The sector as a catalyst for economic recovery
As Nigeria battles to exit the economic recession, key insurance stakeholders have insisted that ignoring the place of the sector in the country’s growth and development amounts to living a lie. Bankole Orimisan examines the situation in the country.
The fact that Nigeria’s economy is recession is obviously no longer a source of worry to both the government and the economic management team. More worrisome now is how to tackle the various challenges posed by the recession as well as how to manage the available resources, so that in no distant time, Nigeria will wriggle out of it, and continue to wax strong while retaining its position as the giant of Africa.
Apparently, the prevailing economic recession, is an evil wind that blows no good, as it affects the rich and the poor, the ruler and the ruled alike. But it cannot be wished away except cogent steps are taken
In their quest to see that Nigeria exits from recession, the Finance Minister, Kemi Adeosun, and the Governor of the Central Bank (CBN) Godwin Emefiele, had a few months back anticipated a reprieve sooner than later.
But economic experts and most Nigerians remained unconvinced in view of the continued loss in the value of Naira against other currencies, particularly the dollar; high inflation; and continued decrease in the purchasing power of the masses and a host of others.
Consequently, insurance takes the bottom on the list of priorities of Nigerians unlike in Europe, Asia, and South America, where insurance adoption and acceptance have progressed remarkably well.
Insurance penetration in Nigeria is estimated at 0.3 per cent while its contribution to the nation’s Gross Domestic Product (GDP), is appallingly low.But experts insist that most people are plunged into poverty for failure to subscribe to insurance, hence the need to insure even in a challenging economy.
President, Association of Registered Insurance Agents of Nigeria (ARIAN), Gbadebo Olameru, while speaking with The Guardian, called on Nigerians to take insurance more seriously so that they can have some succour in the event of a mishap.
He noted that the little money in the economy left people with less disposable income, which in turn, impacts negatively on insurance businesses, as even the existing customers are not finding it easy to renew their policies.
He said: “Most people, who have risen above poverty before, became poor again because their sources of livelihood were not insured. A manufacturer, who fails to insure his factory just for a token premium will regret not taking that decision when fire razes down his factory.”
Also commenting, the Managing Director, Anchor Insurance Company Limited, Ademayowa Adeduro, queried, “You may think that you don’t have enough money to feed; you only have one car, struggling to pay school fees, what if there is a cut off from that small income you have?
The car you bought one year ago, if it became a total write off, how will you replace the car? What if you can’t pay your rent again because prices will rise with the devaluation of naira, whether we like it or not?”
The reality, according to him, is that in view of the Naira devaluation, “people that are well enlightened, the educated workforce should embrace insurance. That is the best product I can ever sell to anybody now.”
The Director General, the Chartered Insurance Institute of Nigeria (CIIN), Richard Olutayo Borokini, in an interview with The Guardian, said a lot of local industries have closed shop because they could not purchase raw materials for their operations.
He noted that if the new forex regime was perfected and people had access to dollars at a flexible rate, these industries would be revamped, and demand for cover would also increase ultimately, since the rate of insurance adoption is based on the state of the economy.
On his part, the Managing Director, FBN General Insurance Limited, Bode Opadokun, said firms profitability are being impacted as more individuals and corporate organisations sacrifice their insurance budget to meet more needs.
Whereas the reverse is the case in the advanced countries like Britain from where Nigeria drew its insurance experience, the sector serves as a tripod for its economy, as the government and the citizens, fall back on insurance for all natural and other disasters. But in Nigeria, recession is forcing the government to think of ways to dispose of its assets, which would not have been the case if they were insured.
But economists have advised that rather than dispose, various sectors of the economy should contribute their quota towards protecting and turning around the economy through the use of the assets.
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