Insure or face the consequences?

Who likes to be forced to do anything? Nobody! Or put differently, if our laws are enforced, will business thrive? It depends!

I am not one of those that believe in forcing individuals and organisations in Nigeria to do insurance because the payments will easily go to insurance companies not the enforcers, in this case, the federal government. 

Just imagine if taxes were paid to certain operators and not directly to the federal government?

Now, if we’ve been able to pull together over N17 trillion to our pensions coffers through the Pensions Reforms Act 2004 (amended 2014), what are we doing differently there?

I understand the constraints but I think the insurance industry in Nigeria created the hole it has found itself. The two prominent laws of the insurance sector – NAICOM Act 1997 and Insurance Act 2003 had the inputs of respected insurance professionals who truly envisioned an expansive but exclusive industry.

The major issue I have seen is separating the insurance profession from the business. A situation where the professionals have not been successful at funding their dream companies and have to depend largely on investors’ funds without allowing them control remains a major clog in the wheel of the sector’s progress.

Let’s not dwell on or compare what happens in other climes. In Nigeria, the competition against insurance is numerous and multidimensional. 

So, as long as insurance is defined as the cushion for financial losses, without tying up other loose ends, insurance products will struggle. If I can receive and transfer money out of my bank account with little restraint, family and friends will provide for me, in the event of unexpected accidents. 

Therefore, enforcement of compliance with the compulsory classes of insurance may take us from 0.3 percent of the GDP to 0.8 percent in the next 10 years but the transformation we seek for the insurance sector will happen through disciplined delivery of the value of insurance to Nigerians. 

What I believe does not matter but if we desire and work towards increasing insurance contributions to Nigeria’s GDP from 0.3 percent to 5 percent in 7 years, we can achieve it! It is possible and doable.

First, we will have to change the insurance business model to respond to the needs and expectations of the people and businesses without compromising the principles.

Customers now want to co-create insurance products and not buy the ones on the shelves.

Secondly, collaborating with governments at all levels towards solving our socio-economic problems has become necessary for the growth and development of the insurance sector. From the society that we seek more insurance adoption and more income (premium), we need to do more than we’re doing. Individuals and organisations expect insurance operators to approach them as problem solvers and not poachers.

Thirdly, if the laws and guidelines stand in the way of doing any of the above which I do not think so, such areas of the laws should be addressed specifically and not the entire laws.

As it stands today, the consequences for not doing insurance can only be enforced through the efforts of governments at all levels that are overwhelmed with issues considered more germane like insecurity and exchange rates.

Value, more value through communication of paid claims, introduction of insurtech solutions across the insurance value chain and inclusive-driven regulation are some of the difference makers to consider now.

Insurance can indeed work for us if we create a free yet disciplined market where the (dis)ease of doing business receives priority attention. 

What do you think? You may think you have more serious issues to worry about, but you will agree that “one insurance policy is one step away from poverty”.

I remain…

Assuredly Yours,