The nation’s insurance industry could generate an estimated N300 billion annually if 10 percent of its 170 million population takes at least one form of retail insurance product offered in the market, analysts have said.
The analysts believe that 15 million policies from life, health and asset-linked policies of at least N20,000 per annum or $10 premium per month would deliver an industry premium that would change the fortunes of the sector and increase its contribution to the nation’s GDP.
The sector, according to the analysts, is currently generating N50 billion annually, from retail insurance, which they describe as abysmally low, considering the population size and potential to risk exposure.
Consequently, they see this as a challenge to operators to put on their thinking caps so as to capture the existing market through innovative products and aggressive marketing.
Rotimi Okpaise, managing consultant, HR Nigeria Limited, tells BusinessDay that the potential of the Nigerian insurance sector is huge, stressing the need for collaboration and far-reaching strategies to develop the retail market.
“The growth of the insurance sector lies within the retail market, as concentrating efforts on corporate businesses which have remained the same over the years, would not yield the needed result and the industry would not go far in its efforts to contribute to the nation’s GDP,” Okpaise says.
He adds that this segment of the market presents the insurance industry with an “exciting” opportunity of providing a needed service of financial inclusion/protection and simultaneously increasing the sector’s contribution to the nation’s GDP.
HR Nigeria, he says, is looking at bringing experts from the UK and South Africa to meet with local industry players for a roundtable discussion to find ways of unlocking the potentials in the retail market.
The firm wishes to be a catalyst to the industry’s discussion and expansion into the retail space, Okpaise observes. Leading the discussion will be Jim Roth, co-founder of Leapfrog Investments, a company with insurance activity in numerous emerging markets such as India, Indonesia, Malaysia, Kenya, Ghana and South Africa, among others.
Fola Daniel, commissioner for insurance, had earlier charged insurance operators to take concrete steps to deepen insurance penetration in the country, so that the industry could make meaningful contribution to the nation’s economy.
“With the old based economy, the sector barely contributed 0.7 percent to the GDP, and with the rebasing, the contribution of the sector to GDP has dropped to 0.6 percent. This calls for more dynamic strategies to deepen insurance reach amongst the vast populace,” said Daniel.
He said the industry must as a matter of deliberate policy, come up with new ways of doing the business, in order to achieve better result, emphasising the need to take advantage of the new licensing on retail insurance.
“Our marketing strategy must change; our product design and packaging must change; our approach to policyholders and their complaints must change and all hands must be on deck to ensure that the message of insurance is taken to the grassroots,” he said.
“Statistics have revealed that approximately 70 percent of the population live below the poverty line; over half of the population live in rural areas, while 52.5 percent of the adult population are completely excluded from financial services. It clearly identified that the micro-insurance sector is the next growth area for the Nigerian insurance industry,” he added.
Daniel observed that with the right products, micro-insurance would spearhead the much-desired renaissance in the industry.
Mayowa Adeduro, managing director, Anchor Insurance Company Limited, said retail business is the way to go now and will require industry collaboration to minimise cost and bring about efficiency, adding that the Nigerian Insurance Industry Database (NIID) is a clear example of collaboration that has brought efficiency and value creation in motor business.
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