Insurance Practitioners Admonish To Focus On Customer Service Delivery.

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Insurance can contribute significantly to the economic development of Nigeria as it is being witnessed in the developed world, if practitioners will lay emphasis on customer service delivery, a Consultant to the World Bank, Vyasa Krishna Burugupalli, has said.
Burugupalli, point out that explore micro agric insurance remains about the best option if Nigeria is to record any appreciable level of insurance penetration soon, adding that agriculture, as the mainstay of the economy, contributes about 45 per cent of GDP while the insurance sector contributes only 0.7 per cent.
He said in some other developing countries, insurance density is 40 -50 per cent; in the developed economies, it is as high as 90 – 98 per cent.
Burugupalli, who spoke at a forum organised by anchor Insurance Company Limited, in Lagos, said the Nigerian insurance market is largely untapped, adding that with over 150 million people, Nigeria has an insurance density of just about five to 10 per cent.
He is the Country Director, Micro Ensure, India, and Consultant to Price Waterhouse Coopers in Sri Lanka for a World Bank/IFC project, was presented by Kunle Aduloju, a Senior Lecturer, Department of Actuarial Science and Insurance, University of Lagos.
The lecture was entitled: “Agriculture and micro insurance: A new vista for deepening insurance penetration in Sub-Saharan Africa,’’ despite the effort of the National Insurance Commission (NAICOM), insurance penetration in Nigeria remains one of the lowest in the world.
The consultant to World Bank further stated that the agric sector employs about two-thirds of the country’s total labour force and provides a livelihood for about 90 per cent of the rural population.
He said 75 per cent of Nigerians live in rural and semi-urban area, a ready-made market for micro insurance to thrive, so with 150 million people, the largest in Africa, and a fast-growing economy, taking insurance to them is the right way to go, he said.
“Microinsurance simply put is a low premium approach to insurance for those at the bottom of the pyramid, that is the poor. The innovative part of microinsurance is that it reaches an area of the population that is still deemed ‘unbankable’ or physically unreachable to the normal banking or conventional insurance activities.
“Micro-insurance is 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.
The guest lecturer said development institutions, such as the World Bank and the United Nations, see in it a potential to secure poverty reduction. He listed risks covered by micro-insurance to include: crop micro insurance, livestock micro insurance, life micro insurance and health micro insurance. Others are disability micro insurance, property micro insurance and health micro insurance.
Comparing the traditional with the micro insurance, Burugupalli, said, “In equivalence with regular insurance, the central underlying principle is the pooling of risks, which implies that financial contributions are collected from the members of an insurance scheme, and the loss of one individual is spread among all members in case of risk occurrence.”
The main difference between micro insurance and regular insurance, he explained, was that the former isw targeted at low-income people, who have limited financial resources and often irregular income flow.
He said the Food and Agriculture Organisation (FAO) has indicated that five billion people live in developing countries, out of which 57 per cent live in rural areas, adding that 49 per cent of these rural dwellers are employed in agriculture.
The lecturer said the number of micro-insured people was estimated at 78 million, which is not a particularly high number, given that China and India are both among the 77 countries.
He explained further that due to the high population numbers in these two countries, the Asian region accounts for 86 per cent of the global outreach of micro-insurance. While only 2.7 per cent of the poor population in Asia was covered by micro-insurance, the coverage of the poor in Africa and Latin America was 0.3 per cent and 7.8 per cent.
This low coverage is reflected in the level of penetration (premiums in per cent of GDP) and density (premiums per capita).
Burugupalli said in a world assessment of insurance density, out of 78 countries analysed, South Africa ranked 32, Namibia ranked 44, Angola ranked 74, and Kenya ranked 82, while Nigeria ranked 86


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