By Henry Uche, [email protected]
Nigeria’s insurance sector undoubtedly has come a very long way like its sister financial sectors in the banking and capital market banking segments.
But despite its relative low penetration rate, Nigeria is rated as home to Africa’s second-largest insurance market.
However, available records indicate that the sector is yet to optimise its full potential.
As in other developed economies the key objective of insurance is to protect and preserve the wealth of the nation by creating additional buffers to mitigate losses arising from unforeseen occurances.
The concept of insurance presupposes that individuals and organisation should be assisted to continue to exist and carry out their legitimate functions even in the event of disasters being insured against. It therefore preaches the imperative of maintenance culture in orgnisations and individuals policy holders.
In spite of efforts being made by the regulator (NAICOM), insurers and other critical stakeholders to reposition the sub -sector, many Nigerians are yet to see reasons they should subscribe/ or take up one form of insurance cover or the other.
This is evident in the contribution of insurance to Gross Nigeria’s Domestic Product (GDP) in 2021 which stands at 0.88 per cent according to Minister of Finance, Budget & Planning, Zainab Ahmed, in a recent statement.
Daily Sun investigations revealed varying perceptions by Nigerians about insurance.
For instance, a real estate consultant, Mr. Ikechukwu Azomaukwu, said his dislike like most Nigerians for insurance is fundamentally due to the endemic rot associated with the sector prior its recapitalisation exercise.
Azomaukwu who is a structural engineer maintained that, in the past most insurance companies were run in houses not befitting corporate organisations which made it look like an unserious business to some persons.
His words, “Prior its recapitalisation, people don’t trust insurance agents and brokers. Even till now, most people are skeptical about the veracity insurers’ offerings. So the trust was not there.
But now they’re coming up with some level of assurances to indemnify policy holders.
He added, “For Life Assurance, the level of confidence people have in the insurance companies to pay beneficiaries of the deceased is very low. Cases abound when children of deceased persons who had Life covers was not able to receive claim of their father’s policy. The reasons are not far- fetched. The system- bureaucracy is too cumbersome,” he decried.
Another Nigerian who pleaded anonymity said many Nigerians currently do not care about insurance cover because of prevailing hunger in the country. According to her, it is not expected of a hungry man or woman to discuss insurance when he is being ravaged by poverty.
“The hunger in the country is unbecoming. Frustration, depression and agony is alarming. People must eat first before talking about taking insurance policy. Remember a hungry man is expected to be angry, so talking to a man who is simultaneously hungry and angry about insurance makes no sense, because he won’t understand anything. Most people know the importance of insurance cover but exigent needs would not allow them think that way,” she asserted.
Similarly, a religious cleric, Adumu Sango, said he does not believe in picking up any form of insurance policy neither does he encourage anyone to subscribe to it. Asked what his reasons could be, he said, “I believe in the Almighty God who promised us divine protection, guidance and provisions. So it’s a waste of time, money and other resources to pick up insurance policy for myself or my children (in the case of life Assurance).
He continued, “I don’t even buy the idea of guarding against any loss whatever. Eventualities and other unexpected contingencies would happen, but they occur only if God permits them. But if you believe in God, He won’t allow such tragedy to befall you, this is my belief and I made my children and congregation know this. I heard the court are not helping matters when cases are brought before them, because they’re overwhelmed with other cases leaving the insured who is seeking redress frustrated,” he asseverated.
In another instance, an academic, Joy Kalu, told Daily Sun, “Insurance as we have heard in the more civilised societies is a far cry from what is obtainable here especially to the g masses. It works for only the high and mighty who own multimillion corporate organizations.
“A typical example was when my husband came back newly to Nigeria from USA in 1984 & bought a 404 Peugeot and was actually paying for full insurance believing that in the event of any mishap, he would claim his insurance but for where? It was one of the Insurance officers that advised him to stop wasting his money, but should simply go for the routine government revenue insurance because when the chips are down he will be so frustrated by insurance clauses he wasn’t shown before that he’ll end up forgetting the whole thing,”
Kalu added, “It is only overseas that insurance companies genuinely investigate any tragedies and pay up as required after due processes. But this is not the case here in Nigeria. For all I know, the process of investigating incidents for which one picked up insurance cover is not only cumbersome but frustrating. Most times the policyholder regrets indulging in such transaction, people give up after a while except those who can hire SANs to pursue their case with insurance companies,” she bemoaned.
