Low penetration, poor publicity, slow growth, poor perception from masses, low income, ignorance, meagre managerial strategy and poor government support through law enforcement have been identified as inhibitive factors affecting the growth of insurance in Nigeria.
The country is endowed with numerous resources and offers immense business opportunities and prospects.Religion is also seen as a militating factor, as the idea of a bad occurrence scares the people, hence the cliché, “God is our Insurance.”
While this is true and incontrovertible, however the Bible does not say we won’t experience some mishaps or promise a hazard-free life, which is why it says: “A prudent man foresees the evil, and hides himself; but the simple pass on, and are punished.”
The story of Joseph and how he saved millions from famine by taking the necessary steps in assuring lives and insuring against the impending disaster is a classic case.
Through the use of insurance, a bread winner is able to secure the needs of his family should he die or becomes disabled. We are able to compensate others adversely affected by our actions such as during accidents, fire outbreaks or building collapses.
With a population of over 170 million in Nigeria, insurance sadly has less than five per cent penetration. The challenge then is: How can you sell a product to someone, who, in the first place does not believe in it and unable to enjoy its services until a mishap occurs?
To sell insurance to “die-hard unbelievers’’, in sharing the gospel, they need to be educated on the benefits of insurance. Nigerians are renowned to be lovers of quality and expensive items, but providing succour in the case of a mishap or calamity still won’t attract them to Insurance. Some even consider it to be a sort of scam. Insurance is not meant to swindle, but rather to provide succour or palliative in the event of a loss.
The Nigerian economy is going through trying times, compounded by the minimum wage issue. The lowest paid worker earns about N18,000 ($63) monthly, which is a total disappointment in the face of rising inflation. It can hardly take care of anything – be it house rent, electricity bills, gas, food, hospital bills, leisure, school fees and transportation. He cannot even afford the very basics, much less insurance.
Although insurance companies in Nigeria have been able to thrive especially by creatively collecting relatively small premiums from individuals and organisations, which when combined have resulted into a large pool of funds for investment and sustainability purposes which is very well encouraging.
But low insurance penetration and acceptability is not only the citizen’s fault but also the government’s, which has failed to support the sector. Just some weeks ago, the Nigerian Senate voted against the idea for owners of private commercial buildings to have comprehensive insurance. Not even the regulatory bodies such as the National Insurance Commission (NAICOM), and the Nigerian Insurers Associations (NIA), could respond to that SOS by opposing the rule.
Also, the poor image of the sector is not very encouraging. A look at the list of top most dreaded marketing jobs, ahead of micro-finance bank, commercial banking, and network marketing, Insurance is number one.
Some of the insurance agents, who go canvassing for businesses, at best are beggarly. They will trail you; almost cry to you with the hope of drawing your sympathy enough to buy just one policy.
But what potential buyers need are confident marketers, who will spell out why they need insurance. The marketers must be witty enough to hold intelligent conversations and skip the boring stories and go straight to the point. At the end, the prospect must be made to understand that not buying insurance is his loss.
What about competitors? Every business faces this, and this is where publicity will pay off, to a large extent.Stuart Henderson Britt once said: “Doing business without advertising is like winking at a girl in the dark. You know what you are doing but nobody else does.” There is very little awareness about the importance of insurance across the country, and while there have been some improvements over time, but there is still a long way to go.
Since the industry is highly competitive, branding comes into play, as insurers need to go a little gaga on adverts, commercials, campaigns, posters, CSR, and PR. They need to dazzle the public and change their mind set about insurance.