NAICOM slams insurance brokers for low market penetration
The inability of intermediaries’ particularly insurance brokers to create new businesses as well as their concentration in major cities and almost non-existent in the grass root have been blamed for continued low insurance penetration in the country.
This development, the National Insurance Commission (NAICOM) said has persisted irrespective of increase in the number of players and entrants in the market over the past years.
Mohammed Kari, commissioner for Insurance made the remark at the 2016 Annual Chief Executive Officers Retreat of the Nigerian Council of Registered Insurance Brokers (NCRIB) held in Ilesha, Osun State with the theme “Growing Insurance Amidst Regulations”
Kari said “There has been a substantial increase in the number of players and activities; although and regrettably too this increase in the number of players especially Brokers was yet to reflect on the level of insurance penetration in the country.”
He said the only possible explanation for this could be that intermediaries are not creating new business, neither are they expanding their operations beyond the major cities of the country and around a few clients that are already converted insurance consumers. This should be of serious concern to any right thinking professional.”
“The broking arm of any Insurance sector occupies a very critical position in the industry and thus remains relevant to the growth and success of insurance business in the country. I will implore you to see this retreat as very strategic, reason being that it is coming on the heels of current economic challenges in the country. It should therefore be a platform for you to take stock of the key lessons being learnt from these challenges to realign your business focus.”
Kari further noted that the task of market development is everybody’s responsibility, stating that it is the trend to quiz the regulator why market penetration is low. “Penetration would continue to be low if everyone would only operate from the comfort of the metropolis or chase only existing clients with insurance policies.”
The Commissioner further stated that while the newly formed Insurer’s Committee has setup various sub committees to look at that and more issues, NAICOM is complementing those efforts by expanding its enforcement of compulsory insurance’s down to the states level.”
In the process, we sadly found all sorts of under the table arrangements where insurance policies are being offered in conjunction with various state governments to unsuspecting public. Sometimes, this is with registered brokers and in most case with unregistered and unlicensed entities. This is illegal, criminal and punishable under the laws of the country. Brokers and Underwriters alike should beware as we have beamed our searchlight to that direction, Kari promised.
“We have also identified the limited channels of distribution as a major inhibition factor to penetration. In this regards, we have considered the creation of additional distribution channels and have gone far on the preliminary works and draft of guidelines which soon be exposed for input.”
“We have further decided to explore and develop the mystified partnership type of operation for Brokers. A draft of the proposed guideline will be exposed for input within the next couple of weeks, and I can assure you it will open a new vista in insurance intermediation in Nigeria.”
Modestus Anaesoronye