Expert tasks underwriters on creative products for informal sector

The Chief Consultant, B. Adedipe Associates Limited, Dr. Biodun Adedipe, said there is an urgent need to create products that would appeal to all Nigerians, especially those in the informal sector.

He stated this while speaking on a paper, themed, ‘Insurance and Financial Inclusion: Developing Insurance Products for the Informal Sector’ at the University of Lagos Actuarial Science and Insurance Class of 89 Alumni symposium, held in honour of Professor Sunday Aduloju.

Adedipe said there is a huge gap in life and property insurance. Citing the Micro Insurance Network (MIN), he said inclusive insurance targets about 6.5 billion people at the risks of sickness, job losses, business premise destruction, fire and floods.

He said the gap was estimated by the Swiss Reinsurance Institute at a yearly value of $1.42 trillion being the economic value of health care, untimely death and climate disasters.

According to him, the real anxiety is about the 1.8 billion very poor people – those who do not have enough to eat. Added to this are another 4.7 billion people that are not extremely poor but are highly vulnerable, he said.

These make up 6.5 billion people that are generally referred to as low-income and emerging insurance customers. He said while governments and insurance regulators would worry about insurance penetration and contribution to Gross Domestic Product (GDP), the real challenge for insurance practitioners is developing products that will effectively deal with the massive protection gap.

Adedipe stressed that findings from Efina has shown that 31.2 million Nigerian adults are not interested in using micro insurance, which means there are N37.4 billion untapped premiums at an average of N100 monthly premium payment.

He called on the National Insurance Commission (NAICOM) to intensify the monitoring and enforcement of the current regulations to deter insurance staff from owning brokerage firms.

“Insurance companies should improve their customer service strategy. There is also a need to strengthen the governance, risk and compliance in the industry to meet customer-servicing needs.

“Enforcement of NAICOM guidelines to encourage a single product line of operations (such as micro insurance specialisation) should be strictly applied. There should also be strict enforcement of compulsory insurance by NAICOM to deepen market penetration,” he said.

He identified prominent micro-insurance products as life, disability, property and agriculture as areas of focus.

Speaking also at the event, Director-General of the Nigerian Insurers Association (NIA), Yetunde Ilori, applauded the alumni for celebrating the Aduloju and his contributions to insurance and actuarial science development. Ilori said that the insurance inclusion targets 40 per cent whereas the industry is currently doing two per cent.