Life is all about choices and these choices give rise to the average human decision-making that comes with taking risks.
Risks come in varying kinds – minor to fatal. While one can never truly eliminate risks from life’s equation, it is reassuring to at least have an insurance policy to mitigate against potential losses.
The insurance industry in developed countries is advanced and risk mitigation through insurance is a well-entrenched culture and way of life.
Unfortunately, that is not yet the case in Nigeria as the insurance industry continues to struggle to convince vast majority of Nigerians of the need and benefits of taking up insurance policies.
One common refrain amongst most Nigerians is “God is my insurance” or “Na God dey protect us”. This belief in the supernatural as a good risk mitigating factor is one of the reasons insurance penetration is still low in the country decades after its introduction.
However, AM Best, a global credit rating agency reports that it is not all doom and gloom. Its 2020 Market Segment Report stated that the gross written premium (GWP) generated in 2018 represented a growth of 14.5 per cent over the previous year by the industry.
The report further estimated Nigeria’s insurance industry’s compound annual growth rate at 8.6 per cent per annum, to be between 2014 and 2018.
While this significant growth is encouraging, the report stated that the insurance industry is riddled with lapses that have constituted a major obstacle to the acceptance and adoption of insurance by much of the populace.
These issues range from the volatile nature of the economy, negative perception about claims payments, inadequate information, and cultural beliefs entrenched within many Nigerians, to mention a few.
The average Nigerian has inadequate knowledge of insurance nor what he/she stands to gain from purchasing insurance policies.
Some would argue that purchasing insurance policies negates their religious faith and welcomes the introduction of misfortune in their lives.
Additionally, given the generally low standard of living, with the majority struggling to survive on little, the need to take up insurance is relegated to the lowest rung of the ladder in the hierarchy of needs of the average Nigerian.
Other issues are clearly institutional such as apathy due to perceived tedious processes involved in buying insurance policies, ambiguous hidden clauses in insurance contracts, and disheartening stories of claims payment denials.
However, all hope is not lost. The Nigerian insurance landscape is gradually overcoming these challenges, especially in the last few years due to regulatory improvements and word-of-mouth testimonies of people with insurance policies.
According to the Chief Executive, Stanbic IBTC Insurance, Akinjide Orimolade, who cited data by the National Insurance Commission (NAICOM), the sector made payment of claims of N490 billion in 2019, which is a growth of 18.6 per cent, compared to N413 billion in 2018.
This figure was projected to rise due to the uncertainties and disruptions brought about by the COVID-19 pandemic and destruction of properties across the country during the nationwide protests against police brutality.
As the saying goes, “Everything happens for a reason,” 2020 with all its unusual events, offered salient positive lessons and a growth opportunity for the insurance industry.
On the one hand, the protests seemed to have shown the importance and practicability of life and non-life insurance, as well as the importance of having the support of experienced insurance brokers.
These recent activities have cast the industry in a positive light and created a positive perception of the Nigerian insurance industry.
Motor and marine cargo products were introduced by the Nigeria Insurance Industry Database (NIID).
This is intended to help reduce fake insurance certificates in circulation. These steps have revealed how the industry is gradually living up to its expectations and the increased level of confidence, especially following the recapitalisation exercise.
Despite the improvements in the Nigerian insurance industry, there are still loopholes to be plugged, especially in the area of smart service delivery and accessibility of insurance products.
Akinjide stated that this was one of the reasons the group set up an insurance arm. Stanbic IBTC has over the years displayed excellent expertise in insurance brokerage.
While this subsidiary is fully functional, the addition of an insurance subsidiary makes it easier to purchase insurance policies without prolonged correspondence.
Akinjide, expressed the need for technological advancement and innovation in the sector and the readiness of Stanbic IBTC Insurance to make insurance more attractive by simplifying policy documents for its clients and enabling access to every information on insurance at their fingertips through the Stanbic IBTC mobile app.
The new insurance subsidiary, the Chief Executive said, also intends to leverage its wealth of experience to make available simple products that will provide solutions for clients, ensure timely claims payments and satisfactory services.
He cited the opportunity for growth in the insurance industry since less than 10 per cent of Nigerians are currently insured; as well as the rise in the number of SME registration and need for business owners to ensure their properties and lives.
Stanbic IBTC Insurance has set a rather high-performance benchmark for itself. If those expectations are achieved, it will no doubt set the tone for what is achievable in the industry.
As the government and the industry regulators continue to pursue ways to improve the sector, it may not be long before the negative perception under which the industry has struggled for so long, is finally broken and insurance becomes a way of life even in Nigeria.