By Hannah Atomode
A significant number of Nigerians are misinformed about insurance, which has resulted in low insurance penetration in the country. According to the Nigerian Insurers Association, the country’s insurance penetration rate is less than 1%, compared to the global average of 7.23%.
Some reasons contributing to this lack of awareness include:
1 Limited insurance financial literacy: lack of understanding and knowledge about insurance products, services, and concepts can lead to poor insurance decisions, inadequate coverage, and financial insecurity.
2. Lack of education and awareness campaigns : To bridge the insurance penetration gap in Nigeria, insurance companies must prioritise public education on how their insurance needs can be effectively met. This endeavours demands significant commitment and substantial funding. By investing in awareness initiatives, insurance companies can empower the public to make informed decisions, ultimately driving increased insurance adoption and penetration in Nigeria.
3. Cultural and religious beliefs: Risk sharing and fatalism can lead to a lack of awareness and understanding of insurance benefits. Viewing insurance as a luxury item rather than a necessary protection can result in low prioritisation. Overreliance on traditional systems and practices can hinder the adoption of formal insurance. Furthermore, some religious beliefs can also impede insurance uptake.
4. Trust issues with insurance companies: In the past, many individuals have had disappointing experiences with insurance companies, which have denied their claims. The use of complex terminology in insurance policies has led to policyholders unknowingly falling prey to exclusions, only discovering them when a loss occurs. This lack of transparency has eroded trust in the insurance industry, making it essential for insurers to adopt clearer communication and more customer-centric practices.
5. Limited access to insurance products and services: Several factors have hindered the widespread adoption of insurance in Nigeria, including financial constraints, limited access to insurance products, and low incomes.
Furthermore, despite the existence of risk-mitigating insurance products, many Nigerians remain unaware of these services, exacerbating the country’s low insurance penetration rates. This knowledge gap underscores the need for increased awareness and education about insurance products and their benefits.
To address this issue, insurance companies and regulatory bodies in Nigeria are working to increase awareness and education about insurance products and benefits. Some initiatives include:
1. Public awareness campaigns: Public awareness is paramount in Nigeria, and concerted efforts are necessary to promote insurance education. The regulatory body, insurance companies, brokers, and agents must collaborate to drive this initiative. Specifically, grassroots education is crucial, as this demographic often requires insurance protection more than affluent individuals. However, currently, insurance adoption is predominantly concentrated among the wealthy and middle class, with a mere 1% penetration rate. To bridge this gap, significant investments of time and resources are necessary to ensure that everyone, regardless of socioeconomic status, has access to comprehensive insurance information.
2. Development of micro-insurance products. To increase insurance penetration, insurance companies must develop innovative products that cater to the diverse needs of the masses. The emergence of micro-insurance companies is a step in the right direction, but more players are needed in this space. These companies should design tailored products that address specific insurance needs, making coverage more accessible and affordable for underserved populations.
3. Leveraging technology to increase access to insurance: The insurance industry in Nigeria has made significant strides in leveraging technology to improve penetration. The adoption of digital channels such as social media, e-commerce, and online platforms has been instrumental in increasing access to insurance products. These digital solutions have helped bridge the gap, making insurance more accessible and convenient for Nigerians. However, despite this progress, there is still room for improvement. To achieve more effective results, insurance companies are expected to further invest in and optimize their digital strategies, ensuring that their online presence is robust, user-friendly, and tailored to the needs of their target audience.
In today’s fast-paced and ever-changing world, uncertainty is an unfortunate constant.
As Nigerians, we face unique challenges that can impact our lives, livelihoods, and loved ones. That’s where insurance comes in – a vital tool for managing risk, protecting assets, and securing your financial future.
I am committed to demystifying the world of insurance and empowering all with the knowledge needed to make informed decisions.
Each week, I will delve into various insurance topics, from the basics of life and health insurance to the intricacies of motor and property insurance.
Whether you’re an individual, business owner, or simply looking to safeguard your assets, my weekly insurance series will provide you with valuable insights, expert analysis, and actionable tips to help you navigate the complex world of insurance.
Stay tuned for the weekly insurance updates, and join the conversation on how to protect your future and secure your peace of mind.
•Hannah Atomode
Business Analyst / Insurance Underwriter
•’To learn more you can follow *talkinsurancewithhannah* on Instagram, Facebook, Tiktok and YouTube channel’.
