Despite the high population of Nigeria, insurance penetration has remained very poor. In July 2015, insurance penetration in Nigeria stood at 0.6% compared to neighbouring African countries like South Africa, Namibia, and Kenya which have 15.4%, 7.7%, and 3.4% respectively.
The term insurance is no longer new to many Nigerians as they often have to get insurance cover on their vehicles before hitting the roads. Insurance cover is done for life and property in Nigeria.
This is sadly the case despite Nigeria’s population of over 170 million and well-capitalized economy. These figures are quite pathetic because Nigeria with its huge population has huge insurance potentials which are largely untapped.
The major challenges facing this industry include product distribution and its channels, inadequate policies and poor implementation, poverty, lack of trust and other factors.
In this piece, I will be looking at how to improve insurance penetration in Nigeria and I will x-ray certain measures that both insurance companies and government have to take to improve insurance penetration in Nigeria.
1. Massive public enlightenment: One of the ways to improve insurance penetration in Nigeria is to improve enlightenment of the people on one-on-one basis. The common practice of insurance companies sending marketers to companies to get them to patronize the biz of their companies is not enough.
There should be proper enlightenment of people in schools, NYSC camps, churches, market and other gatherings and they should be enlightened as to why taking an insurance cover is important by explaining the benefits.
By so doing new markets will be created.
2. Affordable premium: Many Nigerians often get discouraged when they hear they have to pay certain amount monthly in order to maintain an insurance scheme.
Even when they know the importance of insurance, they still turn a deaf ear to it because they believe nobody ever prays for contingency, so why do they have to pay and plan for it in the first place.
Therefore, insurance companies must charge very affordable premiums for the uninsured stakeholders in the informal sector to appreciate the need for insurance and participate in it.
So, one of the ways we can improve insurance penetration in Nigeria is by insurers formulating insurance schemes that are affordable to generality of Nigerians.
3. Partnership: Partnership is another way we can use to improve insurance penetration in Nigeria. Insurance companies must learn to partner with other companies in order to further their goals.
This means there will be insurance covers on telephone lines, SIM cards, bancassurance, etc. Insurance companies must partner with telecommunication companies, the media and others to create agency distribution channel in order to reach to customers, audience and listeners of such platforms or business.
Invariably, when people buy phones there will be insurance on them and if it gets stolen, they can proceed to insurance companies and seek compensation.
There must be a way insurance policies will be fashioned to cover some of the basic things we use daily in Nigeria, this way we improve insurance penetration in Nigeria.
4. Compulsory enforcement: Nigerian government has to take insurance industry seriously. This is because of its untapped potentials. To achieve this, Nigerian Government has to enact laws that will make it mandatory for companies with staff strength as low as 3 to have insurance covers.
This will come in form of life assurance, pension funds, and others. The low penetration of insurance in Nigeria is to say the least laughable and unacceptable. Cases abound where Asian multinational companies in Nigeria have no insurance cover on their Nigeria. This has to be addressed by Nigerian Government.
Therefore, to improve insurance penetration in Nigeria, Nigerian Government has to refotm national ploicies in isurance, and enforce insurance covers on companies and get insurers to insure employees of the private businesses. This way Nigeria will cover areas that have been left uninsured.
5.Non-delay in compensations payment: It is disheartening to hear stories that individuals who have their properties and goods insured lose them and the insurance companies refused to pay them.
This is a wrong message being passed to the next business holder who has been assured that if his goods and property are assured against loss and damage, that they insurance company will pay him compensation.
Therefore, one of the ways to improve insurance penetration in Nigeria is to pay agreed compensation in the event of accident. Business holders must not take insurance companies to court before they get compensated for damage or loss to insured property or goods.
Experts are of the opinion that Nigeria has huge potentials that have remained untapped in the insurance sector. All hands must be on deck to ensure that we improve insurance penetration in Nigeria.
The points I have identified above will go a long way towards realizing this objective. Developing a robust insurance sector means increasing the revenue base of our government because the tax on the sector will increase and they employ more people, thereby reducing the problem of unemployment in Nigeria.
In this piece on how to improve insurance penetration in Nigeria, I have raised points which I believe most insurance companies have either not fully tapped into or have not keyed into at all.
Therefore, these ideas should be fully implemented to the letter to help address this issue of inadequate insurance penetration in Nigeria