It is no news that the Nigerian insurance industry contributes less than one per cent to the gross domestic product of the country despite the fact that the country has the largest economy n Africa and the 26th in the world. In fact, the Nigerian market is the highest in Africa with population of 170 million people. Yet the level of insurance acceptance is very low.
Going forward, practitioners and experts in the field are of the position that the industry must play up retail insurance in order to reach the unreached part of the market which is the highest proportion in the market as against mainly the corporate end of the market that the industry presently underwrite with over 80 per cent of insurance premium coming from the corporate end.
It is not surprising that the cut-throat competition in the corporate end is so high that premium that should be charged at 10 per cent is charged as low as 1.5 per cent in some instances. This is another strong contribution to the low level of insurance penetration in Nigeria.
Present realities have however made insurance business development in the retail end a necessity as even the government through the Coordinating Minsiter of the Economy and Minister of Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala has told the industry that their present performance is not acceptable.
Going forward, the National Insurance Commission (NAICOM) developed a guideline for micro or retail insurance. In the guideline, it defined micro insurance as a segment developed for low income population, provided by licensed institutions and run in accordance with generally accepted insurance principles.
According to NAICOM, micro insurance products are designed in relation to cost, terms, coverage and delivery mechanism.
The commission noted that the segment products should have some simple features to explain the policies, conditions, procedures and marketing.
The risk pooling method, procedures and coverage must be unambiguous and easily understood, NAICOM stated.
The regulatory body noted that micro insurance products must be accessible to the target market in terms of purchase, premium payments and claims.
It stressed that the products or services should be designed to meet the needs of clients and must be beneficial, fair in price and coverage.
The Group Managing Director, Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, said the way forward for the sector was to focus on retail or micro insurance growth and not just the corporate business.
According to him, micro insurance policies will help to alleviate the sufferings of the low income earners and add value to them.
He stressed the need for operators to pay more attention to the development of retail insurance. It is not surprising that his firm has opened the first franchise office for insurance companies in Nigeria. This, according to Ogunbiyi is to increase penetration level of insurance in Nigeria.
The Managing Director/CEO of Sterling Assurance Limited and immediate past president of the Chartered Insurance Institute of Nigeria, Alhaji Fatai Lawal, said insurance is the mechanism of spreading losses and transferring risks from one person to another.
According to him, a person has an opportunity to pay a little amount and go about his business without being bothered about risks. And this is a bog advantage to the retail end of the market.
Lawal observed that most times when losses happened, a person might not have money to replace such items immediately if he had no insurance.
“Insurance companies of today are well regulated and you can be rest assured that there are avenues to seek redress if you feel you have not been rightly treated,” he said.
This redress is paramount to NAICOM and even the Nigeria Insurers Association. They both have platforms that an aggrieved insured can use to register any complaints. These are measures designed to ensure that the industry meets all genuine responsibilities.