By Rosemary Onuoha
Nigerians are communal people by nature. In the past, people of the same community do things in common to the extent that when a bread winner of a family dies, members of his community come together to bring up his children. Unfortunately, that kind of communal living is fast fading out. The world is changing fast and Nigeria is not left behind. As the world becomes a global village, the community living is disappearing and everyone is concerned about his immediate family and welfare.
Since there must be something to fall back on should a person suffer a loss, insurance is now the common community where every Nigerian must belong to. Managing Director/Chief Executive Officer of African Alliance Insurance Plc, Mr. Alphonse Okpor, said that Nigerians are abandoning the community way of living and embracing life insurance which can guarantee a comfortable life to an insured’s family after his or her demise unlike the community way of living which has proven to be unreliable.
Okpor said, “Nigerians are embracing insurance because initially when we used to live community life, and there is any problem in a family and the bread winner dies, the children will be distributed among other relations who may not take good care of the children. But it is no longer that way because people now make provisions for their children, wife or husband depending on the circumstances. People have come to realise that the best way to provide for their children or dependants is to take insurance because insurance does not fail.”
Recounting an encounter, Okpor said, “Sometime ago I went to Kano to present our Islamic insurance. A woman asked me if I realise that Kano is predominantly dominated by Muslims who don’t believe in insurance. And I told them that Prophet Mohammed in the Quran told us that it is better for you to keep something for your family than to leave them begging others for bread. So the best way to provide for your dependants is insurance because when you die they will continue living happy lives.”
Okpor continued, “In the past, people belonged to social clubs in the hope that their financial security will always be guaranteed. However, when a member dies, and money for funeral or the family needs to be raised, some members will come up with excuses of not having money, thereby defeating the motive for establishing the club. But insurance does not fail.” Explaining how life annuity works, Okpor said, “Under the Contributory Pension Scheme, CPS, retirees can buy annuity sold by insurance companies or they can choose programmed withdrawal which is offered by the Pension Fund Administrators, PFAs.
Life annuity guarantees you income until death but programmed withdrawal guarantees payment for 18 years. So, if you are 60 years when you retire and you make withdrawal for 18 years, which will be 78 years, will you go back to work after that? That is why annuity is gaining ground because it is till death.” Group Managing Director of Industrial & General Insurance Plc, IGI, Mr. Rotimi Fashola said that evidence suggests that life insurance has been boosted by the introduction of compulsory group life policies among companies and public sector organisations.
He said that rising wages and disposable incomes are leading to rapid growth in home and car ownership, which together increased the insurance market. He also said that the rejuvenated policy of ‘no premium, no cover’ of the National Insurance Commission, NAICOM, has boosted liquidity in the insurance sector.
The way forward
On the way forward, these experts are of the opinion that if government will take the insurance sector serious, the sector will experience rapid growth and higher contribution to the Gross Domestic Product, GDP. According to Fashola, “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’. 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.” Fashola added that there is need for federal government to support the quest for accelerated insurance penetration and density in Nigeria through micro insurance and takaful insurance.