• Friday, June 14, 2024
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Life insurance uptake rises on economic uncertainty

Life insurance uptake rises on economic uncertainty

Amidst hardship and the slow recovery of the economy, individuals and households are resorting to taking life insurance for the protection of future income and their dependants.

Some of the consumers say they have decided to embrace insurance for long-term savings and capital accumulation, which could be used for future purposes, protection for children’s education and upkeep in the event of the breadwinner’s death.

These developments have resulted in increasing demand for personal-line insurance in the Nigerian market as shown by recent data released by the National Insurance Commission (NAICOM).

According to the NAICOM, life business contributed 41.8 percent of the total insurance market production of N369.2 billion in the second quarter of this year, gradually closing up on the general business, which contributed 59.3 percent.

Of this amount, individual life business was the major driver at 41.8 percent of the life premium generated, annuity business at 24.7 percent, and group life business contributed 34 percent.

Chinemere Obilor, an insured who took a 15-year life insurance policy of N10 million sum assured, said: “I have decided to insure myself and my family, so that we can have something to fall back on, whether I am there for them or not.”

“Many Nigerians are not seeing hope in an economic revival, so people are thinking of what can keep them afloat whatever the situation is.”

On why he sees insurance as the best financial instrument for this purpose, he said: “The problem is that a lot of us don’t understand insurance and its benefits.”

“Life insurance is a double safety measure for protection. It can guarantee you future income and at the same time be a fallback position for your family in case of death. For me it is better than just keeping money in a savings account,” Obilor added.

Read also: Insurance industry repositioned to serve Nigerians better – NCRIB

Bankole Banjo, a brand, media and communication manager at a life insurance company in Nigeria, said the trend in demand for life insurance products was connected to the overall increase in the quest of the average Nigerian, particularly the middle class, to secure their tomorrow.

He said: “You see a lot of people on the so-called ‘japa’ train, and the underlying factor driving that for most is people wanting to do it for themselves, waiting to secure their tomorrow.

“I guess that has now filtered into the uptake of insurance too, as people now, more than ever, are conscious of intentionally planning for a better, secured tomorrow. And what better way to do this than by buying insurance.”
Prompt settlement of claims and benefits may have also contributed to increased confidence of the consumers in life insurance, as the data also show that the life segment of the business recorded an 88.90 percent claims settlement.

Joyce Ojemudia, managing director/CEO of African Alliance Insurance Plc, said paying genuine claims “is a trust we do not intend to break”.

“We are not inured from current economic realities. We understand how critical the times are, hence our boundless resolve and commitment to fulfilling our mantra of being with our customers for life,” he said.

Ojemudia emphasised that the company’s claims payment process is backed by year-on-year evidence of fulfilled claims. “We will continue to make sure that our strategies are updated to meet up with the demands of paying claims as and when due.”

Olumide Ibidapo, managing director/CEO of FBN Insurance Brokers Limited, who expressed confidence in the growth of retail insurance in Nigeria particularly the life market, said the potential is huge.

Ibidapo said if the issue of low awareness could be addressed, with a lot of investment in financial literacy programmes and technology adoption, much could be achieved.

“Several factors are responsible for the low insurance uptake rate in Nigeria, especially in the retail segment. The most noticeable factors include low insurance/risk management/ financial literacy, low disposable income, perceived difficulty redeeming claims in the event of one, and low adoption of the right technological platform by stakeholders to manage and drive the distribution of the retail products, considering the volume/potential population or client base,” he said.

If these major challenges are addressed, there will be a significant insurance adoption growth in the retail segment of the market, he said.