Nigeria’s low insurance penetration rate of 0.4 per cent is due to poor public perception, monitoring and enforcement of mandatory policies, PriceWaterHouseCoopers (PwC), has said.
PwC also said there is absence of innovative products and distribution channels, coupled with complex, lengthy policy and claims processes in the industry.
Chief Economist and Strategist, PwC, Dr. Andrew Nevin, made this known at a Public Lecture organised by Consolidated Hallmark Insurance (CHI) at the Muson Centre, Lagos, to commemorate the 10th Anniversary of the company.
Nevin stated that Nigeria’s insurance penetration rate of 0.4 per cent remained low compared to other countries with similar demographics.
For instance, South Africa’s insurance penetration stood at 14.4 per cent, India’s is 3.3 per cent, Brazil 5.1 per cent, Namibia 7.4 per cent, Russia 3.1 per cent, Indonesia 1.4 per cent, Kenya 2.9 per cent.
Nevin warned that except insurers begin to meet changing customer needs with new offerings, enhance interactions and build trusted relationship and form strategic alliances, the penetration level may drop from the 0.4 per cent where it stands currently.
He outlined the strategies to increase insurance penetration rate in Nigeria to include customising insurance solutions, removing large, entrenched bureaucracies and offering seamless customer experience.
Others are use of new technologies and services to increase access to information that can empower consumer decisions; partnerships between intermediaries, service providers and reinsurers. He said these are good ways to augment existing capabilities and establish symbiotic relationships.
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Earlier in his opening remarks, Commissioner for Insurance, National Insurance Commission (NAICOM), Mr. Mohammed Kari, congratulated the company’s management, board and other stakeholders for the 10-year anniversary celebration.
He said: “What we are celebrating today is that of many businesses combining to become one, in this case Consolidated, Hallmark and General Insurance.
“It is general knowledge that many businesses that started up new or through combinations have life span of three to five years.
‘’Consolidated Hallmark Insurance has not only passed through the injury periods, but is waxing stronger and better 10 years after. The board and management of the company need to be commended for the success and progress so far.”
Kari, however, reminded the company that as it celebrates its success, it should be aware that getting bigger in size and performance comes with higher expectations, adherence to corporate governance, and sustainability of growth among others.
The Commissioner therefore, advised the board to put in place strong corporate governance structure to guide the company’s future activities.
He said this was imperative in view of the transition from compliance based to principle based (risk based) capital and supervision in the insurance industry.
Kari regretted that many hitherto regarded major players in the industry had many corporate governance issues, leading to poor performance and regulatory concerns, which posed systematic risk to stakeholders.
Chairman, Custodian and Allied Insurance, (CHI), Mr. Obinna Ekezie, said a lecture of this nature was absolutely necessary, especially against the backdrop of various challenges that have bedevilled the development of the local economy. He said the sector has a key role to play in offering practical solutions to the challenges.
His words: “Insurance is a tool, which absorbs risks from individuals and corporates while at the same time helping to underpin stability and stimulate economic growth. Insurance is, therefore, more relevant today than ever before.”