For the nation’s insurance industry to contribute significantly like other sectors of the economy to the Gross Domestic Product (GDP), there is a need for the sector players to address the issue of rate-cutting among underwriting firms in the country.
The under-pricing of insurance policies in the market, popularly described in Nigeria as rate cutting, has been identified as a major setback for the development of the insurance industry in Africa’s most populous nation, Nigeria.
This was a major concern by the industry stakeholders, who gathered at the Claim Advocacy Conference, organised by Carefirst Consult, with the theme, ‘Understanding Insurance Beyond Claims Payment,’ in Lagos.
The stakeholders also identify low premium rates and lack of collaboration among the players in the sector as the bane of insurance growth, noting that the premium charged in Nigeria is too meagre compared to what is applicable in other parts of the world.
Checks showed that Nigeria’s insurance penetration is low at 0.5 per cent of the GDP when compared with penetration levels in other parts of Africa, including South Africa, Kenya, Egypt, and Ghana among others.
Speaking specifically, on the development in the sector, chairman of the occasion and former secretary general of the African Insurance Organisation (AIO) Prisca Soares, said: “The premium charged in Nigeria is too meagre compared to what is applicable in other parts of the world and something needs to be done about that.”
According to her, “A situation where some companies give so much as discounts to their clients is one thing that is not allowing the industry to grow the way it should.
“This is a suicidal tendency, which we have to do something about. We do need to cooperate in this market so that there would be sustainability because if insurance goes down, everything else does,” she appealed.
In his presentation on ‘Claim is the Best Teacher in Insurance/Life After Claims’ the Financial/FinTech expert and insurance consumer, Richard Ogunmodede, highlighted the industry’s problems and the negative effect on its growth.
“Insurance operators talk all the talk but they never do the work. They just compete based on an agreed premium and at a zero rate and the consumer assumes there is an implicit guarantee that even when the insurer goes down, they will still get their indemnity so they don’t care about the rate too,” he stated.
He said the growth rate of the Nigerian insurance industry and its contribution to the nation’s GDP is very small and called on the operators to do something, especially on the issue of rate.
Earlier the Founder/Principal Consultant, of Carefirst Consult Limited, Gus Wiggle, highlighted the objective of the conference, which he said is “to ease discussions about claims among insurance stakeholders thereby filling the void in the insurance ecosystem and adding to the value chain of insurance. We are purposed to be the bridge between the consumers and the insurance providers.”
