Emerging demographic structure, rising middle class favours insurance

A demographic structure in the nation’s population favouring a growing middle class is a strong potential for insurance buying and market penetration, analysts have said.

Also supporting this growth prospect is declining family dependence as a result of urbanisation and growing trend where children leave abroad and cities outside their parents, meaning that people would have to recognise the need for insurance protection as against depending on family.

Nigeria, like many African countries would witness this transformation in insurance buying, though it is going to be gradual; experts say this is a common characteristic of emerging economies.

Offong Ambah, group chief executive officer, Old Mutual West Africa, said “The Nigerian economy is developing at a fast pace and offers significant growth opportunities. We believe that the prospects for growth in Nigeria and Africa are strong due to a growing population with strong consumer demand, more workers entering the formal economy for the first time and an emerging middle class keen to protect their wealth and assets among others,” Ambah stated.

However, as it is common with Africans, relatives and families have been interdependent on one another for assistance and support, which created little or no need for insurance as a form of protection.

“However, with many families now going towards nuclear setting, and members of different families concentrating on taking care of their immediate relations, the extended structure that had held sway for many centuries back is losing strength.”

Andrew Greenwood of FBN Life Assurance Limited explaining challenges of insurance buying in developing societies as Nigeria had stated that the trend currently is not unique with Nigeria, but indicative of an emerging economy.

He observed that with growing cosmopolitan culture, where people have embraced western philosophy and modern life style, the dependence on family members for support would begin to wind down and hunger for alternative sources of support would begin to emerge.

Greenwood stated that the new generation of children have taken to living in the cities like Lagos, Port Harcourt, Abuja and many other places and as they embrace the western lifestyle they would gradually think less of the extended pattern of living.

“It is common to find these days’ family sizes pruning down to four and five, unlike what existed in the past and that suggests that people want to keep smaller homes; so, the tendency that they will have that luxury to begin to look after aged parents in the future is in the decline.”

The implication of this, the expert said, is that people will now begin to think of how to provide for their future and retirement rather than want to depend on their children who may have chosen to live the city way of life.

To him, it requires that people begin to get educated on how to provide for their future through insurances, such that dependence on children and relatives for such support would be less if it must be. “What we need to focus on are policies that meet market needs, are clear and simple to understand, are affordable for the purchaser, provide realistic and achievable wealth creation and insurance protection.”

By: Modestus Anaesoronye