In a related manner, a professional marketer, expressed agony saying, “I used to have Comprehensive insurance but I down graded because the only time insurance company contacts me is when its time to make my annual premium payment. We have argued that a system that does not compensate you for no accident in an incident -free year is scam legalised by law. The insurance model we operate needs a total revamp,” he added.
Reacting, the Ag. Managing Director, Noor Takaful Insurance, Rilwan Sunmonu, emphasised on the need for more public awareness on the matter under review. According to him, insurance companies must take public awareness more serious now than ever.
“People are misinformed unfortunately. We need to disenchant and disabuse the minds of many people. Most people who have negative impression about insurance have little or no knowledge about insurance. If you asked them whether they have had any experience with insurance companies, they would say no, ask them if they have any insurance policy, they will say no. So they based their argument on stories they heard from others. Forgetting that such stories are not entirely true. I believe Public awareness is where we need to improve. We need let them know what they stand to gain when they different insurance policies,”
He said, “Claims settlement processes is another factor. Though there is always room for improvement, but I can assure you that no insurance company in Nigeria today would want to deliberately delay in paying claims. The competition is very high in the market, so each Insurance company knows that when they delay in paying claims, it becomes an advantage and opportunity for the next door insurer who is ready to offer more beneficial services.
“Where company A fails to deliver, Companies B will hijack the customer/ clients. There is no two ways about it. Every company is prowling to grab any losed customer from the competitors. I believe this is where the regulator needs to come in proactively.
“More so, Adequate Pricing is another issue we must tackle head-on. Some insurance companies would because of competition under-cut their rates. For instance, Where an insurance firm is supposed to charge N20,000, they come down to N2,000. This is not professional. It’s affects our cash flow. NAICOM needs to look into the under -cutting of rates by most insurance companies,” he emphasised.
Sunmonu added that the types of plans and Policies insurance companies dish out to the insuring public should determine to an extent how the public perceive Insurance which translates into its acceptability or otherwise.
“Insurance offering has gone beyond mere policy offering. If you offer motor insurance for Instance, that vehicle insurance should be able to solve a particular problem for the policyholders. So we should be able to offer tailored -made plans and policies to give more value to them beyond compensation in event of any incident. These days we have smart and intelligent clients/ customers. They need solutions to their problems. Our offerings shouldn’t just be one policy / product for all. We should sit down with potential and prospective clients, understand there peculiarities, needs and challenges and package a policy that suit them to give them extra value. I believe this is where innovation and flexibility comes in. But more importantly, we need to go more into retail. There is huge potential in the retail space, we need to penetrate down to the hinterlands, a lot of grounds are yet to be covered. That is one strategy of Takaful,”
Responding to those who believe that the court/ arbitrators does little or nothing to ameliorate the plights of policyholders who seek redress, he stressed, adding that the court does little or nothing in this matter, I believe such assertion cannot be correct. Generally, the Nigerian legal process can be very tedious and frustrating when one chose litigation as an option for dispute resolution. The insurance contract provides for Arbitration as an option in claim dispute. You may need to sit with your Insurer, with an impartial third party to resolve the dispute without recourse to litigation. This is less expensive compared to litigation. In opting for litigation a policyholder needs to, with the assistance of his legal representative, review the policy document to be sure he has a genuine ground to make a claim.
“Often times policyholders don’t even understand the terms and conditions of the insurance contracts and most Insurance Marketers/Agents do not take time to explain such to them at the inception of the contract. But then the insuring public is becoming more informed. At Noor Takaful Insurance, we have deliberately educated our marketer/agents to ensure they take the pain to review terms and conditions of the policy documents with their clients especially direct clients. For clients that come through an Insurance broker, it is the responsibility of the broker to review the policy document and advise their clients accordingly. So there is a whole lot of reorientation to be done on the part of the insurance companies, the clients and the intermediaries.
“Just like I said earlier, in recent times hardly would you see any Underwriter not setting genuine claims based on the reasons I have mentioned. Insurance companies would do everything possible to avoid litigations because of the bad publicity such could give its brand and the industry as a whole.
The outcome of a litigation will be based on facts so for an insurance company to see that as a last resort then the company will be sure of a positive outcome of such process based on facts available to it as regards the terms and conditions of the policy in question,”