By Ebere Nwoji
A former Minister of State for Finance and current Chairman of Law Union & Rock Insurance, Mr. Remi Babalola, has condemned current low penetration rate of insurance in Nigeria, saying that insurance density in Nigeria is less than $5 while penetration rate stands as low as 0.43 percent.
He also condemned current low contribution of insurance to Nigeria’s GDP, which he put at less than one percent. He however noted that there are abundant opportunities for growth of the industry.
Babalola, who spoke as guest speaker at the just concluded 2016 Insurance Brokers’ Conference, organised by the National Council of Registered Insurance Brokers in Abuja, however, said insurance brokers, can be of immense use to the development of the insurance sector in Nigeria.
He identified information technology as a game changer for insurance brokers, who wish to differentiate themselves in offering cutting-edge solutions in remaining relevant both in the present and the near future.
Speaking on the theme of the conference-‘The Future Today’, the former minister, explained that the retail segment of the insurance space is the future of insurance market in Nigeria given its untapped growth opportunities.
He said this has spelt the need for the insurance brokers to deploy technology to unlock the growth potentials in the industry, whilst engaging in constant public enlightenment to sensitise the market segment for increased penetration.
He said there is urgent need for insurance brokers in Nigeria to expand their role beyond facilitators of risk transfer to helping their clients keep pace with the social, technological, environmental, economic and political developments in order to ensure their business stability in the current face of economic challenges.
“As insurance brokers, members of this Council need to expand their role beyond facilitators of risk transfer to helping their clients keep pace with the STEEP developments influencing changes in the Nigerian society, thus ensuring their business stability even in the face of economic challenges”, he said.
The former minister, while baring his mind on how insurance brokers can stay relevant in the insurance business in Nigeria, said: “The future is only assured for insurance brokers who demonstrate analytics, innovation, expertise in risk identification, management & transfer and who can design and supply bespoke solutions to risks.”
Also speaking at the event, the Commissioner for Insurance, Mohammed Kari, noted that insurance concepts, principles and practices, look alien to the average insurance consumer in Nigeria.
He observed that policy holders find it difficult to comprehend the clauses, warranties and exclusions associated with insurance contracts.
He said against this backdrop, for a consumer to insure right and gain the benefit inherent in insurance consumption, such a consumer would definitely need the assistance of a professional.
He said the need for an insurance intermediary originated as a result of this necessity and not by convenience.
Tasking insurance brokers at the conference to live up this expectation, Kari, said: “An Insurance Broker therefore, is expected to apply his or her professional and in-depth knowledge of risks and the insurance market to secure and arrange suitable insurance policies for his or her clients.
“One of the primary future goals of the National Insurance Commission is to have more informed insurance consumers in the system. And as it has been noted at many fora, there exist information gap between the insurer and the insured.
“What we have noticed is that while on one hand, the insurance service providers hardly explain enough what they sell (the contract document), on the other hand, the policyholders neither read nor ask questions about the contract document of what they buy. So the Insurance Broker is well positioned to bridge this gap.”
According to him, this being the case, the task of the insurance broker should go beyond the collection of premium, claims’ cheque (where applicable) and forwarding of renewal notices. He said brokers should make conscious effort to bridge the information and knowledge gap between the provider and the consumers of insurance.
He said the future market will certainly belong to that broker who has worked hard enough to secure the trust and loyalty of the consumer today, adding that the insurance sector will benefit the economy only when high penetration is achieved.
“I dare say that high penetration cannot be achieved when most providers concentrate their operations in the commercial cities of Nigeria.
“Many Local Governments (and even some states) are without the presence of any insurance Institution. This provides all the space the so-called quarks need to shine. This obviously does not help the penetration of insurance in the country and does not promote future growth of the industry”, he noted.