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“Why Insurance Culture is low in Nigeria”

By Ikeoye Oyetoro

How has the present reform in the banking and other sector of the economy affected your company?
The reforms have really affected us adversely, it was worse enough that we had the economic meltdown which our own economists and policy makers earlier said would not affect Nigerian economy but we know the truth of the matter that the whole world has become a global village and we know that its after effect is now manifesting.

Akin Ogunbiyi, GMD, Mutual Benefit Assurance

But they made us believe that Nigeria is immune to it and as if that was not enough, while we were battling with that, the banking reform came in which affected the economy as a whole especially the real sector which is the productive sector.

The government did not toll the line of economic development by providing substantial support or what I can call the real support like what happened in America and UK where substantial amount of money were injected into the economies of those countries to strengthen the economic unit just to ameliorate the human effect of the reform. We had expected our government to do the same here, all we heard from them at the time was that Nigeria is immune to the economic meltdown and they came out with a policy that is rather too late to have any positive impact on the economy. The delay resulted to a situation they never expected and this made the Nigerian economy worse off than what the meltdown itself would have done to it ordinarily.

How much are insurance companies deriving from oil company, now that we have local content act?
Straightaway, I tell you that compared to what is available, we are actually getting peanuts, we are getting a cent where we can get 100 dollars. We are not really getting anything despite the local content act, government has done very well for the industry in terms of providing enabling environment, providing the necessary back up in terms of legislation i.e local content act but what has the insurance practitioners done for themselves as in taking advantage of that local content act. We have not really done much.

What is the perception of people towards insurance in Nigeria compared to outside?
Well, I can say its not comparable because we do not have a rule of law governing the operating environment like they do outside this country. In US, they will tell you to wear a seat belt and people comply and if you do not comply, you know the fine is hundred dollars and if they send you the paper of your fine and you do not pay, nobody will run after you because you know the interest that will follow if its not paid at the appropriate time.

That is where they have really the rule of law operating. In a developed economy, there is nothing you can do without insurance because you live on credit basically and there is no one that will expose himself to you without securing your financial insurance so for your mortgage, health, life and car, you have to have insurance and thus everything become a credit economy. You cannot compare insurance in the developed countries with a third world economy like Nigeria. Insurance is crucial there because their daily transactions involve insurance and insurance is part and parcel of their lives and insurance policy is also made compulsory.

Why is insurance culture so low in Nigeria?
Today, insurance culture is factually non-existence in Nigeria.. Less than 2 per cent of commercially Insurable risks are covered by one form of insurance or the other even the commonest insurance which is the third party act which according to the law of the country gives a better leverage to the road users than the comprehensive insurance, nobody does it. Is it that the act is not there because there is no compliance or monitoring agency, nobody is doing it.

Today, insurance penetration is as low as 1 per cent. Out of 150 million people living inj Nigeria , less than 1 million of the Nigerian population carry one form of insurance or the other so insurance has not really started in Nigeria and the people that patronise insurance companies that is the corporate world has been negatively affected due to the meltdown because there is no liquidity.

Banks capacities to fund the private sector have been hampered, if you cannot access fund from the banks then how can the real sector survive? The corporate world does not even have enough resources to survive which resulted to some of them shutting down, how then can they patronise us when they cannot even survive on their own and the government that suppose to assist does not make provisions for substantial amount that can be enough for their revival.

How have insurance been surviving considering the economic situation?
We have been growing because we set our strategy right, we do not rely 100 per cent on corporate insurance, its not that we are not doing them but we have designed a means to increase insurance penetration by coming up with products and services that meet the demand of the common man on the streets.

Today, more than 60 per cent of Mutual Benefits income comes from commoners i.e taxi drivers, okada riders, tomato sellers, charcoal sellers, butchers on the streets etc . All these happened because we came up with a policy that we call Micro Insurance Services that actually brings insurance to the door steps of the poor and by making them to see the needs of buying that insurance policy and they are able to buy and afford it.

Our own approach to Micro Insurance Services is through empowerment and poverty alleviation and so with that, we are able to grow. We sell products as low as N50 or N100 on daily basis and every month, we record between N250 to N300 million. These are sources that also generates income rather than waiting for the real sector to come and give us N100 million which we may not get the premium in a time near.

If you get to major markets in Oyigbo, you will see  market women carrying a Mutual Benefit Assurance slip and we also sold over ten thousand policies in Kano and Kaduna . The only way to improve insurance culture is to make insurance helpful to the needs of the people, we must let it add value to the lives of average men.

We have tomato sellers association, we bring them together in form of cooperative movement and we ensure that they are not more than fifty in a cell. Each cell is called Mutual Movement Cooperative model and we have model 1, model 2 till it get to the last number depending on the number of groups we have. We Give each group enough money to buy tomato and share it among themselves and when they sell, they return the money to the sender and after this we introduced safeguard insurance to them which covers their loss incase the tomato got spoilt before they finish selling it or they fall sick. All these are also applicable to butchers, charcoal sellers and the likes.

What advice will you give to other insurance companies?
If you want to improve insurance culture in this country, you must let it have impact in the life of a common man, government has done a lot to assist us, it is for us the insurance practitioners to work within he enabling environment to ensure that insurance culture is imbibed..


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