Given the prevailing challenges in the sector, insurance operators have expressed doubts over the realisation of the Federal Government’s N1 trillion income benchmark for the industry this financial year.
At a Nigeria Insurance Summit in December 2014, the government said it planned to grow the sectoral premium, which was then N300 billion to N1 trillion in 2017, and N5 trillion in 10 years.
Stakeholders believe that low penetration and activities of racketeers remain major hindrances to the realisation of the target. They have also cited the little or no enforcement of the compulsory insurance policy by the relevant agencies in addition to the inability of most states to domesticate the laws. They consider the move not realisable.
In an interview with The Guardian, the operators maintained that current realities make the target too ambitious, especially when viewed from the fact that the industry’s total premium income is below N400 billion.
Nonetheless, they held that there could be possibilities of growing the income if government, operators and the citizens collaborate as critical stakeholders. The Managing Director, Linkage Assurance Plc, Dr. Pius Apere, categorically dismissed the N1 trillion threshold as unrealiseable this year, taking into consideration the high level of rate-cutting in the industry, which, according to him, is mainly surviving in the brokers’ market.
Besides, he noted that the industry does not have enough products to attract such patronage, as he dubbed existing insurance products as recycled. His words: “Insurance industry is just recycling products. Also, the real premium is actually going down because some operators are cutting rates. It is only when they go into retail marketing through micro-insurance that penetration could be deepened and the N1 trillion premium target could be realised.”
He, therefore, charged underwriters to leverage on the untapped potential in the retail market through the launch of retail products that could actually drive income. Similarly, the Managing Director, Nigeria Reinsurance Corporation, Lady Isioma Chukwuma, said the low penetration of insurance policies makes it absolutely impossible to achieve the mission.
Chukwuma, who is also the president, Chartered Insurance Institute of Nigeria (CIIN), noted: “Sincerely speaking, I do not think it is realistic enough because the penetration of insurance is still very low in the country. But that is not to say we are not trying. I am optimistic that we can improve on what we already have as the total premium income of the industry.”
On his part, the Managing Director, Universal Insurance Plc, Ben Ujoataonu, who also held that the target is not feasible this year, observed that it could only happen if all the stakeholders work together.
He said: “It is all about the growth in the economy itself because if the economic indices are right, the corporate organisations will grow their businesses. As they grow their enterprises, there will be need for insurance. The individual on a micro level will have enough disposable income with which to buy insurance.”