Experts urge insurance, pension operators to incentivise micro plans
Experts in the private sector of the economy have advised insurance and pension operators to provide essential incentives that would attract those in the informal sector to embrace micro insurance and micro pension plans in the country.
The Director General/Chief Executive Officer of Lagos Chamber of Commerce and Industry (LCCI), Dr Chinyere Almona, delivered a paper with the themed: “Onboarding MSMEs into Micro Insurance and Pension Space in Nigeria,” at the 7th edition conference of the National Association of Insurance and Pension Editors (NAIPE), held in Lagos.
“Although the insurance and pension sectors have been doing a lot in driving the financial inclusion initiative of the Federal Government, there is a need to incentivise and encourage those in the informal sector,
The Nigerian Nano, Micro, Small and Medium Enterprises (MSMEs) operators need to embrace micro-insurance and join the micro pension plan,” Dr Almona said.
While calling on underwriters and pension administrators to take advantage of opportunities that abound in the MSME sector, Dr Almona said, “MSMEs present a huge opportunity for the micro insurance and pension industry due to the size of the workforce.”
Other opportunities include large MSMEs employment/labour force, large willing adult population, expanding distribution channels, favourable regulatory environment, mature financial services sector and revolution in information technology and digital innovations.
According to her, statistically, the total number of employment by MSMEs stood at 61.9 million representing 87.9 per cent of the total labour force in the country, adding that the number of employment generated by the informal sector was 16 million while the formal sector generated 7.5 million in 2020.
On the need to step up awareness and enlightenment of the MSMEs on the benefits of micro insurance and micro pension and application of technology Dr Almona said “investment in enlightenment campaigns and enabling technology are required.”
The benefits, according to her, include a safety net at retirement, alignment with the current social empowerment programmes, minimises old-age poverty, Improves standard of living for the elderly
While calling on the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom) to provide the necessary regulatory framework that supports NMSMEs with regulatory support, Nigeria is well placed to achieve meaningful micro-pension coverage rapidly as well as enhance insurance penetration.
However, in the micro insurance industry, Dr Almona said the ratio of assets to Gross Domestic Product (GDP) has remained stagnant at one per cent, while micro pension, she said the percentage ratio of pension assets to GDP remains low, stating that the total pension contribution remitted by the public sector is slightly higher than that of the private sector which, according to her, further justifies the low penetration of pension in the private sector of the economy.
Speaking also at the conference, the Director-General, of the National Pension Commission (PenCom), Mrs Aisha Dahir-Umar, who was represented by the Head, of the South West Office of PenCom, Dr Tunde Alayande, said that PenCom in collaboration with the Pension Operators Association of Nigeria (PenOp), has come up with lots of initiatives for the SMEs for the benefit of the industry.
Speaking on behalf of the Nigerian Insurers Association (NIA), the Chairman, Segun Omosehin commended NAIPE for the conference., saying that the conference is not only significant to the insurance industry but also the entire financial services industry.
According to him, NAIPE is not only projecting the image of the industry but in such a manner of making people get to understand what we do, what we represent and how the sector can impact our economy.
Earlier in her welcome address, the Chairperson of NAIP, Mrs Esezobor Nkechi Naeche, said the theme of the conference was considered because of the importance of SMEs as drivers and engines of growth of the Nigerian economy and the need to support it to continue to contribute to the growth of the economy.
She urged micro insurance and micro pension operators to see SMEs as their growth assets by ensuring that they are properly captured.