Mr Jim Ovia, Chairman, Zenith Group on Wednesday said the current Nigeria economy was adversely impacting on the insurance industry.
Ovia, represented by Mr Kehinde Borisade, Managing Director/Chief Executive Officer, Zenith General Insurance Company Ltd. said this while delivering a paper titled, “Improving Insurance Penetration in Nigeria”.
The paper was delivered at the Nigerian Council of Registered Insurance Brokers (NCRIB) 60th Anniversary Grand Ball and Night of Honours in Lagos, sponsored by Zenith Insurance.
He explained that the country was facing serious economic challenges with an estimated 2023 budget deficit of around five per cent of an estimated Gross Domestic Product (GDP) of $514 billion as at September.
According to him, the country’s inflation rate of 20.8 per cent was significantly higher than its top African peers.
Ovia noted that following the trend, the insurance industry had to cope with increased costs, inflation in claims payment and failure to realise profit.
He expressed displeasure that the insurance industry accounts for only N2.27 billion out of the $514 billion GDP the country generates.
The chairman stated that Nigeria has the lowest insurance penetration rate of 0.3 per cent, among other Aftican countries with GDP sizes of over $100 billion.
“This compares poorly to the rate of around 40 to 54 per cent in the Europe and USA,” he said.
According to him, among reasons for the low insurance penetration in Nigeria and Africa was financial illiteracy and affordability for low income earners.
He identified others factors to include cumbersome processes, due to inadequate robust and sophisticated technology, gaps in the industry value chain and distrust of insurance companies.
To improve insurance penetration, Ovia suggested that the industry should adopt the ‘SUAVE principle.
The SUAVE principle means making insurance products, claims and policy wordings Simple, Understood, Accessible, Value adding and Efficient for all stakeholders.
He also advised brokers not to capitalise on their monopolistic power in controlling the insurance market.
He said over 500 registered insurance brokers collectively control the insurance market with around 52 per cent contribution to the Gross Premium Income (GPI), while brokers market in the Europe accounts for 20 to 40 per cent of its gross premium.
“Nigeria brokers tend to earn higher commission than its attainable in other African countries.
“Many brokers capitalise on this monopolistic power which has led to inadequacy of rates and premiums for demanded cover.
“Others are inappropriate policy terms and conditions, failure to or delay in providing documentation and information and coersion to make ex-gratia payment,” he said.
Jim assured that Zenith General Insurance would continue to remain financially sound with a total asset of N50 billion and shareholders funds of N32 billion.
In his address, Mr Rotimi Edu, President, NCRIB, appreciated Zenith Insurance and other co-sponsors as; Tangerine Life, AXA Mansard and Cornerstone Insurance Plc for their support toward the success of the event.
Edu also thank all other companies that found it expedient to sponsor all the council’s 60th anniversary programme.
He charged operators in the industry to adopt adequate robust technology to drive the industry, since technology plays a pivotal role in different aspects of modern day society and business processes.
The NCRIB’s president sympathised with victims of the on-going flooding across the country and those who have lost lives and properties.
The lead broker implored government to convoke stakeholders’ engagement on the malaise and factor in insurance into management of disasters in the country, adding that the council was opened for such opportunity.
He said this would free government funds, often expended on palliatives, for other pressing public good.
The News Agency of Nigeria reports that Dr Folasade Yemi-Esan, Head of Civil Service of the Federation, Mr Darlington Nwokocha, Chairman, National Assembly House Committee on Insurance and Actuarial Matters and
Dr Rabiu Olowo, Lagos State Commissioner for Finance, among others were recipients of various awards presented by the council.