The insurance industry is undoubtedly part of the Nigerian financial sector given its classification in the last GDP re-basing exercise. That is why Nairametrics will always put regulators and operators in this sector on their toes as the sector continues to be oblivious to innovations and products developments of their counterparts in Sub Sahara Africa, Europe, Asia and the United States.
Nigerian insurers over the years have limited themselves or are under the illusions that only through third part motor insurance can they generate revenues in form of premium income. It is generally accepted that Insurers in Africa largest economy generate over 90 percent of premium income from third-party insurance.
This explains their abysmal profit margins, less than one percent contribution to the economy and recurring losses.
Nairametrics had hitherto bemoaned the rotten share price of most of these firms which over the years have remained stagnant at N0.50 in the past 3 to 4 years.
It is only through innovative products that insurance companies can generate reasonable upswing in premium income that will attract investors to its shares.
These are some of the areas Insurers in Africa largest economy can increase coverage so as to deepen penetration and boost premium income.
Political Violence Insurance
- Insurers in Africa largest oil producer ought to have taken advantage of the series of bomb blasts and loss of properties to political upheaval since the return to democratic rule in 1999 to market the Political Violence Insurance (PV) for customers to buy.
- PV is an insurance policy in the special-insurance-product category, covering both terrorism and business disruption.
- For instance, the recent bomb attack in Bangkok has spiked the demand for PV insurance.
- Though premium could be low since the chances of such an event occurring are low, Nigeria Insurers would have benefited from such products.
Losses due to catastrophe or floods
- It is apparent that the coverage for indemnity losses for property lost to floods is low. In Nigeria, for instance, there are cases of floods in Northern part of the country that destroys lives and properties. Lagos State the country’s financial nerve center is also vulnerable to flood
South Africa, Africa’s second largest and most advanced economy has many insurance packages generating premium income for insurers.
Some of the insurance packages offered by firms in the country are: Funeral Insurance, Pet Insurance and Paintings insurance and Longevity insurance. The lists are inexhaustible. These packages mentioned have not been marketed to customers by the Nigerian insurance firms.