Against the backdrop of increasing rate of insecurity of lives and property in Nigeria which is occasioned by some natural factors, political and other ethno-religious factors, Old Mutual General Insurance Company has advised Nigerians to embrace insurance as a means of mitigating all forms of risks in their lives and businesses.
The Executive Director Technical of the company, Mr Japheth Duru, who stated this in Lagos recently, noted that in recent years, there has been an increase in incidence of natural disasters, terrorism, financial crisis and disease outbreaks that have affected the quality of life of an average Nigerian, yet many Nigerians are averse to taking insurance cover.
Duru, while addressing journalists on risks that face Nigerians and the benefits of insurance said: “In fact, as people venture into life’s daily routine at work, on the road and even at home, their lives and properties are exposed to risks in various forms.
“Families have to deal with loss of loved ones, health emergencies caused by accidents or illnesses; home and property owners face the risk of burglary, flooding, fire attacks and building collapse; business owners have to deal with the risk of damage and theft to their business premises and assets; vehicle owners are also faced with risks of motor accidents, aggravated theft and third party liabilities.
“Apart from the grief experienced with these risks, the resultant financial loss can be more destabilising”.
He added that “while these risks may seem distant from our comfort zones, they cannot be completely eliminated and since man has not devised a means to ascertain when risks will occur; the need to mitigate against exposure to acute financial loss becomes crucial.”
He said in the light of this mounting risk of financial insecurities, insurance had been identified by experts, as an important tool to mitigate against exposure to risk, adding that insurance guarantees peace of mind and financial security to the insured.
He regretted that despite this critical realities, current trends showed that Nigerians were yet to truly embrace insurance as a tool for risk management.
“At 0.3 per cent, Nigeria, has a staggering low insurance penetration in comparison to counterpart markets in Africa. South Africa has 14.7 per cent; Kenya 2.8 per cent and Angola 0.8 per cent penetration rate.”
He pointed out that even with an estimated population of over 196 million people and a growing middle class, the National Insurance Commission (NAICOM) had reported that only 1.8 million of the over 96 million adult population have any form of insurance.
According to him, the 2018 industry report on Health Maintenance Organisations (HMOs) by Agusto & Co. had shown the low level of health insurance coverage in Nigeria, which was estimated to be at 5.1 per cent.
“What this means is that in event of an unexpected health challenge, many Nigerians will have to rely on out-of-pocket expenses to settle their medical care.
“This is not far from reality as there has been a rising case of Nigerians resorting to online crowd funding campaigns to foot the huge bills of severe medical conditions, a situation which ideally insurance would protect against, “he stated.
In terms of motor insurance, Duru, said the story was the same, adding that in spite of government’s effort to increase rate of adoption by making third party motor insurance compulsory, the Nigerian Insurers Association (NIA) reported that a staggering 64 per cent of over 11.5 million motorists carry fake insurance certificates.
He said for business owners operating in Nigeria’s tough economic and policy climate, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) had reported said that only 35 per cent of SMEs have a form of insurance to protect against business risks.
According to him, sadly, what this means is that these business ventures are at risk of being disrupted or in extreme cases failing in the event of an unfortunate incident.
He noted that entrepreneurs and investors faced the huge risk of losing millions of naira, which could have been invested in pursuit of business success.