Insurance in Nigeria does not enjoy wide-spread acceptance. This is unlike what obtains in other African countries such as South Africa where companies like Sanlam and Old Mutual (all insurance firms), continually top the list of biggest and most successful companies on the continent. Now, just to paint a clear picture of the unfortunate state of insurance in Nigeria, a recent report by PwC said that “while health insurance has been operational in Nigeria for over 15 years, the uptake has remained low“.
Factors Militating against Insurance in Nigeria
There are many factors responsible for this rather lukewarm acceptance of insurance among Nigerians. One of them is the high level of poverty among the people. There is also the issue of lack of awareness on the importance of insurance. During a recent interview with Business Elites Africa, the CEO of Avon Healthcare Limited, Adesimbo Ukiri, acknowledged these problems, saying:
“The average Nigerian is very reluctant to buy an insurance plan. Some people would argue that it is a disposable income issue because there’s really a large proportion of our population living at poverty or below poverty line. But then you look at the amount of money these people spend on airtime and data, and how much they spend on alcoholic beverages; makes you wonder like ‘really and truly, people can actually afford to spend more on insurance if they choose to’. The question then is how do we educate the population to know that health is something that you should set money aside for? You should contribute into a pool of resources that would go towards looking after you if and when you do fall ill. Because at some point or the other, someone is going to need it. So, you shouldn’t resent the fact that you are not ill for a while and other people are using what you’ve contributed because the day you fall ill and need it, you will be using what other people have contributed. So, that is the greatest challenge we face.”
Steps being Taken by Stakeholders to Entrench Insurance Acceptability in Nigeria
Joyce Ojemudia, the CEO of African Alliance Insurance Plc, also acknowledged these problems during a recent interview with Business Elites Africa. She believes “the major reason a lot of people don’t believe in insurance is because they don’t think insurance companies can actually pay claims.” To change this negative narrative, Mrs Ojemudia said African Alliance ensures to pay all eligible claims promptly. The company also relies on advertising to publicise its claims payments with the aim of creating trust among the people; especially those who already have pre-existing doubt.
Beyond using traditional media to preach the importance of insurance, efforts have also been made to use social media and digital marketing to target millennials and other young professionals. Companies like Leadway Assurance are big on email marketing and social media marketing.
“We are very active on all the social media channels. We are focusing more on the young, upcoming professionals because we believe that they are the ones who are mostly internet savvy and also the ones whose minds can be changed because they are most open to these ideas. And quite frankly, they are also the future. So, this is where a lot of our investments in education and awareness is going to. And we believe that the tides are shifting in our favour,” said Adesimbo Ukiri of Avon Healthcare.
Last year, the finance and insurance sectors contributed just 3.36% to Nigeria’s Gross Domestic Product (GDP) according to the National Bureau of Statistics. What is even worrisome is that much of this contribution came from the financial sector, with very minute contribution from insurance. This notwithstanding, the Nigerian insurance sector still has enormous growth potential just as the Pan-African credit rating agency, Agusto & Co has envisaged in its 2021 forecast. It is also expected that the recent recapitalisation exercise undertaken by the National Insurance Commission, NAICOM, will help strengthen the sector and position it for growth.
EDITOR’S NOTE: You can read our exclusive interviews with the CEOs of African Alliance and Avon Healthcare in our latest magazine edition: Top 30 African Women Entrepreneurs and Influencers below.
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