Chairman of Nigerian Insurers Association, NIA, Mr. Tope Smart, in this interview, talks on challenges confronting the growth of insurance in Nigeria.
By Rosemary Onuoha
INSURANCE penetration has refused to grow above one percent, what can be done to change this?
In Nigeria, it is rather sad that not all have embraced insurance. This is why the penetration rate still remains below one percent against some other African countries such as Kenya and South Africa with penetration levels of 2.9 percent and 14 percent respectively. Also only one percent of our population holds any form of insurance policy.
The reason for lack of interest in insurance may be as a result of lack of knowledge about the benefits of insurance. Many business owners don’t know that insurance offers protection to firms and organisations. In this way, their financial stability is enhanced through the taking over of any damage or interruption in the production process occurring as a result of the insured events.
Insurance offers relief and by so doing reduces pressure on government, and through life insurance, companies provide funds for long-term investment in the real economy. In the absence of a risk transfer mechanism like insurance, economic activities would be much lower and hence will result in economic loss.
What should operators be doing to change the narrative?
As an industry, we are not where we are supposed to be. Our image has been battered and more often than not, we have been made to play a second fiddle to some other professions. Insurance operators should always cooperate, be united and stand together. This way, we can take the industry to greater heights. Also, operators should embrace deployment of good technology to drive operations, development of human capital, and reaching the unreached.
Rate cutting by underwriters has been a challenge to risk pricing, how can this be eliminated?
The level of professionalism in the industry is very low compared with global best practice. The rates charged more often than not for risks do not correlate with such risks. There is need to have a total departure from this practice. Risks survey, inspection and business procurement procedure are sometimes relegated to the background.
We need to address this in order to take the industry to the next level. As members of insurance community, we should continue to come to the table with strong engagement and education. There must be a paradigm shift. People must begin to see insurance not as a product, but as a process.