Insurance Penetration Worsens, Experts Say

Rather than appreciating, experts have said Nigeria’s insurance penetration is worsening each year. They predicate their position on the increasing number of individuals that are not insured. Managing Director of Insurance Brokers of Nigeria, Mr Prosper Okpue told Vanguard at the weekend that insurance penetration in the country is worse than it had been in the past alluding to the larger population that have no form of insurance either for their life or their assets.

Okpue spoke on the background of underwriters market agreement which put pegged commissions to brokers and fixed a minimum price for industrial assets. He said the underwriters may have erred in arriving at what should be the industry minimum rate for some risks when they did not consider brokers input.

However, he was concerned that insurance leaders are not focusing on providing security for more Nigerians. Rather, they are thinking of standardizing price in a market that is characterised by more suppliers chasing few buyers. There are about 76 companies pursuing 50 companies that can pay premium, tell me why the price will not fall, he queried.

He said such price fixing cannot work for the industry citing the numerous compulsory insurances under the law which has failed to excite Nigerians. The problem, he observed, stems from inability of the people to see insurance as a necessity pointing out that solution lies in the active involvement of both government and the players.

He proposed a robust microinsurance scheme that will help the people integrate insurance into their lives insisting that much will not be achieved if insurance penetration is going down instead of appreciating. The former president of Nigerian Council of Registered Insurance Brokers predicted that insurance revolution in the country as elsewhere lies in personal line insurance.

He argued that unless insurance of the individual takes the centre stage, nothing significant can happen. Only companies or government ministries will pay premium for their group life insurance. What happens to the informal sector where the bulk of the population can be found carrying out legitimate economic activities, the IBN boss asserted.

Unless the problem is tackled from the standpoint of increasing penetration, legislation and monopolies that suggest one solution that does not protect the consumer may not work, he argued.

Similarly, Mr Val Ojumah, CEO, FBN Insurance Brokers feared for the market as the foundation for strong growth has not been laid. He said the life market is not properly developed to support the Nigerian insurance industry. Like Okpue, he believes sustainable growth lies in the insurance of the individual.

A significant number of the population having one form of insurance or the other is the guarantee that people are appreciating the importance of insurance.

Source: The Guardian
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