‘Poverty hinders insurance growth’

‘Poverty hinders insurance growth’

Chuks Udo Okonta

Poverty is a major hindrance to insurance growth the Director General, Chartered Insurance Institute of Nigeria (CIIN) Adegboyega Adepegba, has said.

He told Inspen that people consider insurance last in their list of scale of preference due to the level of their income, adding that the industry will take its place in the financial sector when the economy and living standard of people improves.   

He said: “The major one is the level of poverty in the country. There is poor economic down turn, because of this, insurance comes last in the thing most people what to do. When you take your salary, you probably think of paying your house rent, take care of your car, feeding and paying your children’s school fees. So, you probably think about insurance last.

As long as we still have this level of poverty in the country, we will still have a lot of challenges for the insurance sector. But as the per capital income increases, then insurance will have its own fair share of what should come to it. The economy must improve for the insurance industry to thrive.”

The industry present penetration stands at six per cent, while its density (Purchase) is N1200, premium volume N200billion and contribution to the nation’s Gross Domestic Product (GDP) is 0.7. But operators said they hope to increase the industry’s penetration from six per cent to 30 per cent by the end of this year, grow the density (purchases) from N1200 to N7500, premium volume from N200s billion to N1 trillion and contribution to the Gross Domestic Product (GDP) from 0.7 per cent to three per cent.

The Commissioner for Insurance Fola Daniel said that the National Insurance Commission (NAICOM) is poised at providing all necessary frameworks that will aid the achievement of the vision adding that the vision is predicated on compulsory insurances.

He said the commission will ensure the closure of all leakages in the industry which deterred the growth of the sector in the past, noting that the NAICOM is collaborating with the practitioners to ensure that the insurance sector takes its place in the nation.

 “What my colleague and I at NAICOM have done with the MDRI initiative is to look at ways the industry could leverage on existing laws to plug many of the leakages in terms of insurance premium.

“We believe if the implementation is as envisage, there is no reason why the premium income benchmarks of N1 trillion by 2012 and N6 trillion by 2020 estimated in the initiative cannot be surpassed by the industry.”

 He noted that the commission’s desire is to develop and build and insurance industry with high capital and standard.

“In the last 10 years, or thereabout, insurance professionals literally left the industry to half baked managers. Industry leaders followed the lead of quacks into all sorts of unprofessional conduct that combined to expose the industry to ridicule.

“Rather than strive to sanitise and restore the pride of our profession, our leading professionals chose to take the easy path of ‘if you cannot beat them, join them’, taking delight in indulging in unethical practices.

“However, going forward, we will no longer tolerate inadequate financial disclosures and all other forms of unethical practices from any firm. If need be, NAICOM would sanction any firm engaging in unethical behaviour,” he added.