Despite efforts by insurance sector operators and regulators to deepen insurance penetration in Nigeria and boost the sector’s contributions to the Gross Domestic Product (GDP), the sector merely recorded 0.32 percent growth in third quarter 2017 .
This depicts an abysmal performance that is -24.53 percent lower than its growth performance in the corresponding period in 2016 and -21.56 percent lower than the growth rate achieved by the sector in the preceding quarter.
According to the third quarter 2017 GDP report released recently by the National Bureau of Statistics (NBS), the Finance and Insurance Sector consist of the two sub sectors, Financial Institutions and Insurance, which account for 87.09percent and 12.91 percent of the sector respectively in real terms.
According to the report, as a whole, the sector grew at -3.88 percent in nominal terms (year on year), with the growth rate of Financial Institutions as -4.47 percent and 0.32 percent growth rate by the Insurance sector.
The report said the overall growth rate was lower than that in third quarter of 2016 by -24.53 percent points, and lower by -21.56 percent points than the preceding quarter. The sectorâ€™s contribution to the overall nominal GDP was 3.04 percent in third quarter of 2017, lower than the 3.51 percent it represented a year previous, and yet lower from the contribution of 3.75 percent it made in the preceding quarter.
Again driven by the financial institutions activity, growth of the sector in real terms totalled -5.96 percent , lower by -8.61 percent points from the rate recorded in 2016 third quarter and down by -16.42 percent points from the rate recorded in the preceding quarter.
“Quarter on quarter growth in real terms stood at -11.67 percent .The contribution of Finance and Insurance to real GDP totaled 2.69 , lower than the contribution of 2.90 percent recorded in the third quarter of 2016, yet lower than 3.32 percent recorded in the preceding quarter.
This by interpretation means that despite efforts to ensure that the insurance sector contributes meaningfully to the GDP of the economy, it has maintained its hitherto position as the poor cousin of the banking sector which obviously is the leader of the finance sector of the economy.
This is despite the projection by the insurance sector regulator the National Insurance Commission that come the year 2017, the insurance sector would achieve its target of growing its overall premium from the current level of N400 billion to N1.1 trillion riding on the van of its much talked about Market Development and Restructuring Initiative (MDRI) , a medium term plan for the industry launched in 2009 by the regulator.
The initiative, targeted the creation of 50,000 jobs for the industry through the agency system, improve insurance contribution to the GDP to 3 percent, grow premium income generation to over a trillion Naira through the enforcement of compulsory insurances and fight against activities of fake insurance operators.
Irked by the obvious lackadaisical performance of the sector, the operators vowed not to rest on their oars in their efforts to improve on the sector’s performance going forward.
According to the Director General of the Chartered Insurance Institute of Nigeria, Richard Borokini who was former Group Managing Director Royal Exchange Assurance Plc, the sector’s major problem has remained lack of awareness of its value in Nigerians’ day to day living.He also said poor purchasing power of the masses in the face of the dwindled economy directly affects insurance products sales as consumers always strike out insurance from their budget once there is lack of funds to meet their needs.
The institute’s president Mrs Funmi Babington-Ashaye, said poor perception of insurance by Nigerians and religious and cultural beliefs also constitute big problem to the industry.
She however said the sector operators will not give up but would intensify efforts at awareness creation especially among youths through the industry’s catch them young programme.
She also said the industry’s rebranding project expected to kick off in January 2018 will go a long way to solve the problem.