Independent Newspaper charts new growth path for insurance sector

The Independent Newspaper had on Wednesday, 17^th April 2024 charted a new growth narratives for insurance sector in Nigeria at its maiden Insurance Summit tagged: Inclusive Insurance: Navigating The New Narratives For Sectoral Growth” held at Lagos Oriental Hotel, Victoria Island, Lagos.

The event that attracted insurance industry chieftains, regulators, Lagos State Police Command, students of higher institutions, industry analysts and women entrepreneurs as well as other trade groups across the country identified low insurance awareness, education and penetration as the bane of the sector while canvassing a strong need for the operators to think innovations leveraging technology to chart new distribution channels for insurance products and services.

Looking into the progressive performance of the insurance industry in the past few years, the panelists noted that the progress so far made does not tally with the country’s population of over 200million people, asserting that only 1.5per cent of all Nigerian adults are covered by insurance today while uninsured Nigerians face risks and require better mechanisms to mitigate these risks as an alternative to the informal arrangements currently in use.

While lack of trained and adequate manpower development, financial illiteracy and lack of trust were also noted as challenges bedeviling the sectors, the panelists urged the operators to change the narratives and reposition the industry for global competitiveness.

In his keynote address, Olorundare Sunday Thomas, the Commissioner for Insurance, National Insurance Commission (NAICOM) represented by Ajibola Bankole, Deputy Director at NAICOM noted the progressive trend of the sector occasioned by positive market performance at the close of 2023 fourth quarter.

According to the CFI, the Nigerian Insurance industry has sustained its progressive trend of positive market performance recording a milestone growth to close at N1.003trillion, representing about 27percent growth compared to the N790billion recorded in 2022.

He stressed that despite this achievements, Nigeria’s insurance sector is still largely underexplored, with the industry’s penetration at less than 1per cent of gross domestic product (GDP).

“I am highly honoured to be invited to this maiden edition of the Insurance Summit hosted by the Independent Newspapers limited to deliver the keynote address.

“The theme for this Summit: “Inclusive Insurance: Navigating the New Narratives for Sectorial Growth”, could not have come at a better time, as it is very pertinent to our current national and institutional growth and development aspirations.

“As we convene today, I am encouraged by the diverse representation from various sectors here present, this underscores the collective commitment to harnessing the full potential of insurance for our nation’s growth and development.

“The Nigerian Insurance industry has sustained its progressive trend of positive market performance and at the close of 2023 fourth quarter, it recorded a milestone growth to close at N1.003trillion, representing about 27percent growth compared to the N790billion recorded in 2022.However, despite this achievements, Nigeria’s insurance sector is still largely underexplored, with the industry’s penetration at less than 1% of GDP.”

According to him, “insurance inclusion Studies also approximate only 1.5% of all Nigerian adults are covered by insurance today. Uninsured Nigerians face risks and require better mechanisms to mitigate these risks as an alternative to the informal arrangements currently in use. The low insurance penetration in Nigeria is, in part, a consequence of the lack of trust and confidence in insurance companies. A contributor to this perception of the market is the limited knowledge of insurance amongst the public

“At the National Insurance Commission we are committed to creating an enabling regulatory environment by streamlining regulations, encouraging innovation, and promotion of fair pricing practices for inclusive products and therefore urge insurance companies to embrace this shift by: leveraging technology, developing inclusive products, investing in alternative distribution channels and prioritizing customer education.

“Let us also prioritize education and awareness campaigns to empower individuals with the knowledge they need to make informed decisions about risk management and financial protection,” said Mr Thomas.

The Commissioner maintained that as part of the NAICOM’s Financial Inclusion drive, the commission has issued new operating licenses to new Micro insurance and Takaful Insurance operators and revised Guidelines on Bancassurance, Web aggregators and provided a Regulatory Sandbox to help drive more inclusiveness for insurance.

He underscored the commission’s commitment  to encourage institutions to develop business models and products targeted at the excluded or underserved segments of the populace, and license additional entities that are willing to participate in the Takaful and Micro insurance segment.

This, he said, will facilitate attainment of the national financial inclusion target for the insurance industry and development of the industry.

Thomas urged that the narrative around insurance should shift saying; “we must move beyond the perception of insurance as a complex, elite product, and instead, position it as a foundational tool for financial security, accessible to all Nigerians.”

According to him, this new narrative demands a multi-pronged approach around Product Innovation, Distribution Channels leverage technology and partnerships and Financial Literacy by investing in financial literacy campaigns that educate Nigerians about the benefits of insurance and empower them to make informed choices.

“The landscape of insurance is evolving rapidly, presenting us with both challenges and opportunities. From climate change-induced risks to emerging digital disruptions, our resilience and adaptability will be tested.” Thomas pointed out.

In his remark at the summit, Eddie Efekoha, Group Chief Executive Officer, Consolidated Hallmark Holdings Plc, the chairman of the accession noted that since the National Insurance Commission came up with an insurance bill in 2003, the public understanding of insurance, particularly among the retail service, has gradually improved while its penetration rate has increased.

He stressed the need for the sector to consistently create insurance awareness across all segment of the society through partnership and joint initiatives.

“It is vital for the insurance industry to consistently create insurance awareness, with private sector, individually and through joint initiatives to underscore the importance of the insurance industry. Among other things we must do within the industry value chain, attention is needed in sustaining of products, and services, as well as strategies to ensure increased penetration rate.

He acknowledged the fact that the sector has seen growth away from what it used to be adding that “we are ahead of the banking industry, when I say we are ahead, it is because our capital is increasing on daily basis because we are trying to index it and link it to the risks in life.  It’s a function of what you do that determines what you get.” He said.

Ebelechukwu Nwachukwu, Managing Director/Chief Executive Officer, Royal Exchange General Insurance Company Limited, who spoke to the theme paper believes that the industry has evolved in the past 10 years.

According to her, the industry has come a long way from a focus to serve the corporate market to focusing, very significantly, on serving the retail market and the other side of the economy with particular shift agriculture insurance.

“What we do is to create awareness to make people know that they do not need to have a lot of money before they do insurance. We have done a lot in creating awareness on the role of insurance in protecting businesses and people’s assets.

Over the past decade, the insurance industry has experienced relative growth in premium income and contributions to our individual lives. We are providing financial security; we have seen an increased demand for insurance. One of the things that the insurance industry has focused on over the years is improving personal experiences both from the regulators; paying attention to personal experiences has become the vocal point. Making sure that the customers are happy, the clients are paying and paying on time has been a focus of the insurance industry.

Technology and digitalization has helped our inclusion journey significantly, as we are continually driving.

Why should the public embrace insurance as a form of financial security; it’s a form of risk management, as it gives the insured peace of mind; it’s a form of community resilience; financial literacy: making people to understand the concept, the regulators have put in more….We need a lot of collaboration and partnership to drive insurance message.  Increasing awareness and diversifying products is a major challenge of the insurance industry.” Said Mrs Nwachukwu.

On the way out, she called on the insurance industry to collaborate with the regulators, the banking sector, entertainment industry as well as agriculture and other sectors noting that by so doing insurance sector will drive the desired change. 

“We have to send a message that insurance is a culture and culture is insurance. Insurance is a tool that every Nigerian must consider the subject matter as more of inclusive insurance. The insurance sector is including all other sectors and will continue to do so,” she submitted.

Ayodele Adio, Lead Strategist at Avalon Media Group and panelist at the event called for a deliberate policy action by the insurance operators to ensure strategic marketing and campaign that would reposition the industry for its desired growth.