Nigeria’s insurance growing slowly

Some stakeholders say insurance industry
in Nigeria has done fairly well in past 58 years, despite its low
contribution of 0.4 per cent to the nation’s Gross Domestic Product
(GDP) recorded in 2017.

 

Stakeholders spoke on the insurance sector as the nation marks 58th anniversary.

 

They, however, blamed low insurance penetration to persistent poor insurance culture among Nigerians.

 

The stakeholders said though the Industry
has been able to grow geometrically with the total insurance premium
hitting N376 billion (about one billion two hundred and twenty million
dollars).

 

The industry, which started in 1958, is
currently having over four million policy holders with total direct and
indirect labour employed in excess of 100,000.

 

Deacon Tom Ogboi, a retired Director of
UNIC Insurance Plc, said the Industry could grow geometrically and be
more significant in the nation’s economy.

 

Ogboi said what the industry needed was
to make strategic move to shoot up and have a space in the mind of
Nigerians as “the go to risk bearer” for both Corporate and Individuals.

 

“Secondly, the Industry needed a conducive environment supportive of the growth of the Insurance Industry.

 

“It was regrettable that government
through legislation shrinked the business field of the insurance by
removing pensions business, Employee Compensation, it should not be
encouraged,” the insurance expert said.

 

He said that the National Insurance
Commission (NAICOM) needed to be seen as being supportive of the growth
of industry the that it regulates, saying the commission’s recent
actions did not indicate that.

 

“What the new Tier-Based Minimum Solvency
Capital (TBMSC) evolved by the commission on Aug. 3 is fresh capital
injection, all the commission kept saying was fresh capital injection is
not mandatory,” Ogboi said.

 

The insurance expert said that the
Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has
last week said the economy was still very fragile and that the
fundamentals are not there.

 

“While the Manufactures Association of
Nigeria (MAN), who are the major customers of the Industry said
manufacturers are still in recession and have lost a lot of value.

 

“Therefore it is advisable to say that
the timing and due process are necessary for the TBMSC to take off and
for the regulator to get desired impact,” Ogboi said.

 

The Director-General, Chartered Insurance
Institute of Nigerian (CIIN), Mr Richard Borokini, said though the
industry has done fairly well but there was need to enhance performance.

 

He said the industry, in the early years,
was dominated by British owned insurance companies like Royal Exchange,
Law Union and Rock, UNIC to mention few.

 

“But we now have both indigenous and
foreign companies on the market, e.g Leadway, Custodian, Axa Mansard,
Zenith Insurance as bank owned insurance companies are also doing well.

 

“However, there is a problem of low
insurance penetration due to poor insurance culture which have persisted
for many years,” Borokini said.

 

He insisted that a lot need to be done by
way of enlightenment campaigns across various segment of the Nigerian
insurance population.

 

Mr Mufutau Oyegunle, the Managing
Director of LAKEG Insurance Consultancy Ltd, said the Industry could
grow more and become more significant in the national economy.

 

He, however, advised practitioners to cut down their companies management expenses to enable investor get dividends.

 

Oyegunle also advised to ever remain
ethical in their day to day conduct, to guide against sanctions or slam
of huge fines by the regulator.

 

“The huge fines paid by some insurance
companies and management expenses discourages shareholders from
investing more in the industry,” he said.

 

The Commissioner for Insurance (CFI),
Alhaji Mohammed Kari, had recently said the Industry recorded a 6.07 per
cent growth in the second quarter of 2018.

 

He said that the industry contributed 0.4 per cent to the nation’s Gross Domestic Product (GDP) in 2017.

 

Kari said that the commission is well
positioned to address both internal and external forces to enable the
industry increased insurance penetration and its GDP contribution.

 

He also blamed internal and external forces responsible for maligning the performance of the industry.

 

Kari said that the dearth of appropriate
human capital; professional skills; poor returns on capital; too many
fringe players were the main challenges of the industry.

 

According to him, “Incidences of rate
cutting; corporate governance issue; insurance premium flight; lack of
innovation in product development; lack of awareness on the part of
consumers on the suitability of insurance products;
and low GDP per capita figures,” are among the challenges.

 

He said the commission would also
maintain its financial inclusion strategy to increase insurance
penetration to 40 per cent by 2020.