• Tuesday, March 05, 2024
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It’s only insurance that can guarantee peace of mind – NIA DG

Yetunde Iloro Picture

The insurance industry in Nigeria is currently embarking on a rebranding campaign targeted at creating awareness on the benefits of taking insurance as a form of protection. Yetunde Ilori, director general, Nigerian Insurers Association (NIA), in this interview with Modestus Anaesoronye explains the objective of the campaign, benefits to individuals and corporates, and the different products available in the market. Excerpts:

Could you give us an overview of the insurance industry in Nigeria today?

In Nigeria today, I would say that the insurance industry is at the point of inflection. Every attention is on insurance, given the benefits it offers to both the individuals and the economy as a whole. Today every effort is being directed towards ensuring that insurance takes its rightful position and contributes appropriately to the economy. This is also reinforced with the creation of awareness among those who are supposed to use insurance but are not currently using it. We have about 59 players in underwriting, and these are the people that sell and are also called the risk carries.

There are also the intermediaries, who are the people that connect those who want to buy and those who want to sell, called the underwriters. Now, the underwriters (sellers) cannot bear all the risks alone; they have other technical partners called reinsurers and two of these partners are Nigerian companies. Every one of them at the moment is looking for a way forward. How do we get the appropriate number of people from the population to buy insurance? That is what everybody is focused on at the moment. And this is also in line with the ongoing efforts to build stronger capacity by way of recapitalisation and all that.

Many people have little understanding about the benefits of insurance. Now, why is insurance important to every individual?

Insurance is important to everybody and it’s a daily need. Everyone is exposed to risks and these risks vary from one individual to another. There are many ways of managing the risk. If you have your life and possession, both you and your possession are exposed to risk. You can say you want to avoid the risks, how much can you avoid it? You can say you want to reduce the risk, but by what magnitude can you reduce it?

But insurers are the specialists that help you manage these risks by taking care of your financial loss. Anything you have that you treasure, that can have a financial loss, that is what insurance takes care of, and that is what is presented to insurance companies to protect. It is so important that nobody should step out of their house without making adequate provision or having taken insurance cover. For example, if you are a motorist and you have a car, you can say you will be careful, but do you guarantee the carefulness of the other parties? A car you treasure, if you decide to buy now, you cannot buy it at the same price you that you bought it about five years ago.

Instead of saying I will save gradually towards a financial loss or for an eventuality that you cannot even determine when it will happen because it is uncertain. It is better you move the risk or expected financial loss to the business that is set up to take care of that concern, which is insurance. It is not only your motor, even your home. These days you hear of fire incidents here and there, some preventable some others not preventable. But what if it happens to you?

People are fond of saying, ‘God Forbid’ it cannot happen to me,’ but what if it happens to you? We see it happening every day, and we are seeing it. Your home, the property that is contained therein, and the things there in and other things that are contained inside that you cannot afford not to lose, pass them to insurance.

Also, as soon as you begin to raise a family, you should begin to think of the future of the people you love so much and care about. ‘What if I am not there and I am the breadwinner, what happens to them. This beautiful child I have just given birth to, how do I ensure that this child gets the quality of education I have always desired.’

You don’t need to get there before you plan for it, just like you don’t need to see the rain before you buy an umbrella. Even from the birth of that child, you have to start providing for his or her education. Even for your business, you have to provide for your staff because they are the greatest assets of the business. They leave their houses everyday to spend substantial part of their time with you, so you must provide insurance protection for them. You can do a business and go to sleep if you have insurance because it’s insurance that guarantees peace of mind.

In Nigeria, what we have been used to is the informal protection as a form of insurance, but this is fast disappearing because the size the families are reducing.

If your thinking is that, at old age my children will take care of me without making arrangements for retirement by planning for it, then you are making a mistake because they may not be there for you. But if you plan well, you would have made adequate preparation for yourself by transferring your risk to the insurance companies.

How can insurance support other sectors of the economy?

Like I said before, insurance is critical to the growth of every sector of the economy. Look at aviation industry for instance. No aircraft can be allowed to take off without insurance cover. Number one is for the aircraft itself; secondly is the liability side of it and thirdly is the third party liability and damage.

Insurance is important to everyone, including individuals, businesses, corporates, and government because everyone is exposed to risk. Rather than making daily provisions for liabilities, or being distracted from your business by thinking of how to provide liability that may befall the business, you shit it to insurance companies and concentrate on your core business.

By so doing, productivity will increase; contribution of every sector to the economy will keep increasing because the appropriate sector is taking care of the risks of possible financial loss that they are exposed to.

If you also look at a thriving sector like the oil and gas business, there are also many risks that the sector is exposed to. Is it spillage? Is it explosion? Or is it the equipment they use for drilling that sometimes disappears as a result of one accident or the other?  But, if these risks have been transferred to the insurers as at the time of the loss, insurance companies with their technical support will come together, pay back or put back the entity that has suffered the loss in the position they were just before the loss so that there is continuity of business and everybody can concentrate on their aspect of generation of wealth. So, it’s a cycle, and what insurance does is to enable everyone focus on their area of specialty, while insurers manage the associated risks as far as financial loss is concerned.

What kind of freedom does insurance offer?

It frees up worries. It frees you up from fears. It makes you focus on what your area of competence is, because someone else has taken over the risks that have been a distraction to you.

The insurance industry is currently running a rebranding campaign. What is the target?

One thing we have discovered about Nigeria is that there is low awareness about insurance. People definitely enjoy being compensated for the loss they have; families like coming to help a family member in the event of a crisis. But honestly, for you to get adequate compensation, it can only come from insurance. But people don’t know. There are so many wrong perceptions about insurance; they don’t know the benefits and they don’t know where to get it.

There is this particular campaign that the insurance industry is running.   It is to create awareness among the people that when there is a loss, you don’t need to start going around begging; you don’t have to face unnecessary ridicule because the bread winner is dead and the children cannot continue their schooling. Pass it to insurance company and have rest of mind.  

We need create that awareness because everyone is exposed to one kind of risk or the other and there is one form of insurance cover or the other that you can take, but you don’t. This is the awareness we are creating. The campaign is here to tell the public the way out  – that you don’t need to suffer unnecessary hardship because of an incident, but that you should push this burden to those whom it is their responsibility to manage risk.

Instead of doing it in silo, insurers harmonise the risks and then compensate whoever that happens to be unfortunate among many. We need to create this awareness and that is what we are doing.  

The industry has been talking about compulsory insurances. What are these insurances?

There are much insurance by law by virtue of the Insurance Act 2003 that have been made compulsory. One is Motor Third Party Insurance; Building Liability Insurance, Occupier’s Liability Insurance; Group Life Insurance; and Professional Indemnity.