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Thursday, March 30, 2023

Why are Nigerians Not Taking up Insurance Cover?

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There was a cacophony of noise as a lot of traders were offloading heavy car engines from a truck in the scorching sunlight at the Ladipo Auto Spare Market, Lagos.

Sitting in his office and looking relaxed in a polo shirt, Emeka Chukwuka, 49, said he did not have any form of insurance cover because no Agent had approached him or tried to convince him about the benefits of owning one.

The businessman was candid to have said that he lacked trust and confidence for the entire system, as he feared not being paid his claims as at when due.

None of his workers had taken insurance cover, even as they earned reasonable salaries.

“I have been in this market for over 15 years and nobody has come to talk to me about insurance or taking up a cover,” said Chukwuka “To be candid, I am not aware of any products that these companies have, a lot of traders have not been sensitized.”

Chukwuka is one out of millions of Nigerians who do not have insurance cover as lack of awareness about the usefulness of indemnifying properties against fire, burglary, theft, and life is partly responsible for low penetration in a population of 200 million.

According to NOI Polls, an opinion and research organisation based in Nigeria, only one out of ten Nigerians have any form of insurance cover.

The report also stated that the major causes of the low market penetration and poor insurance culture are low awareness and poor enlightenment on the benefits of insurance and it stands at 40 percent.

While insurers have seen premium growth in recent times, the sector continues to lag its peer terms of penetration which stood at less than 1 percent.

And that compares with South Africa (12.9%), Kenya (2.8%), Angola (0.8%) and Egypt (0.6%) while density at $6.2 also remains weak compared to South Africa ($762.5), Kenya ($40.5), Angola ($30.5) and Egypt ($22.8).

More than 90 percent of the Nigerian population do not have a health insurance cover, according to The Lancet, a medical journal.

Analysts say it is saddening that 170 million people are paying out of pocket to assess medical service, and the anemic situation has been aggravated by non-passage of the amended National Health Insurance Scheme.

“There are expectations that people have, and most of these things are not happening. Insurance penetration will not happen until insurance customers are heard, and allowed to enjoy what their expectations are,” said Ekerete Gam-Ikon.

Analysts and stakeholders say companies have to intensify their strategy and develop products that suit small business owners, artisans, and farmers in rural areas.

They added that there are immense opportunities at the retail end of the market given the country’s huge population and an industry in its embryonic stage.

Of course, small and medium scale enterprises are the bedrock of the economy as their contribution to national output cannot be overemphasized.

According to the Nigeria Bureau of Statistics, SMEs in Nigeria contributed about 48 percent of the national GDP in the last five years. With a total number of about 17.4 million, they account for about 50 percent of industrial jobs and nearly 90 percent of the manufacturing sector in terms of number of enterprises.

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