Stakeholders have revealed that less than 2 million Nigerians buy insurance policies yearly, highlighting the widespread lack of coverage and low awareness within the insurance sector.
This was recently revealed according to a study conducted by popular Nigerian financial sector development organisation, EFInA.
Speaking recently at the Investment Summit 1.0, themed “Investments in Insurance: Opportunities for Financial Growth,” held in Lagos, the Head, Strategy & Project Management, Cornerstone Insurance Plc, Tunde Lawuyi, said that because several Nigerians have limited disposable income, insurance is always an afterthought.
According to him, the products his company designs are not primarily targeted at the majority of Nigerians who are in the farming and agricultural sector, and many of them don’t even live in communities where fire risks are a major cause of concern.
Tunde shared that while the regulator has issued guidelines on micro-insurance, which is insurance targeted at the poor, execution has been difficult without the required tech solutions.
“Well, the reality is that many Nigerians have limited disposable income, especially in rural areas where at least half of the population resides. If not more, many of them have low levels of disposable income. When you consider the sources of income themselves, the Nigerian Bureau of Statistics tells us that the majority of Nigerians are into farming and agriculture, which is the biggest employer outside of government.
The products that we design as an industry are not primarily targeted at people in those demographics. We’re selling car insurance, and many of them don’t have cars. We’re selling home insurance, and many of them don’t live in communities where dogging or fire risks are a major concern. Life insurance is a product that many people can buy, and the industry has grown somewhat in covering this deficit.
The regulator has issued guidelines on micro-insurance, which is insurance targeted at the poor. However, the challenge with execution is how to distribute this product and how much to pay someone as a salary or sales commission if the product sells for N500 or N1,000 per annum.
How many policies will they need to sell to justify a salary? That’s why technology must now be employed as a means of distribution to these people,” he said.
Also speaking, the Brand Strategist, Investment Hub Nigeria Ltd, Asamau Adams, disclosed that Nigerians losing interest in insurance is not a great thing because there is no good investment without insurance.
Asamau reiterated that the lack of enlightenment is also an issue to address since many Nigerians feel financial prowess is only for the rich, not those struggling to make ends meet.
“Less than two million Nigerians buying an insurance policy is not far-fetched. We come from a society where people fall for scams every day, and we do not have enough information as to which way we want to go when it comes to investment. One must consider three factors in investment, which are trust, education, and access. A lot of people do not have trust; we have had stories of MMM, CBEX, among others.
Many people are also not enlightened, they believe financial prowess is only for the rich, meanwhile anybody can attain any level they want, if they find the right strategies and follow consistently. Another problem we have is access. When you have the education and trust, you might not have the access. A lot of people do not know they can insure their phones, and anything with as little as N1000.
The solution to maximising insurance is looking out for the right investment companies like Investment Info Hub Nigeria Ltd, and also insurance companies like Cornerstone Insurance Plc. There is no good investment without insurance, and you cannot insure what you haven’t invested in,” she added.
