Insurance penetration will grow on improved financial inclusion, access to credit

Nigeria’s low insurance penetration amidst its huge population will see a quantum leap if the country can intensity financial inclusion education and improved access to credit.

According to what experts have listed as external factors needed for increased penetration in Africa’s most populous nation, financial education is key to achieving strong inclusion across all levels of the population.

Others are increased access to credit, enforcement of compulsory insurances, regulation and an improved microeconomic environment.

Speaking on the topic “Driving Insurance Penetration in Nigeria” at Leadway Assurance 2022 Training for journalist, Joshua Ogbeifun of Leadway Assurance said low penetration is a major challenge facing the industry, and underscore why stakeholders must play their role to increase uptake of insurance across the population.

Ogbeifun while stating that insurance penetration in Nigeria at 0.3 per cent shows that we are lagging behind, noted that something needs to be done collectively.

While advocating for simplification and personalizing insurance products and services to meet the yearnings of the insuring public, he charged the regulators to put an adequate regulatory framework in place.

Ogbeifun expressed worry that a situation where there are about 12 million cars on the road in Nigeria and only about 3 million have valid insurance policies is not the best for the industry and the nation at large.

Ogbeifun who called on the government to ensure changes in the nation’s macro-economic conditions to encourage job creation and increased employment also urged the government at all levels to provide adequate credit facilities that promote private business operation and entrepreneurship in order to empower the people financially.

“If there is access to credit, people can acquire assets, people can take loans and invest, and all of these will be insured to protect against loss”

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According to him, this is the driver of insurance business growth insurance and economic development in advanced nations.

On internal factors to drive insurance penetration, he said increasing access through digital and wider distribution, targeting unique customer segments and needs, and leveraging the power of partnerships.

Ogbeifun who enjoined insurers to work in collaboration with government, regulators and other stakeholders to help shape and reform policies, also emphasized the need for the players to demystify insurance.

For journalists as purveyors of information, he appealed to them to help with the education of the public on the value and benefits of insurance as well as engage the regulators, government, intermediaries and other stakeholders in the industry to play their roles well.

Ogbeifun giving background to insurance penetration said it is the ratio of the value of insurance premium of a country in a particular year divided by the Gross Domestic Product (GDP) of that country, adding that it shows how the citizens of the country embrace insurance as a risk management tool.

According to him, a country with low insurance penetration shows that people of that country do not take insurance as a risk management tool, noting that lesser growth in the insurance industry also means lesser growth for the country because they will not be able to maximize the value of insurance as the backbone of the financial sector.

“From available data, insurance penetration is low in most of the African countries aside South Africa where we see high penetration, every other African country especially the West African countries are experiencing low penetration.

“Globally, reports showed that in 2020, insurance penetration to GDP was about 7.3 per cent. Insurance penetration is thriving in the United Kingdom with 11 per cent, the United States of America with 7 per cent and South Africa with about 13 per cent,” Ogbeifun stated.

He stated that what drives insurance penetration in these countries include population, financial literacy, regulators’ assistance, adding that in terms of economy, they have strong purchasing power with enough disposable income to buy insurance.

In Africa, according to Ogbeifun, insurance penetration in the Francophone (French-speaking) countries is 1.2 per cent, while the Anglophone African countries like Nigeria is 0.3 per cent.

“With insurance penetration in Nigeria at 0.3 per cent, it shows that we are lagging behind and something needs to be done collectively.

“Insurance penetration in South Africa is about 12.4 per cent, Kenya 2.83 per cent. What drives insurance penetration in South Africa is the Life segment of their business, unlike Nigeria whereby due to some factors around religious and cultural values, people do not really take insurance seriously.

“Nigeria as a supposed giant of Africa, we should not be at 0.3 percent. As a nation and as the insurance industry, as government, intermediaries, even as players in the market and as stakeholders, we should think on how to drive insurance penetration for Nigeria,” Ogbeifun added.

Earlier in her opening remarks, the moderator of the webinar, Aishat Belo-Garuba explained the morale behind Leadway Journalism Training for Insurance and Pension Journalists.

She said the training provides Leadway with a veritable platform to interact with journalists while intimating them on the activities of the company in particular and that of the industry generally.