Insurance penetration could rise to 3.69% in the next 10 years from the present 0.06% if the technological infrastructure and data necessary for its growth are made available, say industry analysts who appeal to government and regulators to play their roles well.
Economic analysts and insurance experts are of the opinion that Nigeria’s insurance industry remains the weakest link in the nation’s financial sector, contributing little to the GDP over the last 60 years despite several interventions by government when compared to banking, pension and the capital markets, according to a report in blueprint.ng. In addition, the insurance industry has barely grown in real terms over the last 10 years, according to Coronation Research in its 2019 Nigeria Insurance Industry Report.
It was established that the industry is suffering from poor returns on equity not because of its small size but largely because of lack of technological infrastructure and data necessary for expansion.
According to Mr Guy Czartoryski, head of research at Coronation Merchant Bank that insurance penetration in Nigeria is extremely low, even compared with countries with similar GDP per capita, for example, India with an insurance penetration at 3.69%. He said, “Experience in other countries shows that, with the right conditions, insurance can be rolled out to India’s level in eight to 10 years.”
The authorities have made several attempts to expand the insurance industry. These efforts included making some classes of insurance compulsory, recapitalisation of insurers, diversification of distribution channels, launch of takaful and promoting financial literacy.