Mr. Tope Smart, Chairman, Nigerian Insurers Association (NIA) has
lamented that only about one (1) percent of Nigerians have any form of
insurance policy despite the country?”s huge population of 180 million.
who is also the Group Managing Director/CEO of NEM Insurance Plc, said
at his investiture: ?SIn Nigeria, it is rather sad to note that not all
Nigerians have embraced the concept of insurance. This is why the
insurance penetration rate still remains about .5% as against some other
African countries such as Kenya and South Africa with penetration
levels of 2.9% and 14% respectively. Also, only 1% of our population
holds any form of insurance policy.??
The NIA chairman, who
described insurance as the bedrock of the economy, says the Nigerian
insurance industry is a key component and an important member of the
Nigerian financial services sector. He added that the reason for lack
of interest in insurance may be as a result of lack of knowledge about
the benefits of insurance to the economic growth of our nation and
indeed the entire world at large.
?SDespite the lingering apathy
for insurance by the Nigerian populace, driven largely by ignorance, on
one hand and cultural and religious beliefs on the other hand, the
industry remains resilient. In 2016, the industry?”s Gross Premium
Income stood at N316 billion as against N252 billion premium income in
2012, an increase of 25%. The growth is significant in life insurance
segment particularly in annuities. Also, to be noted is that Nigerian
insurance industry continues to record increased claims payment. In
2016, total claims paid by operators amounted to N113 billion, as
against N73 billion paid in 2012, an increase of 55%.??
He listed the benefits of insurance to include:
Offer protection to firms and organisations. In this way, their
financial stability is enhanced through the taking over of any damage or
interruption in the production process occurring as a result of the
Insurance promotes entrepreneurial attitude, encouraging investment innovation and vitality of the market.
Insurance offers relieve and by so doing reduce pressure on Government.
Insurance, through Life Insurance Companies provide funds for long-term investment in the real economy.
In the absence of a risk transfer mechanism like Insurance, economic
activities would be much lower and hence will result in economic loss.
Also, in the absence of Insurance, human behaviour, particularly risk
aversion would either lead towards avoiding these activities or
excessive precaution and both of these actions would result in an
Also to be noted is that risk transfer mechanism
will reduce fear, anxiety, frustration or demoralisation which can
reduce productivity in the environment.
Insurance also encourages creativity, innovation, entrepreneurial activities and trade that are vital for sustainable growth.