Weak awareness slows insurance policy uptake
PwC Nigeria has revealed in its latest report, entitled: ‘Insurance penetration in Nigeria’ that the nation’s insurance industry is performing below its risk capacity.
This, according to the report, is evident by the low patronage of insurance services in the country.
PwC said the insurance sector if successful, would support the development and growth of the economy, encourage savings and investment, aid job creation and stimulate the growth of capital markets and financial assets.
The report observed that insurance stocks on the Nigerian Stock Exchange (NSE) are not performing as much as they should, given the apathy of investors who believe that insurance firms are not properly managed.
Besides the regulatory issues, which operators in the industry are grappling with, PwC said poor patronage of insurance in Nigeria could be blamed on relationship management, which sometimes is below par.
The relationship issue, according to the report, has its base in weak corporate governance and risk management framework, which sometimes make companies seem unfriendly, particularly when there are claims to be made to customers.
“At the heart of this, customers often complain about the lack of flexibility and technology-driven innovation in terms of the kind of insurance policies and packages that meet today’s upwardly mobile audience of contemporary insurance,” the report said.
According to the firm, the implications of these challenges on the industry are rife. On this, it referenced a 2018 Enhancing Financial Innovation & Access (EFInA) report, which revealed that of the 99.6 million adults in Nigeria, only 1.6 per cent have insurance covers, even though nearly 40 per cent of them have access to financial services.
According to the report, lack of awareness remains a key barrier as a massive 77.2 per cent of the adult population are not aware of insurance. PwC stressed that the low-income level of the citizens makes it difficult for them to patronise insurance firms.
It stressed that there is an urgent need to address these issues and grow the industry.
PwC emphasised that Nigerians have much to gain from the thriving insurance industry, “but first, they must be assured or better still reassured of a new dawn. New dawn would mean building trust and friendship that would enhance reliability”.
Amidst this is the desire for professionalism that will drive excellence among practitioners in the industry.
“It would be visible when insurance companies develop innovative policies and packages that are driven by technology and adequately incorporate people in the formal and informal sectors. Nigerians would then breathe fresh air of a new life, opportunities, and experiences that would make them prime to gaining the benefits of the new-look insurance industry”, the report said.