Investment, insecurity and insurance

By Ekerete Olawoye Gam-Ikon, MNIM, CPP

Every economy has its season of confrontation with one of the greatest threats to mankind – insecurity and when it becomes full blown to the extent that humans adapt to it, as they readily do to situations, and find livelihood there, the need for a change in strategy towards resolving the issues earns a priority status.

Yet, we must step back a little to appreciate that the state of insecurity threatening investment flows started at individual levels, which could have been addressed by existing and improved insurance policies and programmes that were, unfortunately ignored.

We cannot forget that there was a time when job security made great sense and people proudly stayed on one job in one company for 25 years and more, ending up with huge payouts in terms of retirement benefits, pensions payable for life and access to the company and industry for the children of such persons, whether professional or not.

As we changed or got changed from the job security regime to job mobility era, the insurance policies remained the same such that from the perspective of government, where different schemes had been put in place and followed, the benefits were not so mobile. For example, workers who moved from a job where their National Housing Fund (now with Federal Mortgage Bank of Nigeria) and National Provident Fund (now Nigerian Social Insurance Trust Fund) were paid regularly had challenges as their new employers were failing in their remittances of the deductions from their salaries to the Funds, just like we have with the current contributory pensions, where some employers are failing to remit to their Pensions Fund Administrators (PFAs).

Unfortunately, prosecution of the defaulting employers takes time to happen and allows the next employer imitate the style.

Help Was Not Coming

This situation had left many employees losing confidence in the security their jobs were meant to provide, little or no funds to invest towards a secured future and absolute lack of trust in whatever insurance offered.

Insecurity at such individual levels coupled with disturbing news of alleged embezzlement of such funds, which were contributions from the employees, inadvertently opened the way for increasing number of these employees in both public and private sectors, helping themselves with what they could get today, rather than waiting for tomorrow that offers emptiness.

Insurance remained the unchanging option for future benefits, and suddenly the industry was seemingly bitten by the same bug, which denied payment of entitlements to the named parties, leaving many policyholders with no funds to invest.

As trust and confidence were eroding, the insecure employees were confronted with unsafe and illegal alternatives to investment and insurance, and many were duped and never recovered from the disappointments and depressions that followed.

Organizations and governments at all levels then had rising and near insurmountable challenges dealing with demotivated and non-committal workers that were prodded by unions. Subsequently, commendable efforts were made by the organizations and governments to bring back confidence but insurance that could have ensured trust seem to have been left out of the discussions and negotiations.

Why would insurance not have been a strong negotiating tool for workers when the subject of workers minimum wage and benefits were discussed and negotiated?

Insecurity arising from formal jobs were and have been evident to the general public, which have not trusted insurance too, thereby encouraging more people to look elsewhere for securing their future. That elsewhere is now with us.

Lately, investment instruments have been less inspiring and, in my view, insurance still remains the most reliable way back to where we are coming from – a secured work and future environment.

Getting Our Security Back

Based on the understanding of the process described above that has produced the state of insecurity today, we can renew the minds of employees to regain their confidence by relaunching insurance as the safety net of the future! In a hugely populated and complex country like ours, insurance should not be left strictly as a private sector business; it should be the business of government recognizing its related role in the matter of security and investment.

The Federal Government of Nigeria should through the Central Bank of Nigeria (CBN) and National Insurance Commission (NAICOM) create an Insurance Intervention Program – IIP that will ensure all Nigerians leveraging the National Financial Inclusion Strategy have insurance and pension accounts that restores the sense of security and trust that discourages embezzlement and amassing of wealth not in any investment that adds to the nation’s economic development.

More importantly, organizations that have been providing insurance for their employees consistently for ten (10) years could be given insurance holiday while the funds from IIP takes care of the families of such employees. Insurance needs to become the vehicle for the social impact programmes of governments at national and sub-national levels in Nigeria.

Also, recognizing that, with growing insecurity, poor and vulnerable people are ready targets for recruitment, the IIP will specifically focus on provision of welfare insurance policies to enable continuous onboarding and release of people periodically and deliberately create a system that reassures Nigerians.

When those at the bottom of the pyramid are actively engaged and hopeful that insurance enables them have access to good healthcare when they are sick and injured, we would have reduced the threat to our security and impliedly, investments intended for us.

Without a deliberate program to bring insurance into the efforts at stemming insecurity and improving our investment environment, we might not realize the potentials of the wealth we possess. Time for a rethink!