Tuesday, March 30, 2021 / 09:35 AM / OpEd By Ekerete Ola Gam-Ikon
/ Header Image Credit: Getty Images
We are already familiar with some of the statistics for
insurance in Nigeria:
- Only 1.9 percent of our adult population had one form of
insurance policy as at 2018 (National Financial Inclusion Strategy Report);
- Insurance penetration to our Gross Domestic Product (GDP)
was 0.3 percent in 2019 (National Bureau of Statistics);
- Out of 11.7m registered vehicles (NBS 2018), only 2.5m
have genuine insurance cover evidenced in the Nigerian Insurance Industry
Database (NIID) domiciled in Nigeria Insurers Association (NIA);
- Over 80 percent of the Gross Written Premium (GWP)
recorded in 2019 was attributed to corporate businesses (NIA);
- Lagos State accounts for about 83 percent of the Total
Gross Written Premium of the insurance industry in 2019 (NIA);
- Brokers and agents accounted for about 78 percent of the
GWP of N473b in 2019 (NIA).
These statistics and more have often been interpreted as
reflecting the huge growth potentials of the insurance industry in
However, a very large population of Nigerians have remained
unmoved and very slow at taking up insurance despite obvious threats to their
health, assets and rising reports of insecurity.
Recent efforts through random interviews to ascertain the
reasons for this persistent apathy against insurance revealed three key
1. Poor knowledge of insurance, as compared to cultural and
2. Low purchasing power and disposable income in view of
3. Outright confusion regarding how to start the journey and
who to rely upon.
In my view, the first two reasons were probably as old as
the insurance industry in Nigeria and unlikely to go quickly but the last one
seemed new and unusual, thus requiring more of my attention.
A further attempt at ascertaining the reasons why anyone
should be confused revealed about three major concerns these Nigerians have
1) Nigerians love to copy but have not seen
those that have taken up insurance and feeling cool that they could copy.
Only one in every 200,000 Nigerians has an insurance policy
and hardly discuss it. Word of mouth is still the strongest means of awareness
and, unfortunately, it is only when something goes wrong that those holding
insurance policies talk about them.
The confusion is, if it was a good thing to have, how is it
that certain respected people and influencers are not talking about their own
2) The premium that insurance companies
chargee would unlikely enable them fulfil their promises when the time to pay
It is confusing to many how a vehicle worth N10m is insured
for a premium of N200,000 or N300,000 with an assurance that even if it is
stolen, the insurance company will pay. Discerning persons that do not however
understand insurance and the place of reinsurance argue that it is almost
impossible to meet up with claims when they occur.
I agree with them and consider that the rising problems of
delay in claims settlement and payments are traceable to the poor pricing. This
is worsened by the ill-equipped efforts at marketing and selling insurance,
that is, where the products suit the needs of potential customers.
Insurance is not one of those products that people will buy
because it is cheap, rather they expect that it should be expensive until more
people have subscribed to force down the price. Certainly, a hard but necessary
work for the insurance industry in Nigeria.
3) The approaches of the insurance industry
players are not like those of their colleagues in the banking industry.
Nigerians are best at comparing one with other people using
any basis on sight, so their confusion arises from the perceived inability of
the insurance companies to offer and deliver the kind of services the banks do.
It is just so difficult and confusing for many people who are touched by their
banks daily to understand why insurance companies cannot be as strategic,
aggressive and customer-focused like the banks.
Indeed, some acknowledge that even the banks need to do more
but are at a loss on why the gap between both industries should be so wide.
They hope that with digitization and Insurtech, we will
likely see quick positive changes in the insurance industry, yet those changes
need to come faster.
The days of paying insurance premium only on annual basis
and not hearing from your insurance company until the next renewal are areas we
expect faster actions.
Also, the enlightenment campaign needs to be believable and
consistent, considering the depth of mistrust.
The insurance industry in Nigeria must acknowledge the fact
that their products and services are often confusing and bear this in mind when
pitching to people irrespective of position or vocation.
Simply letting your prospects tell you their insurance
stories could more likely enable you achieve success with them and provide
opportunities for more sustainable relationships.
Let their trial not leave them confused anymore please.
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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