In a bid to tap into the untapped potential of other sectors of the economy, Law Union & Rock Insurance Plc, has listed agriculture, education, and healthcare as key areas the leasing, and insurance industry need to fully tap into.
The underwriter is particularly worried that the current market development restructuring initiative (MDRI) efforts of the industry players and the regulator are not yielding desired results.
Growth is expected to be driven by medium small and medium enterprises (MSMEs), supported by expanding credits, in which leasing companies will play a key role, as the country’s domestic economy is large and relatively robust, and growth forecasts support future expansion of insurance and leasing businesses.
The Managing Director/Chief Executive Officer, Law Union & Rock, Jide Orimolade, noted that insurance is still not feasible in Nigeria, which is expected to reach a penetration level of 10 per cent in 2025. This will translate into insurance premiums running into trillions of Naira.
He said: “Nigeria has the largest population in Africa, and one of the largest globally, presenting a huge potential market for business, despite the large population, insurance penetration till remains low.”
Orimolade spoke at the Equipment Leasing association of Nigeria Limited/ GTE (ELAN), first quarter business forum with the theme: “Building Synergy Between Insurance and Leasing Industry- Opportunities, Product Development And Key Success Factors.”
According to him, the agricultural sector recorded growth despite the recession experienced between Q2 2016 and Q1 2017. He also anticipates that there will be a sharp increase in demand for agricultural equipment leases if current production and growth levels are sustained in the sector. Economic forecasts indicate that Nigeria will recover from recession, and the economy will bounce back in late 2017. “We need to reposition ourselves to capture the opportunities that will follow the expected economic recovery.”
He said: “There has been a steady increase in the demand for household appliances, pleasure cars, accommodation, etc. by individuals and families, but most of these individuals who are majorly fixed income earners in paid employment cannot afford to pay one-off or lump sum for these items.
“They therefore look to leasing companies. If someone leases a car, he needs to insure it too. This is a service point where both the leasing company and the insurance company meet. No matter the kind of leasing whether it is vehicle leasing, agricultural equipment leasing, house/apartment leasing, office equipment leasing, factory equipment leasing or household appliances leasing these leased assets have to be safe and secure through insurance.
“Agricultural sector holds the future of our economic growth. It is projected that by the end of 2020, it will become the mainstay of our national economy. There is also government’s deliberate effort and policy to drive growth in the sector through several initiatives. We have seen positive growth in this sector even when other sectors recorded growth decline. More and more people and companies are going into farming; this present huge opportunity for agricultural equipment leasing as well as opportunity for agricultural insurance products.”
The Chairman, Board of Directors (ELAN), Chuka Onwuchekwa, who also spoke at the event, identified the education sector as another area that holds the ace in terms of opportunity for insurance and leasing products. “The number of private schools in Nigeria has risen very rapidly in the last 10 years. Despite rising school fees, we see the determination of parents to send their children to ‘best private schools.”