What Nigeria could not take from insurance in 53 years
Nations that have recorded prosperity and economic growth has been found with strong presence of a developed insurance sector, which not only has served the key purpose of risk mitigation, but also as a mobiliser of long term funds for infrastructure development.
Such nations also show in their demographic structure a large proportion of their citizenry that have been taken out of poverty as result of embracing insurance because of its strategic role in economic life of individuals, particularly small holder farmers and small and medium scale enterprises.
Government in such jurisdiction has also been found to take insurance very seriously, making it a part of their economic stronghold like the banking sector in their policy making processes.
What then can be said of Nigeria even as it marks its 53 years of existence? Can this same be attributed to Nigeria where the insurance sector is still contributing less than one percent to the GDP? What in reality is the level of government support to develop the insurance sector, if it’s still the biggest debtor of premium for insurance services consumed?
Except for corporate organisations and government agencies that could be said to have embraced insurance having supported their survival in the event of loss, the larger percentage of Nigeria’s population is yet to embrace insurance and this accounts for why only less than 8 percent of the population has one form of insurance or the other.
Today in Nigeria, lack of infrastructure is a major challenge facing government and the larger economy, making it almost difficult for manufacturing companies and businesses to survive. Housing gap is a big challenge and insurance is a facilitator to grow the mortgage industry. This is where insurance could have come in to support funding for infrastructure if it has developed with large premium size and investment income.
Access to funds is a huge concern for investors and manufacturing companies, as bank loans are at very high cost of about 22 percent, which ought not to be if insurance has grown reasonably with long term funds. Insurance could support micro finance banks in increasing access to loans to small scale businesses and farmers.
As at the end of 2012, the industry premium stood at about N250 billion. Fola Daniel, commissioner for insurance, said the Nigerian insurance industry has witnessed tremendous changes in recent times owing to the new reforms embarked upon by NAICOM.
These reforms include the introduction of Risk Based Supervision, migration to International Financial Reporting Standard (IFRS); Market Conduct Reforms, Claims Settlement Reforms and Financial Inclusion, all geared towards developing the industry and improving the general perception about insurance.
“It is our belief that the country is much likely to attain a sustained economic growth and development if it can adapt its insurance industry with innovative ways that will bring on board the generality of the country’s population.
“The Nigerian insurance sector has great potentials for massive growth. You will agree with me that the population size of the country, if adequately harnessed, gives an added advantage to the insurance industry to further develop its market. This is what we intend to achieve with the various initiatives incepted by the Commission in recent times.”
By: Modestus Anaesoronye