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How Micro-Insurance Can Deepen Insurance Penetration in Nigeria

Insurance	1211 VIEWS
Insurance
1211 VIEWS

Friday, September 20, 2019 / 06.10PM / Bukola Akinyele for Proshare WebTV / Header Image Credit: Sherpa Project

In a recent report on the financial system, Coronation Merchant Bank noted that micro insurance will increasingly become a significant part of the risk protection business in Nigeria. The report noted that India currently has a risk protection penetration of 3.69% primarily driven by a virile micro-insurance sub sector. Nigeria's risk protection penetration rate is presently below 1%.

Mr. Ekerete Ola-Gam Ikon, an insurance expert, in a recent interview with WebTV noted that micro insurance stands in a pole position to deepen local insurance penetration. Ikon, however, noted that for micro-insurance to grow the National Insurance Commission (NAICOM) must improve the regulatory ecosystem and increase the use of technology to ease the process of doing business.

Ikon described two (2) philosophies guiding the micro-insurance policy which should be considered in Nigeria ;

He identified the big opportunity for the growth of the insurance sub-sector in retail which represents micro-insurance. This according to him means one should be able to "Buy Insurance As You Go" which is retail.

Based on the principles behind retailing, he said there was a need for micro-insurance to leverage on successful retail chains of businesses, such as supermarkets, cinemas, sports arenas, religious events, entertainment outlets and other such activities that attract high human traffic daily.

He called for the reform the current NAICOM approval and regulatory procedures, to create an enabling environment for micro-insurance business to grow.

Speaking further he noted that since the release of the NAICOM amended guidelines, only two micro-insurance licenses have been issued and these are based in Lagos.

Ikon argued for Micro-Insurance firms to be given the sole rights to sell Third Party Motor Insurance, as a way of creating an immediate market for them.

On processes, guidelines and licenses, the insurer called on NAICOM to explore enhancing digital insurance provisions, which is long overdue considering developments around Insurtech.

Also, the convener of the 'Insurance September' made a strong case for increased awareness of the micro-insurance segment of the risk protection business. He brought to the fore the fact that people do not know that micro-insurance firms can only insure assets valued at N1m or less.

He cited an example of one of the newly licensed micro-insurer that was digitally ready in terms of operations, but struggling with meeting NAICOM's requirement for physical presence.

"We don't always have to follow the banking system which has its own challenges, insurance is a solution people need today and the industry must be seen to be responding to it" He added.