Sustaining Inclusion in Insurance, Pension Sectors

Recent developments in insurance and pension sectors point to the fact that the sectors are already achieving financial inclusion among Nigerians, writes Ebere Nwoji

Among the various arms of the financial services sector of the economy, insurance and pension are two sectors that are backwards when talking about financial inclusion among Nigerians. 

They are backwards because most Nigerians are alienated from these two sectors. They hardly understand their workings, values and benefits in them.

This explains why Nigerians hardly patronise them willingly without a compelling regulation.

Insurance for instance is hardly purchased by an average Nigerian except for compulsory products like Third Party motor insurance backed by law and group life insurance also backed by pension Reform Act 2014.

On the part of insurance, after over 100 years of practice in Nigeria, it was only in 2023 that the insurance sector’s annual premium income which represents operators’ turn over hit N1 trillion mark. This is despite aggressive marketing efforts of the operators.

Currently, insurance annual premium income stands at N1.2 trillion as at Q2,2025.

For the pension sector, the huge N27.45 trillion assets gathered by the sector operators in the past 22 years of contributory pension practice is as a result of compulsory nature of the CPS for government workers and organised private sector workers.

The compulsory nature of the scheme backed by very strong regulation is the only reason why the sector has been able to accumulate such assets.

The Micro pension plan which was not made mandatory by any law, after six years of its public launch in Nigeria was only able to accumulate less than N1 billion having registered just 200,000 contributors.

This explains why the present Director General of PenCom, Omolola Oloworaran, rebranded the Micro Pension to  become personal Pension Plan.

Realising this backwardness of the two sectors, the operators and their regulators have in recent times determined to change the narrative and achieve inclusiveness of Nigerians in the two sectors.

Financial Inclusion 

Financial inclusion according to experts in finance refers to efforts to make financial products and services accessible and affordable to all individuals and businesses regardnless of their personal net worth or company size.

It strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives.

In insurance, financial inclusiveness is one task that has remained a tall order for the sector operators and regulator, the National Insurance Commission (NAICOM).

This is because the problem of Nigerians’ alienation to insurance services is as old as insurance business itself in Nigeria. Many Nigerians detest insurance including the compulsory insurances preferring to bear their risks on their own.

This has resulted in poverty and demise of many businesses especially the micro, small and medium scale businesses because due to lack of insurance coverage, once risk occurs, such businesses automatically closes down due to lack of cushioning effect.

NAICOM’s Effort

Against this backdrop, NAICOM as the insurance sector regulator has been at the fore front of fighting financial exclusion among Nigerians. Past helmsmen of the commission initiated the effort but in recent times, NAICOM seems to have more than ever determined to fight against financial exclusion among Nigerians through insurance awareness creation.

The commission is using all avenues to ensure that Nigerians at all levels are financially included especially in insurance services. It is using Micro insurance in particular to achieve this important inclusiveness among Nigerians. It is also employing technology to achieve wide spread of insurance services among Nigerians.

Though past commissioners for insurance emphasised much on achieving financial inclusiveness of Nigerians to insurance, the incumbent insurance commissioner, Mr Olusegun Ayo Omosehin, seems to be more prepared, ready and determined to achieve this.

Indication to his level of preparedness and determination to achieve this is his statement when he took up the mantle of leadership of the umbrella body of insurance underwriters, the Nigerian Insurers Association (NIA) as the 25th Chairman.

Omosehin in his investiture speech said, “I have chosen the theme of my tenure as: Expanding the Frontiers of Insurance through Partnerships and Stakeholders’ Engagement”.

“To this end, we will actively pursue the insurance awareness and publicity project under the auspices of the Insurers’ Committee. We invite all stakeholders in the insurance industry to join us in this journey as we seek to entrench insurance culture and expand the dragnet in line with the central theme”, Omosehin said.

His successor, Kunle Ahmed is not relenting effort in this regard as he concentrates on use of technology in changing insurance landscape and making insurance services available and afford- able to Nigerians. This determination saw him instituting and launching the NIA Technology hub.

He is also championing the course of micro insurance operation in the country

Omosehin has sealed partnership with the police for the enforcement of compulsory insurance especially Motor Third Party insurance.

In the partnership, the Nigerian police force, said it has set up a special team headed by the Deputy Inspector General (operations) to oversee the enforcement of the compulsory insurance.

Within the space of his appointment as insurance commission, he has initiated several ways of expanding insurance coverage among Nigerians.

Promoting Micro Insurance

Analysts said this has brought to the fore the need for promotion of micro insurance services as the surest way of achieving financial inclusiveness in insurance industry.

NAICOM defined micro insurance as insurance that is accessed by low income population, provided by licensed institutions, run in accordance with generally accepted insurance principles, and funded by premiums.

