21, 2021 /11:58 AM / OpEd By Ekerete Ola Gam-Ikon / Header Image
Nigeria's insurance industry led by the regulator,
National Insurance Commission (NAICOM) may have finally decided to pull its
gloves off and fight for the share of the country's huge population by recently
announcing that, as at December 31, 2020, there were 1.03m individual
policyholders and 891,218 corporate policyholders, making a total of 1,921,218
policyholders in Nigeria!
According to NAICOM, these policyholders attributed to
the industry's premium income of N520bn in that year, yet leaving insurance
penetration at less than one percent and insurance density at less than three
Much as these numbers cannot compare favourably with
those of other financial services providers in Nigeria, especially the banks,
and other insurance markets in Africa, we have recently seen measureable
optimism by the regulator to lead this new battle for numbers.
The efforts to reactivate partnerships with other
stakeholders like National Pensions Commission (PENCOM), Federal Fire Service
(FFS), Federal Road Safety Corps (FRSC), National Health Insurance Scheme
(NHIS), Federal Ministry of Transportation and Federal Capital Territory
Ministry coupled with the release of its 3-year Strategic Plan are highly
commendable, especially coming along with the commencement of the
implementation of the new Code of Corporate Governance and the journey to IFRS
To develop the insurance market in Nigeria, more
individuals in Nigeria need to become policyholders, and this is the battle cry
NAICOM has made by this action to its licensed operators to join now.
Can insurance companies, insurance brokers and agents
begin to tell us how many policyholders they have under their management? Could
this become the new basis for competition in the market? What were these
figures before NAICOM announced?
What 1.9m Policyholders
With a clear and valid position as we now have
concerning the number of insurance policyholders in Nigeria, it is important to
consider the possible detailed breakdown of the top numbers, with a view to
appreciating its sustainable growth.
Firstly, of the 1.03m individual policyholders, how
- Life and General Insurance
- Nigerians and Non-Nigerians
- Male and Female
- Young and Old
- Employed and Self-employed
- Employees of Public Sector and
- Residents of Lagos and Those
Outside Lagos (Lagos contributes over 80 percent of the insurance
industry's Annual Premium Income)
- Direct clients of Insurers and
Through Intermediaries (Agents or Brokers)
Then, importantly, how many have been enjoying the
protection of the regulator as required by the law? In this regard, it would be
necessary to know:
- How many of them reported
claims and how many have been settled?
- How many claims were denied,
repudiated and/or dishonoured?
- How many claims were not
settled and how many are under adjudication?
- How many are Life or General
Generally, numbers elicit questions and queries that
bring improvements to processes and the regulator knows this. Next, we will
expect insurance companies to come out with their numbers.
Of the 891,218 corporate organizations that are
policyholders, it should matter how many are wholly Nigerian to ascertain their
level of acceptance of insurance as well as their experiences with regards to claims
payments by insurers.
It had been previously reported that the premium
remittance by corporate organizations constitutes about 80 percent of the
industry's entire Annual Premium Income, while they also receive the bulk of
claims paid out by insurers in any one year.
When most of the policyholders have yearly General
(Non-Life) Business contracts, it is easy to lose the numbers as policyholders
drop their policies on account of "not seeing value" in paying
The greatest challenge of the insurance industry in
Nigeria is most probably how to make insurance attractive to more Nigerians
amidst the huge population of over 206m people and still growing.
How 1.03m Individuals
Can Help Win More
Considering that the insurance industry, thanks to
NAICOM, now have these individuals as policyholders, they can be possibly
engaged in ways that will earn more. Some of the ways they can be engaged are:
- Critically appraising the data
to give them an easier sense of identification as insurance policyholders.
Most of these 1.03m policyholders are employees of governments and
businesses who will not have any contact with their insurers, so to make
them feel appreciated and valuable, the insurance industry will have to go
beyond the relationship with their employers to make them feel the impact
of insurance. When there are channels that they are encouraged to use in
reaching to their insurers, they will become more educated and enlightened
about insurance, and have the capabilities to spread the word and bring
more people on board;
- Creating accredited electronic
and digitally driven platforms where these customers can share and
exchange their experiences and expectations about the insurance industry
would be necessary to retain them and grow the number of policyholders
periodically. Just imagine when they would have to interact on product
needs, level of service and innovative solutions across the financial
- Promoting the use of the Agency
System as a client-management one where a ratio of One Agent to One
Hundred Policyholders could be adopted and implemented, meaning about
100,000 Agency Force would have been established.
Nigeria can do as well as China does with its
population in terms of insurance with the emergent digitization environment
but this cannot happen without a clear Digital Agenda, an outcome of the
combination of regulators and operators.
For many decades, there have been many visible points
of disconnect and contradiction affecting the effective functioning of the
insurance industry in Nigeria, largely due to the absence of data and
application of data analytics in everyday market engagements.
Now it can be possible to see one Nigerian who has an
insurance policy distinguished from the other that does not have one, and our story
regarding low insurance penetration can begin to give way to a more interesting
I am one of the 1.03m individual policyholders in
Nigeria; how about you? Time to restart!
About The Author
Ekerete Olawoye Gam-Ikon, MNIM,
CPP, is a management consultant with a specialization in Strategy and
Insurance. You can contact him via e:mail firstname.lastname@example.org and mobile +234-806-648-1111
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