By Rosemary Onuoha

Earthquakes, floods, drought, disease, crime, all tend to hit the poor hardest.  Vulnerability and poverty go hand in hand, but micro insurance holds out the promise of breaking a part of the cycle that ties them together.

Unfortunately, with over 50 underwriting companies operating in the Nigerian insurance sector, only a handful is engaged in micro insurance.

Micro insurance is said to be the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

According to experts, over N60 billion micro insurance opportunities are untapped by insurers in the country.

Microinsurance cannot be delivered under the existing products, process and procedure of the commercial underwriters. Hence, if a greater percentage of the population is to benefit from insurance, experts are of the view that a new approach must be adopted.

Managing Director of Riskguard Africa Limited, Mr. Yemi Soladoye said that micro insurance remains the panacea for poverty eradication, but unfortunately, the conventional insurance companies have established themselves in the wholesale market because according to them, they are not ready for the peanut premiums in micro insurance.

Soladoye said that the growth of micro insurance in Nigeria has been stunted because big insurance players have refused to embrace it, adding that there is the popular impression among Nigerian underwriters that retail insurance is only for life or composite companies even as most of the underwriters appreciate the benefits of retail insurance but the cost of establishing one, the low expertise in the segment and the long gestation period is posing a problem.

Accordingly, as part of measures of meeting some of the challenges in micro insurance, Managing Director of Industrial and General Insurance Plc, Mr. Rotimi Fashola said that there is need for the federal government to support the quest for accelerated insurance penetration and density in Nigeria through micro insurance and takaful insurance.

Rotimi said, “To enhance the development of these forms of insurance, there is need to enact laws that will guarantee government subsidy because the insurances are for the benefit of the poor who cannot afford conventional insurances. Without Government subsidy, agricultural insurance would be unable to play its role in the development of farming.

“Moreover, micro insurance will play very important role in poverty alleviation programme of the federal government by guaranteeing compensation to the poor who are perennial victims of flood, fire and other natural disasters.

“As a matter of necessity, government should cultivate the habit of seeking the input and contribution of insurance professionals and experts to relevant government policy decisions. It is also important that insurance practitioners are considered for appointment into the governing boards of companies, parastatals and agencies where risk management considerations are relevant,” Fashola stated.

Lamenting governments lack of interest on the insurance sector, Fashola said “Government and its agencies have been paying lip service to the importance and benefits of insurance, without serious patronage and support. There is hardly sufficient budget provision for payment of insurance premium by government and its agencies. Therefore, when insurance services are patronised, payment of the premium becomes an issue, a clear negation of the provisions of the law on ‘no premium, no cover’.

According to Fashola, some government parastatals or enterprises are funded without allocation for insurance. Many insurance policies contracted by the MDAs in the past were not renewed, thus leaving the assets exposed to risk, damage and losses without insurance protection. Many of the parastatals are no longer contracting insurance, certainly in breach of some of the compulsory insurances, because of the government budget system, he stated.

Fashola however, charged the incoming administration of Muhammed Buhari to take insurance serious because it has the capacity to become the engine of growth of the economy.