Nigeria’s insurance gets wake-up call as citizens demand reforms

Cynthia Ezekwe

Nigeria’s insurance industry has long found itself trapped in a cycle of stagnation, struggling with low penetration rates, widespread underutilisation, and limited impact on the nation’s economic development.

As this state of affairs persists, the Nigerian people have begun to raise their voices, calling for a transformation of the insurance sector that will finally address their needs and aspirations.

Despite this public outcry for change, the country’s insurance operators continue to struggle with fundamental issues that hinder the industry’s growth and productivity.

A 2022 industry survey by Agusto & Co. noted that Nigeria’s level of insurance penetration was less than one percent, considered an abysmal performance given that the country has a population of over 200 million people who could inspire a booming insurance industry under the right conditions. 

However, this also shows that there are abundant opportunities for growth in the industry if judiciously exploited, considering the country’s large and populace, and the introduction of new innovative products and channels of distribution beyond the traditional channels, to reach new segments of the market. 

In light of the above, Nigerians from diverse backgrounds gave their thoughts on how insurance can better serve their needs.

“One of the major concerns citizens have is the lack of awareness and understanding of insurance products. Many people don’t know what insurance is or how it works. Insurance companies need to invest in education and awareness campaigns to help understand what insurance is and how it works, and enable them to make informed decisions,’’ said Tunde Lookman, an entrepreneur based in Lagos.

Lookman stressed the need for improved insurance literacy and awareness initiatives to increase adoption and understanding of insurance among Nigerians. He noted that the high cost of insurance premiums is another issue constraining the growth of the insurance sector in Nigeria, stating that  many citizens feel the premiums are  unaffordable.

“Insurance companies need to offer more flexible payment plans and affordable premiums to make it easier for citizens across the country, particularly for low-income earners,’’ he added. 

In a call for innovation within the insurance industry, tech-enthusiast Olamide Olanipekun underlined the urgent need for insurance companies to embrace technology, thereby making their services more easily accessible to a wider segment of the Nigerian population.

As Olanipekun noted, “insurance companies must innovate and offer inclusive, tailor-made insurance products that cater to the diverse needs of Nigerian citizens. Embracing technological advancements such as digital platforms and mobile apps can dramatically improve the insurance experience for policyholders.”

Olanipekun reiterated the importance of transparency and accountability in driving the growth of Nigeria’s insurance industry, highlighting that these values are fundamental in building trust between insurance companies and policyholders.

“We need insurance companies to be more transparent and accountable. We want to know what we’re paying for and what we’re getting in return. Government regulations should ensure that insurance companies operate with transparency and accountability,’’ he added. 

Onyeka Ezike, a concerned Nigeria, pointed out the importance of effective regulation and policy frameworks to safeguard the interest of the citizens  and promote a healthy insurance market.

Ezike, in discussing the recent developments within the Nigerian insurance sector, remarked that the industry is beginning to see positive signs of growth and progress, evidenced by a renewed confidence among Nigerian citizens.

He noted further that the regulatory body, the National Insurance Commission (NAICOM), needs to intensify its efforts in implementing the policy framework and ensuring that the industry is on par with modern standards.

“The Insurance industry needs to be digitised and revolutionised to meet modern-day standards. Insurance outside Nigeria is digital and you don’t need to interface with the insurance company before buying a policy or making a claim. Although companies like Heirs Insurance are at the full front of the game in that aspect,’’ he said.

Ezike, highlighting another hurdle faced by the Nigerian insurance industry, referred to the difficulties that policyholders encounter when attempting to collect their claims at the policy’s maturity stage.

He observed that this is a widespread problem in Nigeria, as many people have experienced difficulties in receiving their claims, creating a negative perception of the insurance industry. To counteract this, he recommended that insurance companies focus on improving their customer service and streamlining the claims payment process.

Chima Nwachukwu, author of the foremost bancassurance literary fiction in Africa titled, “When Life Happens”, provided insightful recommendations for the revival and growth of the Nigerian insurance sector. Nwachukwu underscored the importance of creating widespread awareness about insurance and educating the public, particularly those residing in rural communities, about the value and benefits of insurance.

According to Nwachukwu, insurance operators and regulators must assume the active role of evangelists, spreading the message of insurance far and wide, and fostering a new, healthy insurance culture among the people.

“As a stakeholder who has played active part in marketing insurance as a need and necessity to humanity, and having observed the trend of events in the sector in over two decades of my involvement with the industry, I can argue with facts that for insurance to thrive in Nigeria, the players (operators and regulators) must focus on raising the insurance education and enlightenment among the kids, young adults, Small and Medium Enterprises (SME) operators and the rural population. 

“They must look for ways and take opportunities to help to foster a new healthy insurance culture among the people. Opportunities such as those offered by the WHEN LIFE HAPPENS fictional series must be taken seriously,’’ he said.

Emphasising the critical role that education and awareness play in cultivating an insurance culture, Nwachukwu noted the example of Malaysia, a predominantly Islamic country, where TAKAFUL insurance has gained widespread acceptance due to effective public education efforts.

Drawing lessons from Malaysia’s success, Nwachukwu advised the Nigerian insurance operators to pivot from their short-term target-driven focus to a more long-term strategic approach that prioritises education and awareness.

He stressed that a well-informed populace is more likely to embrace insurance, as they understand its importance in safeguarding against risks.

Nwachukwu issued a rallying cry to the Nigerian insurance industry, urging them to heed the pleas of its citizens for a brighter future and take proactive steps to transform the industry into a more inclusive, effective, and customer-centric institution.

His recommendations for achieving this included:

• Investing in education and awareness campaigns to spread the message of insurance and improve understanding of its importance
• Offering flexible payment plans and affordable premiums that cater to the varying needs and financial capabilities of all Nigerians
• Adopting technological advancements to enhance the customer experience, increase accessibility, and streamline insurance processes