Managing Director/Chief Executive Officer (CEO) FBNInsurance Limited, Mr Val Ojumah, has disclosed that the contribution of the insurance sector to Nigeria’s Gross Domestic Product (GDP) is growing.
Ojumah said it was encouraging that the contribution of insurance sector to the GDP had moved from under one per cent to about 1.02 per cent.
He said that the contribution to the GDP had the potential to increase further with deepened penetration, which was barely one per cent.
The managing director, however, said that government at all levels and insurance practitioners had a huge role to play to improve penetration and in turn increase contribution of the sector to the GDP.
According to him, cultural and traditional aspect to the acceptance of insurance as a means of risk management in Africa and Nigeria is a militating factor to the penetration of insurance, and ultimately better contribution to the economy .
” The society is accustomed to the alternative of insurance; for example, Life insurance, because Africans and Nigerians are still living in accordance to our traditional value .
” There is this belief of communal relationship, contribution, rights and benefits expected from one another in event of death , crisis and misfortune which is hindering the acceptance of insurance, unlike the western world .
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“Government has a role to play in these, just as it made annuity compulsory for pensioners, which led to an uptake of the sector .
” Originally , Life insurance was used as a discount on annual taxable income to encourage people to buy life insurance but this has changed .
” There is the role of regulation, government and industry players to improve the sector, ” he said.
According to him, practitioners in the industry need to also step up in terms of their service delivery to the society.
Ojumah said it was no gainsaying that the insurance sector, in terms of claims payment administration, was still poor.
He said once the industry players could improve their approach to claims administration, the contribution and acceptability of insurance as a subject matter would get better.
The managing director said that the activities of general insurance, especially, were tied to economic development, and as more live above poverty, they would be able to afford insurance premium.
“Under the current circumstances, when majority of the population is poor, the ability of acceptability of insurance will remain low .
“According to Maslow’s hierarchy of needs, insurance does not come up at all because people need food, clothes, shelter, among other basic needs.
“Unfortunately, majority of Nigerians are struggling and can’t consider insurance as a need,” he said.
Ojumah said that life insurance contributes significantly to the total savings portfolio of every country and the contribution of life insurance premium had direct relationship to economic development.
He said that savings would be low as long as the majority of the society are poor.
“While the issues raised are getting better, there is a lot of balancing that needs to be done for insurance to take its appropriate place in our society and economy, ” he said .
In his contribution , Mr Bankole Banjo, Brand, Media and Communications Manager, African Alliance Insurance Plc that the present contribution of the insurance industry to the GDP indicated that the sector had a lot to do in terms of getting more Nigerians to buy insurance.
Banjo said that to achieve this, the industry must constantly play more in the retail space and communicate the essence and value of insurance to the retail market in particular.
“Awareness is not the problem; many people have an idea of insurance, after all, they know how they mobilise peer-to-peer support when they need to, but they do not seem to trust organised insurance as it were, ” he said.
According to him, the insurance industry players need to build trust by paying genuine claims as due, and banish cultural biases by opening their eyes to the practicality of insurance in relation to the support system they are used to.
The insurance communication manager said the industry should also consider religious elitism by bringing revered religious and traditional leaders to understand the value of insurance with a view to making them ambassadors for the industry.
