LAGOS – The Director-General, Chartered Insurance Institute of Nigeria (CIIN), Mr Kola Ahmed, on Wednesday identified fear of risks among operators as a major factor affecting low investment in micro insurance.
Ahmed told the News Agency of Nigeria (NAN) in Lagos that such a fear was human as one would not know what to expect from a new venture.
He said businessmen were naturally afraid of incurring expenses that they might not be able to recoup.
“It has taken time because of the fear of the unknown by the operators.
“The fear has to do with the in-built fear of humans that go into new areas; it is always a challenge because they do not know what they are going to meet there.
“And then the fear of the expenses they will incur in setting up in those areas that the initial expenses will be much more than what will come in.
“But, in fairness to them, unless you are able and you are willing to invest in certain areas until you have invested you cannot wait to reap the benefit.
“You have to invest first. But our people are always afraid they want quick returns on their investment.
“But in the area of micro insurance it takes some time. It has a long gestation period; may be three, four years for you to put in the structures. You have to open up the outlets here and there.
“But by the time you start having different number of clients and start getting some premiums from them, the amount of premium you get from the number, in insurance, is based on law of large number.
“The more the number of people that you have, the better for you. ’’
According to him, in the long run it will pay companies to invest in micro insurance and then wait after a gestation period to start reaping the benefit of their investment. (NAN)