The low insurance penetration in Nigeria put at less than one percent shows that over 40 million small-scale enterprises (SMEs) accounting for approximately 84 percent of employment and 50 percent of GDP, were relying on cash to manage daily risks.
Experts who spoke at the Coronation Insurance Plc webinar with the theme: ‘Shared Prosperity through Financial Inclusion – Protecting your business and wallet using insurance’, says, even the large-scale businesses with substantial assets and secure cash flow cannot have cash, sufficient enough to cover their entire risk portfolio.
They noted therefore, that this kind of financial recklessness often challenge the ability of Nigeria’s small business sector to drive sustained growth and long-term prosperity.
Olamide Olajolo, managing director of Coronation Insurance Plc speaking on the theme said, in a volatile market where a single event could wipe out a lifetime’s work, insurance played a critical role in both personal and business survival.
“By creating a pool of capital in which the good fortune of the many assured the survival of the few who encountered misfortune, insurance had a critical role to play, primarily by making sure that Nigerians didn’t rely on their savings or assets to cover losses.”
It was incumbent on the industry to change the narrative on insurance, imagining that a N250, 000 cover for example, could secure over N1 billion in risk. What business could set N1 billion aside to cover their own risks?
The Webinar moderated by Wole Famurewa, CNBC Africa anchor, the panel of experts including Adedeji Olowe, founder and CEO at Lendsqr; Babatunde Akin Moses, CEO of Sycamore.ng; and Yemisi Isidi, CEO of Triift Africa shared their individual perspectives on how insurance could drive shared properity.
Panellists believed that the attitude to insurance could be changed in Nigeria by providing practical examples of how simple insurance products could sustain financial inclusion by protecting income and investment.
Panellists were also at pains to demonstrate the value of insurance, especially to businesses. Simple, affordable, products like health and life insurance for business owners, for example, could save a family or a small business owner from being wiped out by the ill health of the breadwinner or single business operator.
Access to credit was a key driver of business success across all businesses in Nigeria. Small businesses, however, struggled to access credit. Here too, insurance had a critical role to play. Small businesses with adequate insurance cover presented at much more secure credit proposition to reputable financial institutions, like banks, and other grade ‘A’ lenders. As such, small businesses with just a few basic covers were far more likely to access credit on much more favourable terms.
Moreover, with most insurance providers able to advice on the risks that specific individuals or businesses faced, the simple process of purchasing insurance acted as a powerful force for financial education in Nigeria. In short, by deepening financial literacy, Nigeria’s insurance sector was ensuring the survival of far more businesses and the prosperity of far more families.
Finally, especially in tough times and volatile exchange rates, insuring assets purchased at more favourable US dollar values was critical for businesses that relied on imported equipment, insight or services.
Fortunately, technology had made accessing insurance in Nigeria much easier – and cheaper – with many insurers offering simple, effective risk products, simply by downloading apps onto handheld mobile phones.
As insurance became more common amongst the personal and mass small business segment, insurance was set to play a much more significant role in driving financial inclusion, preserving wealth and supporting long-term prosperity in Nigeria.