With Nigeria’s insurance penetration estimated at less than one per cent, experts have attributed the low acceptance of compulsory insurance to low enforcement.
Besides, they also stressed the need for a strong alliance among the government, security agencies, regulators and industry players to explore opportunities in different compulsory insurance policies.
There have been some efforts, particularly by the National Insurance Commission (NAICOM), to explore these opportunities but the lack of enforcement has been a major setback.
Experts, who gathered at the just-concluded Africa Insurance Organisation (AIO) held in Kenya, urged insurance stakeholders in the continent to work together and deal with the challenges bedevilling the insurance industry’s growth.
The former president of the association, Tope Smart, in a paper delivered at the event, said there is a need to bridge the gap in the sector by addressing all the challenges confronting the markets in Africa.
“With determination and commitment, we can do this,” he said.
While calling on African insurers to renew their trust in AIO executives, he said he looked forward to a better African insurance industry in the years to come.
Smart also highlighted that “low penetration and slow growth, despite the wide room for growth, are some of the challenges of the sector, particularly, in the Nigerian insurance sector. These are challenges we are coming together to tackle. These are some of the reasons we are in business.”
Speaking on the issue of the slow insurance uptake, the Managing Director/Chief Executive Officer, First Bank of Nigeria (FBN) Insurance, Valentine Ojumah, said the sector is a key part of the financial sector. He pointed out that in developed markets, insurance accounts for a significant portion of the total economy.
Vetiva Capital Management research said that insurers could serve as a means of long-term financing and that the sector is important for sustained economic growth. It added that this is expected to deepen and broaden the domestic financial services and generate higher savings needed for economic development.
“We believe that the Insurance sector is critical to the ability to emerge and transitional economies like Nigeria to grow and develop, as well as provide a reliable cover for risk to the citizens. Insurance provides stability by allowing large and small businesses to operate with a lesser risk of volatility or failure,” the report stated.