By Chiamaka Ajeamo [email protected] 08060655687
Economic experts have urged insurance and pension operators to leverage opportunities presented by the COVID-19 pandemic to boost the nation’s financial inclusion rate and expand growth in key sectors of the economy.
Those who spoke at a recent conference for stakeholders noted that although the pandemic brought severe distruptions to lives and businesses, it equally has its advantages which operators need to seize to boost the industries.
Former Director-General, Lagos State Pension Commission (LASPEC), Folashade Onanuga, speaking on ‘COVID-19 Impact on Financial Inclusion: Opportunities for Insurance & Pension Sectors’ said: “while the pandemic has caused severe disruptions, opportunities have also been created to grow customer base on account of the obvious fact that there is no real social security arrangement by government in the event of sudden and unexpected events and so citizens need to make plans by themselves for wellness both in business and family life.”
According to Onanuga, economic shocks like sudden loss of job, illness or death can send people living just above the poverty line into abject poverty.
“So whether one is in the formal or informal sector, there is the need to have a safety net. The sudden and unforeseen calamities created by the pandemic has highlighted the need to plan for unforeseen circumstances and even early retirement.”
To take advantage of these opportunities, she said, the pensions and insurance industries must remain committed to the inclusive growth of the Nigerian economy, creating opportunities for lower income groups to be part of the broader financial system.
Onanuga noted that financial inclusion is achieved when adult Nigerians have access to affordable financial products and services that meet their needs.
She further explained that opportunities exist to increase insurance penetration and the customer base, both in the retail and corporate segments of the market if the right moves are made.
“Insurance penetration has remained at an average of 0.4 per cent of Gross Domestic Product (GDP) driven largely by a general lack of understanding and awareness of the benefits of insurance products, specifically amongst low-income Nigerians. We need to build trust. The Banking sector has managed to bridge this gap to an extent,” she pointed out.
Commenting on the pension sector, she said: “inclusive growth in pensions must recognize the peculiarity of the population segment being addressed, adding that this recognition must have an impact on how products are designed and how lower income segments of the population interact with pension funds.
“If you consider what happens in developed economies, there are different kinds of plans to meet different needs.”
She therefore charged operators of these two critical sectors on creativity and innovation in their products development and service delivery by focusing on meeting the needs of the people for enhanced financial capacity.
For his part, the Executive Chairman, Prestige Insurance Brokers Ltd, Prince Feyisayo Soyewo, noted that the COVID-19 pandemic has helped corporate institutions to retool their operational strategies, leading to higher profitability and easier ways of doing things virtually and getting results. Soyewo said that it was heartwarming that many individuals and operators have taken the whole pandemic experience as an opportunity for a paradigm shift in all undertakings.
He added that for the insurance industry, aside from the long cessation of work, necessitating remote working conditions, the pandemic led to the need to review rates and revisit some of the policy conditions and exclusions earlier permissible for some insurances.
“I want to believe that the pension sector also had its own side of the pandemic which they would be able to relate to us more explicitly at this auspicious forum. We must all come to terms with the fact that change is the only permanent thing in life and those who are resistant to change would be changed by change ultimately,” he said.