Chiamaka Ajeamo, [email protected]
Worried by the low level of insurance penetration in Nigeria, experts in the industry have tasked operators to leverage opportunity presented by the recent #EndSARS protests to build public trust and deepen insurance penetration rate.
In the last three decades, Nigeria’s insurance penetration has remained less than one per cent, owing to a number of factors, including apathy among Nigerians toward buying policies.
In fact, various published reports have revealed that aside battling many challenges, including low penetration, insurance industry has barely grown in real terms over the last 10 years compared with other countries with comparable economic challenges.
However, it has been projected that the sector’s penetration will rise by a factor of 10 times in real terms to 3.69 per cent in the next 10 years because the technological infrastructure, population and data necessary for its expansion are available.
It is against this backdrop that experts and stakeholders have charged operators to seize opportunities emanating from the fallout of the #ENDSARS protests, which led to massive looting and vandalism of properties, to educate Nigerians on the relevance of insurance to their lives and businesses so as to encourage the uptake of policies.
Speaking to Daily Sun, Professor Segun Ajibola, a former President Chartered Institute of Bankers of Nigeria (CIBN), said the whole essence of insurance is to hedge against losses that could result from human and natural disasters. It is a proactive step taken by individuals and corporate bodies to protect themselves against unavoidable disasters as the insurer restores the insured to his former position when calamities occur.
He however, stated that the insurance business in Nigeria is still low because many see it as an unnecessary expense but it is believed that the devastation from the hijacked EndSARS protests will linger on for long; and that is likely to change the mindset of Nigerians towards insurance generally.
“Of a fact, insurance companies are likely to incur high costs in meeting the claims of the victims of the EndSARS protests but how successfully they are able to do this would have some telling effects on the perception of Nigerians about the relevance of insurance to their lives.
“The events of 2020 have provided the operators and regulators of the industry a golden opportunity to deepen the concept and practice of insurance; and by so doing, minimise the negative effects of natural and man made disasters that have befallen many this year.
“I understand that the ordinary insurance policies do not cover losses that result from riots and mob actions, as there is a special class of insurance that cover these. So, these are matters of details that can come with the education and enlightenment of Nigerians that are potential clients of the insurance industry,”Ajibola said.
Also speaking, Ekerete Ola Gam-Ikon, an insurance expert and consultant, said though the EndSARS destructions will certainly affect the insurance industry and the national economy adversely; Nigeria and Nigerians are reawakened as every sector and individual will be required to respond positively and take advantage of the opportunities this bad situation creates.
He noted that the industry has to brace up for the expansion of customer base by building capacity to provide the insurance coverages that people and businesses will need into the future.
“When you consider the carnage, you will understand that some businesses that did not have insurance cover might not return for a long time while those with insurance will be better positioned to bounce back.
“As you might know also, only policyholders that have Riots Strikes and Civil Commotion (RSCC) extension can engage their insurers on claims arising from the carnage. So, you are unlikely to have high magnitude of claims as compared to what our eyes have seen vandalised and burnt.
“So, this is the moment for the underwriters to step up and take its position to educate and enlighten the public about its role and what had been done for businesses previously to keep them open.
“Also, the industry needs to work with the Federal and state governments now to seek the domestication of the insurance laws. States Houses of Assembly should be busy considering sponsored motions to have their governments establish appropriate agencies for the enforcement of the insurance of public buildings to avert any future pains.”
Gam-Ikon while stressing the need for insurers to utilise this period to engage Nigerians said that, there should be intensive communication and education on the importance of insurance to lives and businesses as Nigerians need to do away with ignorance of how insurance works.
Commenting on insurance products and services, he harped on the need for operators to design new products that meet specific needs adding that, the youths should be targeted with digital products while the regulator should ensure that more microinsurance poducts that are affordable and accessible be made available to the people to encourage adoption.
“EndSARS carnage is an excellent opportunity to build trust and deepen market shares. We are in a season of crisis and opportunities so, there are rooms for the creation of new products by insurance firms and new methods of distribution of these products as well.
Many Nigerian youths are not insured because most products are traditionally tailored hence, unattractive to the youths. When you create something that people need they will buy it.
“Also, the issue of claims management need to be promptly addressed this period because if people are paid claims when issues like this arise, they will buy policies and when they come, you as the insurer will engage them. From this process trust and confidence will be built but when reverse is the case then, there is a big challenge and this is when mistrust and lack of confidence in insurance happens.
“People that were not even insured and were affected by this carnage can even get ‘Ex Gratia’ payment by insurance companies. This needs to be encouraged in order to deepen penetration. The insurance industry must be ready to lose this year so they can gain more in the future,” Gam-Ikon stated.
For his part, Mr Chika Mbonu, business analyst, said the #EndSARS looting and destruction of properties and businesses is indeed a great opportunity for operators to instil confidence in Nigerians that insurance works, and this will be implemented majorly through prompt claims settlement alongside awareness creation, sensitisation and educational orientation programmes emphasising that insurance in Nigeria genuinely works and gives peace of mind in situations such as this.
Meanwhile, the Executive Secretary of the National Association of Small and Meduim Enterprises (NASME), Eke Ubiji, has encouraged its members to adopt insurance as a risk mitigator for unforseen circumstances such as the #EndSARS vandalism.
According to Ubiji, the massive destruction has revealed the place of insurance in businesses and it is unfortunate that most business owners affected had no policy to ameliorate their financial losses.
Lamenting about the carnage he said, “If they had insured their businesses, the burden would have been far less than it is now. But I think they must have learnt their lessons”, he said.
He, therefore urged SMEs to embrace and insure their assets while imploring insurance companies to fashion their products and services to meet the peculiar needs of the market at any point in time.