The result of this exclusion of the grassroots dwellers from insurance services over the years was low turnover for the industry while the sector’s contribution to the nation’s GDP was very minimal and insignificant.

This is quite unlike the banking sector where both city and rural dwellers patronise banking services and willingly visit banks for one transaction or another.

A flash back at Nigerians’ experiences during the past years, especially in the finance sector shows that many Nigerians no longer need advertisement to patronise banks as a safe way of keeping their money and other valuable treasures.

Their positive attitude to banking is usually glaring in most bank premises during the Yuletide.

At various festive periods, there are usually long queues of Nigerians waiting to either withdraw money from their accounts for the festive period or transfer money to their relatives for Christmas or Salah festivals. The ATM machines were not exempted from the rush as the length of queues in the various ATM service points surpassed those of customers collecting money from the counter. The trending one is the use of agents who operate POS outlets to deposit and withdraw money. This shows the improved level of knowledge and understanding of Nigerians towards banking services. This is similar to what happened in the Stock exchange market few years before the 2008 global financial meltdown when many Nigerians were queuing up to buy shares of companies including those of insurance companies before the global meltdown diminished their interest.

But coming to insurance as an arm of finance sector, the reverse is the case as despite the huge losses in the air transport system, in the marine subsector, on road transport, in various markets in the country as a result of incessant fire outbreaks, in the construction industry due to incessant building collapses and the loss of lives of many bread winners of families, Nigerians have not seen the need to embrace insurance as a safe measure for their properties and lives just as they did in banking and stock market.

Indeed, despite ugly experiences of Nigerians on emerging risks like flood rendering many homeless every rainy season, kidnappings, riots resulting to wanton destruction of lives and properties, as experienced during the #endSARS protest, Nigerians still remain indifferent in their attitude to insurance services.

Insurers’ Dream

Against this backdrop, insurers dream of such a time when Nigerians will begin to embrace insurance and rush insurance products as a means of safeguarding their lives and properties.

The operators determined to see this happen, as in their various groups, each regime of the groups’ governing council always include mass education in their agenda. 

They believed that it is only when they succeed in making Nigerians see the value in insurance through insurance education that they can willingly buy just as they buy banking services.

Bearing this in mind, the insurers, year in year out are more determined to realise their dream of seeing Nigerians rush insurance products the same way they buy banking services and products realised.

NAICOM, as the regulatory authority of the sector and the Chartered Insurance Institute of Nigeria (CIIN) as the educational arm of the industry have been at the vanguard of this. 

NAICOM said the only way to go in achieving this is to deepen insurance penetration in the grassroots through micro insurance. To achieve this, it evolved a medium-term plan for insurance market development tagged Market Development and Restructuring initiative (MDRI).

Since the launch of the initiative, which main target was to extend insurance services to the doorstep of every Nigerian, the commission has been evolving new marketing channels targeted at pushing insurance products to the doorstep of every Nigerian.

One of the efforts in this regard being the licensing of intermediaries tagged web aggregators. It has before now launched guidelines for micro insurance institutions and has been advertising licenses. So far, the commission has licensed about eight operators of micro insurance.

The CIIN on its part is targeting mass education of the youths through its various impacts in secondary schools and tertiary institutions in the country.

The institute has succeeded in convincing government to include insurance in curriculum of senior secondary schools and is fighting to ensure that it is extended to junior secondary schools. The use of agency system in pushing insurance products in addition to technology is another way the operators push insurance products to the people. Operating firms have hundreds of agents working for them. Just recently, the pension sector followed suit with the licensing of the first agent to market the personal pension plan and take it to the closest range of Nigerians in the informal sector. This is in addition to the use of technology employed by pension operators. PenCom Director General, Oloworaran, speaking on the use of agents to popularise personal pension plan said the premier pension agent with the name Awabah, is expected to collect micro-contributions and build confidence in the pension system.

“They will take pensions to markets, villages, motor parks, farms, and workshops,” the agency said.

According to the PenCom DG, the Accredited Pension Agent, which regulation was introduced in September last year is designed to bridge the gap between pension fund managers and Nigerian workers, especially those of informal sector.

Public reaction

This latest move by PenCom to sweep millions of Nigerian informal sector workers into pension net has been commended and described as a positive response towards salvaging Nigerian micro business operators, artisans, and other self-employed workers from old age poverty.

It was also described as a step in the right direction towards pushing pension fund managers into joining force with the commission in marketing the contributory pension scheme and growing pension assets from the present figure of N27 .45 trillion to huge investible funds well above the present figure.

Looking at these developments, one can see that both insurance and pension sectors are already winning the war on financial exclusion of Nigerians for their sectors.

But operators need to consolidate on these efforts to achieve the desired result of sweeping all Nigerians under insurance and pension coverage.