Before insurance industry can be viable among other sectors of the economy in the country, there would are to create systematic awareness through advertisement in the print media, radio and television, Finance Minister, Kemi Adeosun, has said.
The minister, who made this known in a chat with journalists in Abuja, attributed the operators’ failure to advertise as one of the major reasons for the underdevelopment in the industry.
She stressed that there was need for them to embrace advertisement to grow their business operation by taken it to next level.
She emphasised that out of 57 operators, less than half advertise in the print media, less than 20 on radio and less than 10 on TV.
“There are several factors that contribute to the underdevelopment of the insurance industry. It majorly includes low awareness.
“There is also the issue of poor distribution channels. Operators of the industry have only focused on one channel, which are brokers. This has led to a huge gap in market penetration especially in the retail market which is our greatest opportunity for growth,” she said.
She further said the challenge of under penetration and non-compliance with the laws relating to compulsory insurance of vehicles, property among others is a much debated issue, combination of poor government enforcement and poor industry practice
She pointed out that the discounting industry has some causes of premiums as a competitive strategy, which would be expected at a much more mature phase of the development lifecycle of the industry.
“It creates a vicious cycle that will ultimately lead to reduced cover in real terms and profitability and capacity for the industry and it must be stopped,” she said.
“Even high-risk entities – buildings with multiple occupancies such as hotels and hostels – have low rate of compliance. The regulator alone cannot drive the enforcement, this must be a collaborative effort of the operators, the various arms of government, both state and Federal and the National Insurance Commission (NAICOM).
“To support this, given our vast population and wide geographical spread, the deployment of modern technology is an essential pre-requisite to success. Out of 57 operators, less than a quarter advertise in the print media, less than 20 on radio and less than 10 on TV,” she said.
She, however, noted that in Nigeria, only one in eight cars is insured, only few corporate and few federal civil service personnel have group life insurance.
However, Insurance companies need to stop complicating matters. It’s one thing having a variety of products but it’s another stashing up similar products with little or no disparity. The poor managerial stratagem makes matters even worse. Competent individuals who will not just think outside the box but go ahead and create their own boxes, which will reflect via innovation of first class products, quality infrastructure facilities for ease of business, implementation of ICT and TQM in their business environment. This will certainly increase the value of your assets. Let’s not forget that the insurance industry is a vital part of the financial sector.
Insurance is a big deal in developed countries and accounts for a large fraction of their total economy whereas it accounts for less than one per cent of Nigeria’s total GDP– I mean, a singular telecom company in Nigeria alone contributes five per cent to the GDP of Nigeria while the GDP of one of the most popular banks in Nigeria outweighs the GDP of all the insurance companies in Nigeria put together.
On the positive side, Nigeria has well over 40 insurance companies’ not excluding reinsurance companies and some of them are doing impressively well in their own regard.
GPI’s are skyrocketing over the years, and claims are being settled as at when due which is a clear hint to the true insurance opportunities that exist here in Nigeria. This is just the beginning and a lot of patience and perseverance will need to be exercised in order for this industry to gain wide acceptability as we see in developed countries like the United States, France and Japan.