NOIP poll raises critical questions on state of insurance in Nigeria

NOIPolls result on how retail insurance can help explore huge potentials in the sector released recently with revelations that only a few Nigerians know or take one form of insurance or another, has further thrown a challenge before operators that something has to be done if this sector most play its role in the economy. Modestus Anaesoronye looks at the report raising the following  question: 

Why is insurance not selling in Nigeria?

· Whose fault is it?

· What can be done?

NOIPolls has revealed that almost 9 in 10 Nigerians (86 percent) do not have any form of insurance cover. The results have also indicated that Vehicle/Car insurance (63 percent) is the most commonly purchased insurance cover, and Insurance companies (42 percent) and agents (41 percent) are the key channels of insurance purchase.

Furthermore, the major causes of the low market penetration and poor insurance culture are low awareness and poor enlightenment on the benefits of insurance (40 percent). The poll also reveals huge potentials for insurance companies and practitioners to design new products to target Nigeria’s bulging youth population. These are the key findings from the Retail Insurance Snap Poll conducted in the week of August 19th, 2013.

In the NOIPolls conducted recently on how Retail Insurance can help explore the insurance culture in Nigeria in terms of the level of patronage and the reasons surrounding poor insurance culture in Nigeria, respondents were asked four specific questions.

Do you have any form of insurance?

In order to measure the proportion of Nigerians that have insurance, respondents were asked: At present, do you have any form of insurance cover in your name? Overall, the majority of Nigerians (86 percent) do not have any form of insurance cover; thus indicating low insurance penetration in the country and poor insurance culture amongst Nigerians.

Analysis across geo-political zones, reveal that the South-West zone (34 percent) had the highest number of Nigerians that have insurance, while the North-East (96 percent) and North-West (81 percent) zones both accounted for the highest proportion that indicated they have no insurance of any form.

Analysis based on age group showed that the highest proportion of insured Nigerians are within the age category of 45-54 years (34 percent); followed by people within the 55-65 years age group with 26 percent, and 65+ group with 22 percent. On the other hand, there’s very low insurance penetration for youths within the ages of 18-21 (0 percent) and 22-34 (4 percent); signalling huge market potentials for insurance companies and practitioners who can design products to target this market segment.

What type of insurance do you know?

To gain insight into the form of insurance cover Nigerians have, respondents that indicated they have insurance cover (14 percent of the total), were asked: What type of insurance cover do you have in your name? The findings reveal that the most common form of insurance cover that Nigerians buy is Vehicle/Car insurance as specified by majority (63 percent). This is followed by Life assurance (20 percent), Property (17 percent) and Health (16 percent).

Looking across geo-political zones, findings further reveal that while the South-East zone accounted for the highest proportion of Nigerians that have Vehicle/Car insurance cover (78 percent), the South-West has the highest proportion of respondents with Life assurance (37 percent). Furthermore, the North-Central zone (33 percent) had the highest number of respondents that indicated Property as the form of insurance they currently have.

Further analysis based on age showed that all the respondents aged 55 years and above (100 percent) claimed to have Vehicle/Car insurance and 50 percent of respondents within the age category of 65 years and above had life assurance.

Where do you buy your insurance?

Thirdly, in order to explore the channels through which Nigerians purchase their insurance covers, respondents that have insurance covers (14 percent of the total) were further asked: Where do you buy your insurance from? Responses showed that the slight majority of Nigerians purchase insurance covers directly from insurance companies (42 percent), closely followed by insurance agents (41 percent). Also, 11 percent indicated that they purchase insurance from Banks.

Furthermore, while more male (50 percent) than female (31 percent) respondents purchased their insurance covers through insurance companies, more female (53 percent) than male (35 percent) respondents purchase insurance covers from agents.

From the geo-political standpoint, all respondents from the North-West zone that have insurance covers indicated insurance company as their channel of purchase, while the North-Central zone (78 percent) accounted for the highest proportion of respondents that buy insurance covers from insurance agents.

Why don’t you have any form of insurance cover?

Finally, respondents that had previously indicated they do not have insurance cover (86 percent of the total) were asked: Why don’t you have any form of insurance cover? Responses show that the majority (40 percent) mentioned “I am not aware/Lack of enlightenment about insurance” and its benefits as the main reason why they do not have any form of insurance cover. This is followed by 26 percent who indicated that “it is not necessary; No need for it; No interest in it” and 14 percent who claimed “it is expensive; I cannot afford it.”

In addition 9 percent stated “I do not trust insurance companies; they are not genuine”; 6 percent indicated “I do not believe in it; it is against my culture/religion.” It is imperative to note that only 9 percent stated that they do not trust insurance companies, compared to some decades ago when insurance practitioners were considered fraudulent for use of hidden clauses and non-payment of claims.

These findings show that while the image and reputation of insurance companies and practitioners may have improved over the years, the low awareness and poor enlightenment on the benefits of insurance is perceived to be the main factor responsible for the general low patronage.

Further analysis based on geo-political zones show that the North-West zone (58 percent) had the highest number of people that indicated lack of awareness and poor enlightenment as reasons for not having insurance covers. This is followed by the North-East zone with 53 percent. Also, the South-South and South-West zones with 33 percent each accounted for the highest proportion of respondents that claimed “it is not necessary; No need for it; No interest in it.”