 NIGERIAN INSURANCE SECTOR: DEVELOPMENT, CHALLENGES AND OPPORTUNITIES.

 

—  NIGERIAN INSURANCE SECTOR: DEVELOPMENT, CHALLENGES AND OPPORTUNITIES.

—  BEING A PAPER PRESENTED AT ASSOCIATION OF REGISTERED INSURANCE AGENTS OF NIGERIA (ARIAN)

 

—  BY CHIEF (DR.) ISAAC OLUSOLA DADA (MFR)

—  INTRODUCTION

—  Highly Pleased to be in midst of business men, Intellectuals and Insurance gurus

—  The choice of a topic on Insurance Development in Nigeria  is necessitated by current happens in the nation Economy and contribution of Insurance to our GDP

—  Insurance today is being conducted over a vast array of lines of business that encompass personal, commercial, marine, aviation, agriculture, life, health, financial and engineering insurance. Lloyd's is famous for insuring the life, health, legs or even noses of actors, actresses and sports figures.

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          GLOBAL HISTORY OF INSURANCE

—  Used primarily to hedge against the risk of a contingent loss.

—  Early method of transferring risk were practiced by Chinese traders as early as the 3^rd millennia BC.

—  Modern profit insurance manifested in Babylon almost 2000 years BC, in a contract of loan of trading capital to travelling merchants.

—  The Greeks and Romans introduced the origins of health and life insurance to us around 600 AD, when they organized guilds which afforded members certain benefits such as proper burial rites

—  Iranian Monarchs were the first to insure their people to some extent, formalising the process by registration thereof at court.

—  Insurance policies not bundled with loan or other kinds of contracts were invented in Genoa in the 14^th century, as were insurance pools backed by pledges of landed estates.

—        GLOBAL HISTORY CONT

—  Hamburg fire contracts were concluded on 3^rd of December 1591 which are generally regarded as some of the first examples of true mutual insurance contracts that we have today.

—  The first insurance company in the United States  underwrote fire insurance and was formed in Charles-Town ,South Carolina in 1732.

—  The first American life insurance association was sponsored by a church-the Presbyterian synod of Philadelphia around 1840.

—  DEVELOPMENT OF INSURANCE IN NIGERIA

—  The report of J.C Obande Commission of 1961 was the first major step at regulating the activities of insurance business in Nigeria

—  The Insurance Decree No 59 of 1976 constituted the first All-embracing Law for the regulation and supervision of Insurance business in Nigeria.

—  The Federal Government of Nigeria promulgated the Insurance Special Supervisory Fund decree 20 of 1989 to strengthen the manpower need of the Insurance Supervisory Board.

—  In 1992, the Insurance Special Supervision Fund decree No 62 was enacted, establishing a body known as National Insurance Board, bringing out Insurance supervision outside core civil service, changing designation of Chief Executive from Director of Insurance to commissioner for Insurance and setting up the Board of Directors to oversee the affairs of the established Body.

—  Companies in the insurance sector have been angling to meet the industry gross premium target of N1.1 trillion set by the Nigeria Insurance Commission (NAICOM). The Projection target has been shifted to year 2017.

 

—    COMPARISION WITH BANKING SECTOR

—  The Gross premium of 14 insurance companies was compared with 14 bank’s customer deposit in three consecutive years. The banking industry grew by 62.99% whilst insurance sector grew by  33% in term of customer patronage.

—  Also, the total Asset of Insurance grew by  21.97% but banking Asset grew by 53.62% in the three years of analysis.

—  Gross Premium Compared with Bank Deposit

—  TOTAL ASSETS

—  CHALLENGES

Notable amongst these challenges are the following:

—   Issue of Corporate Governance

—  Management

—  Public Perception & Image Repair

—  Competition

—  Innovation & Product Development

—  Employment of the Marketing Concept

—  Strategic Alliances

—  Branch Expansion

—  Information Technology

—  Renewed Vision, Mission & Core Value

—  Service Quality & Responsive Claims Payment

—  Broadening Scope of Insurance Business in Nigeria

—  Capacity Building & Manpower Development

—  Staffing and Manpower Development

—  OPPORTUNITIES

—  Market Share in Our Large Population

—  Our Local Participation in Oil and Gas facilitate local Risk retention and foster Insurance Market penetration.

—  Public awareness and Active role of NAICOM to ensure improved payment of Premiums and Claims.

—  INSURANCE GROWTH DRIVERS IN NIGERIA

Listed below are the various underlying growth drivers for Nigeria’s insurance industry:

—  Growing of the financial industry as a whole

—  Growth of life and non-life industry

—  Promoting innovation and removing inefficiency

—  Competition and orderly growth

—  Growth of specific insurance segments such as motor insurance

—  WAY FORWARD

In meeting the significant potential, the industry has an increased role and responsibility to fog ahead. Three areas of focus could be:-

—  Distribution-This include positive changes to Market dynamics and changing in consumer preference. ie Product innovation

—  Regulation-Effective adjustment to regulatory changes and must drive transparency and product simplification.

—  Making sales and marketing more responsible and answerable.

—  CONCLUSION

—  Finally, with the renewed interest of Nigerians in the industry as well as the commitment of NAICOM and its allied regulatory bodies towards engendering international best practices and standards in the industry, the investors are expected to receive enormous benefits, while the insurance industry will contribute positively to the principal objective of the Federal Government’s Financial system strategy 2020 to make Nigeria twenty largest economies in the world by the year 2020.

              

 THANK YOU