How govt, operators can help deepen insurance penetration – Shareholders
Mr. Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria, says the government needs to do more in creating an enabling environment for insurance penetration in the country.
He spoke with the News Agency of Nigeria (NAN) in Lagos on Friday, against the backdrop of the poor penetration of insurance in the country.
NAN reports that insurance penetration is measured as a percentage of premiums to Gross Domestic Product (GDP).
A report by PwC estimated insurance penetration in Nigeria to be about 0.7 per cent.
Okezie said that both the government and operators in the insurance sectors had roles to play in deepening insurance penetration in the country.
He said that government must enforce the implementation of insurance policies and products created for the Nigerian market.
“In Nigeria, if you don’t enforce a policy, it doesn’t work and since the government is in charge of the law enforcement agencies, the government must order its security officials to enforce compliance with insurance policies.
“For example, how many vehicle owners in Nigeria go to the insurance companies to obtain an ordinary third party motor insurance policy of just N5000 that enables them to drive in accordance with the law?
“Instead of many to do that, they go through illegal means to obtain fake insurance documents and even the law enforcement officials ignore it when sighted during inspection.
“If every vehicle user complies with the payment of at least the N5000, that is billions of naira that would be generated by the insurance companies, which will be taxed by the government and in turn contribute to the nation’s GDP.
“Such money when invested by the insurance companies into the economy is a huge source of revenue for the nation and also a source of claims payment for the insurance firms,” he said.
According to him, the government must put in place a measure of enforcement that ensures that insurance policies are carried out in tandem with the law that established them.
Okezie expressed displeasure that the insurance industry which was supposed to be at the centre stage of business was contributing less than one per cent to the economy as GDP and had been overshadowed by the banks.
The shareholders coordinator expressed disappointment that every insurance policy rolled out by the government seemed not to have survived.
“By law, owners of storey buildings in the country are expected to acquire an insurance policy, but it doesn’t seem to exist because since the pronouncement was made, there has been no enforcement,” he said.
According to him, the insurance industry is losing more money, rather than make more money to boost their operation.
Okezie said that the enforcement of such policies in other climes is what enables insurance to thrive and even float or acquire the banks, rather than the banks acquiring the insurance firms due to the system of operation in our clime.
He urged operators in the Insurance sector to ensure prompt and accurate claims payment, which is key to build the trust of their customers and attract more.
Also, Mr Moses Igbrude, former Publicity Secretary, Independent Shareholders Association of Nigeria, said that insurance business in Nigeria had not started because its level of penetration and impact compared to other countries was not meaningful.
Igbrude hinged the major challenges of insurance penetration in Nigeria on lack of information about the policies and operation of the industry.
“It is unfortunate that the masses do not even understand what insurance is all about.
“Those who understand either have the belief that the insurance companies are not doing well , don’t pay claims and only have a mindset of dribbling customers,” he said.
According to him, the type of religious and cultural settings and belief of many Nigerians that God will forbid any evil occurrence around them, which is out of ignorance, is not helping the insurance sector also.
Igbrude said that the insurance operators must determine to take the business seriously and educate the public on their products and its importance.
He explained that operators must educate the masses that the principle that established insurance operation expects it to absorb shock and mitigate losses.
The former shareholders scribe urged insurance operators not to also take advantage of the ignorance of the masses on the policies and workings of insurance.
“For example, most people are just paying for the N5000 third party motor insurance policy to satisfy the police and traffic officials.
“The insurance firms are just collecting this free money without paying claims because most people don’t even know they have such right or don’t have time to go and reclaim.
“That is why most Nigerians make trouble and cause unnecessary traffic jam when two vehicles are involved in an accident when they are expected to just exchange their insurance details and the firms would fix the damages,” he said.
According to him, insurance companies should also diversify their concentration from insuring only government assets and multinationals companies.
He advised the insurers to look into accruing revenue from the transport companies who are expected to insure their vehicles and passengers, Life insurance, health insurance, among other areas to contribute to the GDP.
Igbrude charged insurance operators to be trustworthy, live up to expectations and pay claims when they arise, so as to spread good testimonials about them. (NAN)