Growth prospect for insurance sector high despite challenging environment

The potential for growth of the insurance sector in Nigeria and Sub-Sahara Africa remains high despite the challenging environment, say Wole Oshin, group managing director/CEO, Custodian & Allied Insurance Plc.

Oshin who made the remark during a presentation at the recently concluded West Africa Insurance Companies Association Education Conference and General Assembly held in Lagos said the consistent performance over the years could not actually be considered as strategic or deliberate but rather the advantage the Industry has as a growing sector.

“He noted that insurance penetration in the sub-region is low and therefore upside is very high”

Oshin observed that laws and regulations continue to serve as catalyst through compulsory insurances, pension reform Acts, stating that theses has opened new opportunities in the industry that is capable of generating huge premium income.

“Multilevel channel of distribution such as Agency, mobile phone, bancassurance, affinity groups, shops among other channels”.

Speaking on the theme ‘Insurance as a Growth Option in a Challenged Economy’ Oshin noted that “one of the very potent tools used over the years by the more sophisticated and more developed economies has been the use of insurance. They have successfully been able to arrest social imperfections and unrest through adequate pensions, life and health insurance for their citizens.”

He said the snowball effect of this is the economic stability enjoyed by less labour unrest and downtime and an output per capita which translates to several billions of dollars in savings.

“The topic of the moment is timely and addresses the potency and power of the modern day risk manager and the overarching contribution he lends to the economy”.

On developments in around the region that is capable of helping to boost growth despite economic challenges, Oshin stated that ease of doing business has improved in most countries with the ripple effect of business expansion across sectors.

Another development he hinted is information technology through improved IT architecture and software, stating that almost 70 percent of Africa has mobile phones with about 800 million phones. “Nigeria’ e-commerce market generates over $12million dollars a day.”

There is also improved governance and financial reporting standards; more diversified professional workforce with varied backgrounds and training; improved opportunities for innovation although most markets are still tied to doing business as usual. Health products, savings and Life are growing, Oshin observed.

On demographics and social change, the insurer highlighted of a rapidly growing middle class with disposable income, stating that Africa is predicted to grow by 1.3 billion to 2.5 billion people by 2050 accounting for 39 percent of the world’s population. The population growth has led to increased businesses, rapid urbanization. “Lagos is expected to be the 12th largest city in the world by 2025 and Africa’s workforce will surpass China’s by 2025.”

This story he said is a confirmation that insurance is a potent tool that can be used to stabilize, restore and repair economies with far reaching political, economic and financial reach and Africa is indeed rising and we can beat the odds in spite of a hostile environment”.

Modestus Anaesoronye