Chiamaka Ajeamo
As part of measures to grow Nigeria’s insurance industry, financial experts have urged operators to develop new markets as the wholesale segment is becoming rather saturated.
Those who spoke at the Insurance Directors’ Conference, organised by the National Insurance Commission (NAICOM) in partnership with the College of Insurance and Financial Management (CIFM), the training arm of the Chartered Insurance Institute of Nigeria (CIIN), said the growth of the sector cannot continue to depend on mandatory insurances and the government businesses for survival, but that underwriters should explore the informal sector for new markets.
Speaking at the event, the Assistant Director (Insurance), Financial Sector Deepening Africa (FSDA), Mr. Thomas Wiechers, said the insurance industry is characterised by high degree of fragmentation and low profit margins, primarily because of low level insurance penetration in the country.
Wiechers further noted that only 10 per cent of salary employees in Nigeria have insurance policy, with two per cent of the entire population, having access to insurance policy, while 98 per cent are currently uninsured. He attributed this to the fact that most insurance products are too stereotyped, targeting only the compulsory classes of insurance, while neglecting the informal sector.
He said, “A lot of people do not have access to health insurance. Insurers should not only look at what is compulsory, that is, easy to sell products, but also look at market demands. Presently, demands are high for health insurance products, as well as that of life insurance.
However, there is a disconnect between the insurance companies and their policyholders as Nigerian insurance industry is largely driven by brokers who act as intermediary between the company and the insured. This affects company-customer relationship.”
While lamenting that there are few product offerings for Small and Medium Enterprises (SMEs) to addres the needs of the sector, he listed agriculture, motor, health, mobile insurances, household insurance, bancassurance as well as micro and takaful insurances as areas of focus for operators to key into adding that, they hold huge potential and promising opportunities.
Urging insurers to increase their assets portfolio and capital to play big in the capital market, he said that, limited assets base affects the ability of underwriters to absorb large risks in corporate insurance.
He concluded by stating that it is only when insurers develop new products in new markets to meet specific needs, that insurance penetration and profitability can be deepened while improving the relevance of the insurance industry in the financial services space.