Awoyemi: Insurance Industry Must Promote Adoption of Digital Assets to Deepen Coverage

James Emejo in Abuja

The Founder/Chairman of Proshare Nigeria, Mr. Olufemi Awoyemi, has called on the insurance industry to spearhead the adoption of digital assets in the country in order to leverage inherent risks for wider coverage.
He said to thrive amid the emerging challenges facing the industry, insurance operators must be innovative by exploring accessible and affordable products that address the needs of the society.

Speaking on “Shaping the Financial Sector: Emergent Challenges and Opportunities – The National Budget as it Relates to the Insurance Sector,” he also stressed the need for the insurance regulator and operators to press more for the recapitalisation of the industry as well as passage of the Insurance Amendment bill.
Awoyemi said the 2023 national budget does not hold much promise for the industry unlike in other climes where regulation, taxation, infrastructure and social welfare programmes all have significant impact on the sector.
He argued that relying on the budgetary provisions for the National Insurance Commission (NAICOM) alone won’t benefit the industry with regards to its development.

He said while uncertainties had become stress test for businesses and insurers, the headwinds present openings for the sector to convert the tailwinds into opportunities for increased business.
According to him, the industry could leverage economic downturns to increase insurance coverage by prioritising certain types of insurance and infrastructure to reach new markets.

He said poverty and public distrust remained major obstacles to insurance penetration in the country.
He said, “For instance, life and health insurance may become more attractive to individuals who fill overwhelmed by stress and lacks – and property and casualty insurance may become more important for businesses facing increased risk of uncertain times.”
On the other hand, the widespread poverty incidences should nudge insurers to offer products and services that are affordable, accessible and meet the needs of consumers and businesses within each stratum.”

Awoyemi, however identified some of the digital assets which could help insurance operators to expand coverage to include data privacy and security, money laundering, financial stability, financial inclusion and other financial and systemic risks.

According to him, aside the macroeconomic and political challenges that may impede the growth of the sector, insurance companies faced the threat and opportunities of a universal financial system in the country.
He said, “Nigeria’s financial system is dynamic and constantly evolving with operators especially in the banking system using unorthodox means to explore new markets and expand their operations.”

He added that more than responding to the requirements of the regulators, industry operators needed to be forward-looking in market trends and policy expectations, stressing that the Chartered Insurance Institute of Nigeria (CIIN) should drive policy advocacy in that direction.

Among other things, he said the growth and intense competition from insurance technology companies (insurtechs) would continue to test the resilience of conventional insurance firms.

He said insurtech would remain a force in the industry because it can conveniently bridge the two issues that that weaken insurance penetration in the country.

Awoyemi pointed out that, “The time is ripe for insurance companies to fully realise the values and benefits of digital infrastructure and technological innovation which mostly set the phase of changing consumers’ needs.”

He said although there was a slowdown in insurtech investment in early 2022, “they are projected to remain sought after investment vehicles, partners, acquisitions and insurers.

“In Nigeria, between 2021 and 2022,  five insurtech startups raised nothing less than $6.7 million in pre-seed funding.”