awareness about the benefits of insurance has been identified as major bottlenecks dwarfing the growth of the nation’s insurance industry despite available potentials, BusinessDay investigations have revealed.
These key issues analysts say remains major factors retarding growth despite the country’s large population of over 170 million and investments in the sector by both local and foreign players.
With about N300bn premium incomes as at the end of 2014, the industry which ranks third largest in Africa now has less than 1 percent penetration level and contributes barely 0.6 percent to GDP.
Analysts who spoke to BusinessDay on the development say the sector would do well if confidence is built amongst the insuring public and accessibility of insurance products enhanced across the country, up to local communities.
Fola Daniel, commissioner for Insurance said lack of Trust and confidence is the biggest challenge facing insurance industry. “We also have problem of awareness.”
Daniel said the Commission is seriously working very hard to change the face of insurance so that confidence will grow and people will begin to see insurance as necessity that would provide succour in the event of the unexpected.
He said the Commission’s “No Premium No Cover Policy” which has become a major success in the industry was targeted at bringing liquidity in the market, so that operating companies can be able to meet claims obligation when they arise. “If claims are paid promptly, consumers will have trust and confidence”.
Daniel noted that the development has prompted the Commission to also adopt a zero tolerance position against any underwriter who fails to settle genuine claims promptly.
“We have further set up a Contact Centre which enable an insured to call and register his/her agitation for non settlement of claims, a development that has endeared the insuring public to the industry that was once seen as a deceptive sector ,due to poor claims payment records.
“We have received accolades from the public for active claims cases resolution. This is a huge success as for as the No premium No cover policy is concerned.”
Dapo Obah, executive director, Premium Debate, said the issue of trust was as result of bad practices that characterised the industry in the past, where insurance companies was unable to pay claims.
Today, it has changed. The industry regulator is very hard on companies for any delay in payment of claims and for me that is the only way to achieve trust and confidence, Obah stated.
“Payment of claims has also become the best advertising any insurance company can do, so with that the impact would begin to show on the income of the industry.”
The National Insurance Commission two weeks ago issued a circular to the insurance companies requesting them to furnish the commission details of their claims owed to the insured. This, according to the Commission, is in line with its commitment to protect policy holders and ensure best practice in the nation’s insurance industry.
In the statement signed by Mohammed Kari, deputy commissioner for insurance, technical, the Commission said “as part of our statutory function to protect policy holders’, and the persistent bad publicity the Nigerian Insurance Industry is getting on the matter of unsettled claims, the commission is once more determined to bring to an end, the unfortunate scenario which is negatively impacting our quest to deepen insurance penetration and trust.”
The information required according to the circular includes Name of insured/claimant; policy number; claim number; date of loss/incident; date of report; quantum/estimate and reasons why the claim is still outstanding.