INSURANCE penetration in Nigeria hovers around 0.5 per cent in 2008, dropped to 0.3 per cent in 2014; lower than the African average of 2.8 per cent last year.
This points to the potential for growth inherent in the industry with emphasis on the need for new penetration strategies to explore these potentials. South Africa has the highest insurance density (U.S dollars 925) in Africa.
Stakeholders in the industry have expressed readiness to encourage partnership and alliances in the insurance industry to deepen insurance penetration in all sectors of the economy.
According to insurance managers, the industry is an important component of the financial system in any country which mitigates risks and provides foundation for smooth functioning of all business activities.
Besides, it promotes savings and investments, increases the overall financial assets in any economy; it is a major contributor to job creation for agents, brokers, underwriters, actuaries and other industries whose risks are covered by the insurance industry. Overall, insurance can be a vehicle for growth in developing economies.
For instance, the Group Managing Director\CEO, Cornerstone Insurance Plc, Ganiyu Musa, in his paper on “Critical success factors for market expansion and penetration strategies”, said to harness full potential of the industry, suggested a three-year (2015-2017) strategic plan to grow premium to N1 trillion from over N300 billion mark in 2014, widen the number of policyholders from three million to 10 million, create direct jobs from 100,000 Nigerians from the over 30,000 in 2014, and to reduce insurance gap from 94 per cent to at least 70 per cent.
According to him, in the short term penetration strategy, pricing and market conduct should be viewed critically. He urged operators to maintain price discipline to deal with rate-cutting issues, greater collaboration between underwriters and brokers, as well as operators being self regulated as an industry.
He advocated alignment of innovative products with the customers’ real needs; increase micro-insurance penetration in new segments such as agriculture, introduction of takaful insurance to rural parts of the country to further deepen insurance penetration.
According to him, full exploitation of the opportunities offered by the banking distribution platforms, use of technology to improve products distribution; leverage on the 126 million active lines to boost insurance penetration (mobile phone ownership in urban (84.9 per cent) and (55.6 per cent).
He proposed enforcement of the six classes of compulsory insurance through collaboration with other relevant stakeholders, improvement in tax environment for operators and policyholders; greater collaboration between operators and regulator to expand the market.
The Cornerstone boss, said that to attract new and diversified talent base to meet changing customer demands, develop series of trainings and customized insurance offerings to SMEs considering the nature of risk faced by the segment, partnership with banks and other financial sectors on the ongoing financial inclusion and literacy programmes to drive insurance literacy and awareness, joint intensive awareness campaign among operators to educate the masses on benefits of insurance via media relations, radio, TV, prints publications, and use of social media to increase the variety of distribution channels.
Also, the Group Managing Director, Mutual Benefits Assurance Plc., Dr. Akin Ogunbiyi, in his remark said the key to deepening insurance penetration in Nigeria is investments in grass root operation in alignment with the Market Development and Restructuring Initiative (MDRI) initiated by the National Insurance Commission (NAICOM) to drive grass root penetration.
According to him, the company’s bold investments in grass root operation, where the company has taken the lead in alignment with NAICOM who has taken the bold step in deepening penetration.
He commended the commission for their dynamism, leadership, understanding and support especially in the approval of innovative products development, market penetration in the rural areas and informal sectors.
He emphasized that the challenge in the industry is that we have concerned ourselves on corporate world and what level of business can we generate in the corporate account.
The corporate account cannot give us any meaningful impact that can be compared to South Africa.
According to the Mutual Benefits boss, from the statistics published by the commission, we are told that less than one per cent of adult population has one form of insurance or the other.
Nigeria has a population of 170 million people, and adult population is about 45 per cent, we are saying that less than one per cent of adult population are actually insured.
Nobody wants to invest and take insurance to the grass root, this is where we have taken bold step to deepen insurance, close the gap and find a way of returning to the rural population where they truly need insurance.
source: Guardian news