By Merit Ibe
The Lagos Chamber of Commerce and Industry (LCCI) alongside some economic experts have proffered the way forward for the Nigerian insurance sector as a contributor to the growth of the economy.
Speaking at the 2023 Insurance Stakeholders’ Consultative Forum, yesterday, themed: “Rethinking insurance as a Critical Economic Growth Strategy”, President of the chamber, Dr Michael Olawale-Cole, noted that the Nigerian insurance industry, despite its enormous potential, is still at its infancy and far behind its African peers judging by some key indicators.
He viewed that the insurance industry plays a substantial role in the Nigerian economy via many mechanisms, such as mobilising domestic savings, facilitating the conversion of accumulated capital into productive investments, minimising risks, fostering financial stability and stimulating trade and commerce, but lamented that the great expansion seen in the financial services sector over the last decade has not been replicatedin the insurance industry.
Olawale-Cole cited the global insurance market report, which says that insurance penetration rate for Nigeria and South Africa is 0.5 and the 12.2, respectively.
He said while other leading emerging economies- like Kenya with 2.9 and Ghana with 1.2, have low insurance penetration rates, Nigeria has the lowest figure comparatively, despite being the largest economy in Africa.
“Undoubtedly, the insurance sector has a potential for development due to various alterations in the regulatory framework, this necessitating future modifications in the operational practices.”
He said the future of the sector hinges on the extent and speed of digital transformation since it has the potential to enable the industry participants to secure a significant market share.
“In evaluating the impact of the insurance industry, it quickly becomes evident that it facilitates economic transactions for individuals and businesses by offering risk transfer and risk dispersion mechanisms. The insurance industry has experienced minimal growth in real terms over the years due to various challenges faced by stakeholders, which include limited awareness among the general population regarding the significance of insurance, low purchasing power, disruption from technology, unfavourable economic conditions, apathy toward filing claims for damages and diverse religious and cultural sentiments, among other factors.
He called for a rethink by individuals, businesses, government and the practitioners for improvement in the sector and a better contribution of insurance to the GDP.
In his keynote, Commissioner, National Insurance Commission (NAICOM), Sunday Thomas, highlighted the importance of educating the public on the need for insurance.
Thomas noted that the importance of insurance in the growth of the economy can be looked at from the demand, supply sides, its relevance to the government, businesses, the economy, individuals and others.
“When you are talking about preserving existing assets, insurance come to the fore; on the relationship with the outer world and sustaining confidence in foreign direct investment (FDI) it comes to the fore. It has become imperative that without insurance, planning cannot be adequate if indeed we want to grow our economy.
Noting that the future of insurance in Nigeria is bright, he advised that insurance should be the oxygen that everyone should begin to breathe, “it should be the life style and should be basic in individual lives.
Chairman, Insurance Group of the LCCI, Gboyega Olanbiwoninu, noted that it was important for operators in the sector to rethink, re-engineer and remodel the way insurance products are marketed to the public.
Applauding the theme of the programme, Olanbiwoninu said it was apt especially at this period in the politics and economy of the nation, lamenting that pivotal position has not been given to insurance, which is the bedrock of economic growth and sustainable development.
“We all know, insurance as a risk mitigation strategy also provides the required peace of mind for individuals and corporate institutions, providing the required impetus and catalyst for business conception, venture and growth.
“With the new government in place and efforts currently being channelled into reflecting sectors of the economy and analysing various processes, practises and procedural method and strategies that could produce the paradigm change in our nation.
“Sadly, not much of pivotal position has been given to insurance, which is the bedrock of economic growth and sustainable development.
We all know, insurance as a risk mitigation strategy also provides the required peace of mind for individuals and corporate institutions, providing the required impetus and catalyst for business conception, venture and growth. It is therefore, not out of place for the new government to rethink the disposition of government to insurance, alongside other strategies being mapped out for growth of the economy. In doing this, government should apart from providing or accelerating its support for enabling laws to promote insurance growth also insure its assets, bearing in mind that it is the largest spender and potential client of the insurance industry.