For the nation’s insurance industry to ascertain its desired contribution to the Gross Domestic Product (GDP) of the country, there is a need for a rethink by individuals, businesses, government, and practitioners to educate and enlighten the people on several advantages that a big-shouldered insurance sector has for the growth of a nation’s economy.
Economic experts across sectors of the economy who converged at the 2023 edition of the Insurance Stakeholders’ Consultative Forum, themed: “Rethinking Insurance as a Critical Economic Growth Strategy,” organised by the Lagos Chamber of Commerce and Industry (LCCI) have proffered a way forward for the sector on how to contribute maximally to be the economic driver of the country.
They also revealed the major challenges of the sector could be attributed to poor knowledge of the public on the advantages of accepting insurance products to mitigate risks and for the government to implement insurance policies with thorough enforcement across the country.
However, it is disheartening that as of today, statistics in the industry indicate that less than 5,000 public buildings have so far been insured across the country, which is very insignificant compared to several public buildings in Nigeria.
Speaking at the Forum, the President of LCCI, Dr. Michael Olawale-Cole, said the Nigerian insurance industry, despite its huge potential, is still at its infancy stage and far behind its African peers judging by some key indicators.
For this, he however, said that the insurance industry plays a substantial role in the Nigerian economy via many mechanisms, such as mobilising domestic savings, facilitating the conversion of accumulated capital into productive investments, minimising risks, fostering financial stability, and stimulating trade and commerce, but complained that the huge expansion seen in the financial services sector over the last decade has not been replicating in the insurance industry.
Citing the global insurance market report, Olawale-Cole, said the insurance penetration rate for Nigeria and South Africa is 0.5 and 12.2, respectively.
He said while other leading emerging economies- like Kenya with 2.9 and Ghana with 1.2, have low insurance penetration rates, Nigeria has the lowest figure comparatively, despite being the largest economy in Africa.
“Without doubt, the insurance sector has a potential for development due to various alterations in the regulatory framework, necessitating future modifications in the operational practices.”
He said the future of the sector hinges on the extent and speed of digital transformation since it has the potential to enable the industry participants to secure a significant market share.
Assessing the capability of the insurance industry, he explained that it quickly becomes evident that it facilitates economic transactions for individuals and businesses by offering risk transfer and risk dispersion mechanisms.
The Guest Speaker, in his keynote address, the Commissioner for Insurance, National Insurance Commission (NAICOM), Sunday Thomas, also stressed the need to educate the public on the need for insurance.
Thomas, who attributed the need for insurance to the development of the economy said demand, and supply sides, saying its relevance to the government, businesses, the economy, individuals, and others.
According to him, when you are talking about preserving existing assets, insurance comes to the fore; on the relationship with the outer world and sustaining confidence in foreign direct investment (FDI), it comes to the fore. It has become important that without insurance, planning cannot be adequate if indeed we want to grow the economy.
However, advised that insurance should be the oxygen that everyone should begin to breathe, “it should be the lifestyle and should be basic in individual lives.
Speaking also at the programme, the Chairman, the Insurance Group of the LCCI, Gboyega Olanbiwoninu, urged insurance operators in the sector to rethink, re-engineer, and remodel the way insurance products are marketed to Nigerians.
Olanbiwoninu said it was apt especially at this period in the politics and economy of the nation, lamenting that a pivotal position has not been given to insurance, which is the bedrock of economic growth and sustainable development.
“We all know, that insurance as a risk mitigation strategy also provides the required peace of mind for individuals and corporate institutions, providing the required impetus and catalyst for business conception, venture, and growth.
“With the new government in place and efforts currently being channelled into reflecting sectors of the economy and analyzing various processes, practices and procedural methods and strategies that could produce the paradigm change in our nation.
