Between 2010 and 2012, the number of policyholders in the insurance industry rose from 500,000 to 1.5 million. NIKE POPOOLA writes on the different initiatives to further increase insurance patronage in the country.
In the last two financial periods, the number of life insurance policies sold by underwriting companies to policyholders tripled, according to the National Insurance Commission.
Despite this development, operators are still unsatisfied because a very large percentage of the population is still without any form of insurance cover.
According to experts, insurance works by the law of large number in which many people contribute into the risk pool, which is in turn used to settle the claims of the few losses that may arise.
When more people contribute, the underwriting firms are able to build a stronger pool of funds and are able to play their role as the risk bearer of the economy better.
If underwriters maximise the huge potential of the country’s vast population, experts say the insurance industry will soon become a major player in the international market because the population is sufficient to drive the industry’s growth.
In recent years, the regulatory arm of the sector, the National Insurance Commission, has been introducing measures to increase insurance penetration from less than one per cent to, at least, 30 per cent of the entire population.
The Commissioner for Insurance, Mr. Fola Daniel, said there had been an increase in the number of policyholders from 500,000 in 2010 to 1.5 million in 2012.
Daniel said in its quest to deepen insurance penetration, the commission established the Market Development and Restructuring Initiative.
The programme, he explained, was in line with the Federal Government’s FSS2020 development framework, with many goals, including to promote public understanding of insurance mechanism; build confidence in the Nigerian insurance market; grow the gross premium income; increase insurance density and contribution to Gross Domestic Product and; ensure enforcement and monitoring of compulsory insurance in the country.
According to him, the programme has been officially introduced in all the six geo-political zones of the country, including the Federal Capital Territory.
Daniel also said the commission had embarked on massive sensitisation campaigns across the country to further educate and inform the public about insurance, build confidence in it and grow the gross premium.
The outcome of these efforts, he noted, were already being felt in the industry and the economy at large.
Some of the improvements, he said, included increase in gross premium from N157bn in 2010 to N250bn in 2012, which resulted in 0.5 per cent to 0.7 per cent premium to GDP growth ratio.
He added that companies with foreign equities had increased from three to 10 in the same period, generating substantial foreign direct investment, while there was equally an increase in local capacity for oil and gas risk from 10 per cent to 48 per cent.
The Managing Director, Nem Insurance Plc, Mr. Tope Smart, said insurance was relevant to economic development.
He said there was a lot of potential in the Nigerian insurance industry with lots of benefits that the insuring public could gain from it.
For this reason, he said that individuals should not wait until the unexpected happened before insuring their assets.
“Insurance ensures continuity of business and retention of happiness for those who are aware of it and decide to take up insurance as at when due,” Smart said.
The President, Chartered Insurance Institute of Nigeria, Mr. Fatai Lawal, explained that insurance was the mechanism for protecting losses by transferring risks from one person to another.
He said, “With insurance, you have the opportunity to pay a little amount to protect yourself and have the opportunity to do what you want to do. You don’t have to carry your risk yourself.
“If you own an asset, don’t assume that if anything happens you will be able to bear it. Most times when it happens, that is when you don’t have the resources to bear it.”
According to him, the insurance companies are currently well regulated and policyholders can be rest assured there are avenues to seek redress if they feel they have not been treated properly.
While stressing the relevance of insurance to individuals, Lawal said CIIN was committed to making insurance more relevant in the economic activities of the country.
He noted that the CIIN was developing the profession, with the aim of increasing insurance contribution to the Gross Domestic Product.
Lawal said the industry would contribute more to the preparation of next year’s national budget, adding that it would make a proposal to the government about how insurance could improve the country’s economy.
