Banks have contributed more to Nigeria’s GDP than insurance. It should have been the other way round. This is because the insurance sector connects all sectors. Yet it is the one with a stigma. Insurance in Nigeria means different things to different people. For some, it is a tale of woes. For others, it is all bloom and no gloom. Yet for those in the logistics business, the insurance man is not to be trusted. What is your story?
On The One Hand
The Reinsurance reports reveal that Nigeria holds a mere 1.7 per cent (or $1.08 billion) of the African insurance market. In contrast, South Africa dominates with a remarkable 68.2 per cent ($43.36 billion). Insurance firms are bigger in Europe and America. But the banks are bigger in Nigeria. Insurance firms are smaller here.
On The Other Hand
If an insurance policy is indispensable, it will be adorable. But it is indispensable. That is why it is not adorable. You can live without an insurance policy. To keep up with your policy, you need a disposable income to pay your premium every month. Otherwise, your policy may lapse. If it lapses, you will lose your coverage. If it rains, it will flood. No boat is coming for you.
In The Long Term
The 2025 Nigerian Insurance Industry Reform Act (NIIRA) has come to strengthen the industry. I have a doubt. But, anyway, the Act says it will increase capital requirements for insurers. Improve policyholder protection. Align the insurance practice with international standards. Mandate the digitalisation of the insurance processes.
The Act will ensure faster claims settlement. For instance, a 24-hour settlement mandate for some claims. The lack of transparency in claim settlement has pushed many Nigerians away from taking an insurance policy. For instance, in 2005, you had a comprehensive insurance policy on a brand new car and paid the premium every month. For two years, life was good. Then hiccups. The car tumbled. Life detoured.
The insurance firm waded in. You recorded the accident scene. You got the police report. Sworn to an affidavit. The broker was helpful. Life crawled. After playing ping-pong for six months, you had fixed the car and moved on, the broker called. Bad news. The insurance would pay [he mentioned the paltry sum]. You accepted the payment and counted your ‘’blessing.’’ After that, the insurance policy became a taboo. Many friends and contacts have shared similar experiences of not receiving claims on time and receiving too little with no impact.
Since then, many of them have embraced African insurance. One of them bought a car recently. He did not obtain an insurance policy. He called his pastor. Another one called his imam. The other one drove to his village for a “comprehensive insurance cover.” The insurance firms are competing with African Insurance Incorporated. Can NIIRA curtail this tradition?
Why Does It Matter?
NIIRA has promised to rectify the late and non-payment of claims. But scars do not die. Scars live. What has changed the narrative is the introduction of technology. Many insurance technology companies are pushing the envelope and breaking barriers. Insurance is now accessible to artisans and market women for a token.
In The Short Term
The insurance sector has suffered reputational damage. NIIRA has come to mend it.
