The National Insurance Commission (NAICOM) has said its road map on the insurance industry, if well implemented, will position the industry to answer substantially to its assigned role in the national financial inclusion strategy.
Commissioner for Insurance Mohammed Kari, who spoke while presenting a paper at an insurance forum in Abeokuta, the Ogun State capital, said the insurance industry needed to capture more Nigerians to have protection for the industry and meet its target under the National Financial Inclusion strategy.
Worried that insurance penetration is still very low at 0.5 per cent, he said a study adapted from EFInA on Access to “Financial Services in Nigeria, 2016 Survey”, showed that while 20 per cent of Nigerians have not thought of getting insurance cover, 19 per cent do not believe in insurance.
In the same vein, 15 per cent cannot afford to pay for insurance, 15 per cent said they have nothing to insure, 10 per cent does not know the benefits of having one, 11 per cent does not know where to get one, seven per cent believes insurers are cheats and do not settle claims while three per cent will not insure for religious reasons.
Overall, he said, awareness and education constitute 60 per cent reasons for Nigerians not having insurance while poverty constitutes 30 per cent, failure of insurance constitutes seven per cent and belief system constituted three per cent.
He said strategic issues for inclusive insurance market would include unsuitable products and services; fake insurance certificates; poor claims payments; insurance fraud; high expense ratio; weak IT environment and low data quality.
Speaking on the implication of EFInA findings for financial inclusion and the challenges, he said: “Financial institutions are short-term oriented and not disposed to investing in innovation that financial inclusion requires.
“Low-income people are suffering from greater levels of poverty, less employment and income-generating opportunities; more concerned about survival and marginal economic activities.
“The opportunities are, however, that the fact that there are large numbers of unbanked people that do not have Insurance too; market for a broad range of relevant products and services (micro-insurance, micro-pensions, etc.) via all channels channels; Small and Medium Scale Enterprises (SMEs), agricultural producers, households and individuals, especially those in the informal sector; and women and youth (under-served groups)”.
The Commissioner, who lamented that the Commission has attempted three times to implement a roadmap for the industry, noted that it is yet to work because of time spent on development, stakeholder’s commitment and focus, stressing that the iindustry’s strategic intent is to establish, develop and maintain a fair, safe, stable and inclusive insurance market for the protection of beneficiaries of insurance contracts, competitive returns to investors and optimal contribution to Nigeria’s economic development
“Nigeria has an abysmally low insurance penetration when compared to its peers and other benchmarks jurisdictions. Therefore, with the necessary and sufficient interventions, the current level of insurance penetration 0.5 per cent can be substantially improved upon.
“To be an innovative insurance market in Africa noted for high level of capacity, transparency, efficiency, stability and inclusi-veness supporting the economic growth agenda of the country and attaining optimal rate of insurance penetration at all times,” he said.