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Nigeria's leading finance and market intelligence news report.

Making Nigerians appreciate the benefits of insurance

“God forbid! Car accident is not my portion” said Samuel, as he turned down a car insurance policy proposal from an agent, soon after acquiring his first car, a 2006 Toyota Corolla. According to Samuel, buying insurance is a subtle means of attracting whatever loss a man seeks to protect himself against.

Some, like Samuel, whose religious convictions or even cultural superstitions are responsible for their apathy, may sometimes feel that taking up a form of insurance policy is synonymous with a lack of faith. Yet, their reason is only one of the many factors that have contributed to the low insurance penetration and appreciation in Nigeria. For others, the struggle is with delayed gratification, for them, insurance does not serve in the immediate, they worry that what they are paying for may not be beneficial and even if it will, it is likely to pay off in the future.

Perhaps, the biggest and most pronounced challenge that the insurance industry in Nigeria has had to face is the lack of trust and transparency between insurance providers and customers. Many Nigerians still struggle to believe that their claims will be paid quickly, reasonably, fairly and yes, accurately. Affordable insurance is another challenge, worthy of consideration. A number of people do not have insurance because they cannot afford the current payment plans and structures.

With Nigeria’s literacy rate put at 62.02 percent, lack of awareness and illiteracy is one challenge, too obvious to be ignored and one would at least expect that an excellent percentage of 80-90 of the seemingly literate population would have advanced knowledge of insurance policies and their impact, but this has not always been the case. The large informal workforce is another factor that has affected insurance penetration in Nigeria, if you are like me who have been a beneficiary of corporate insurance, you would agree that a good number of Nigerians that have insurance today, obtained it through their employers because of compulsory schemes for corporates. However, the fact is that corporates only employ a small percentage of the workforce and struggling SME’s most times do not explore insurance as a form of employee benefit.

While the above mentioned factors are not exhaustive reasons for the low penetration of insurance in Nigeria, it is important to admit that there are amazing opportunities for immense growth in the largely underdeveloped insurance market in Nigeria. Simply, the Nigeria insurance industry needs a new lease of life, a fresh breath of ideas and innovation that would drive acceptance of the value which industry provides. To adequately leverage these opportunities, it is imperative for insurance practitioners to efficiently create and ensure Flexible& Affordable Payment Plans, Simple Onboarding, Underwriting and Claims Process as well as Flexible & Customizable Products.

More importantly, there is a growing need for increased sensitization, awareness campaigns, education and enlightenment by insurance companies and the regulator. This communication should be deliberate and specific, with the goal of making Nigerians believe insurance and not just buy. For example, after the last #EndSars protests, a business owner friend after witnessing how his neighbor who took insurance was compensated became convinced about insurance. An insurer used the opportunity to explain to the SME operator, how individuals, businesses, institutions, and corporations that were insured before the violence and carnage in Lagos and other cities are receiving relief through insurance claims.

Ultimately, the goal is to ensure that trust returns to the insurance industry in Nigeria full time, while this is not the easiest of tasks, it is achievable if insurance professionals are more customer-centric. With a deliberate, dynamic and proactive sensitization strategy, insurance companies can improve visibility of their business to different classes of Nigerians and even persuade the likes of Samuel, mentioned at the beginning of this piece, to benefit from the many gains of insurance. Truth is, Nigerians will buy insurance when they are well informed of its benefits, if it is affordable and offered to them at the right time and with the right incentives. By, then it would be a new dawn for the insurance industry in Nigeria.

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