While insurance serves as a means of protection against financial losses in the event of an accident or other disasters, a huge number of Nigerians are yet to key into it, according to the Chief Executive Officer of the National Insurance Commission (NAICOM), Olusegun Omosehin. He shares his insight on Channels Television’s News Night programme.

Enjoy the excerpts:

If you look at the landscape, how would you describe the Nigerian Insurance landscape?

The insurance landscape currently has great potential but with some teething challenges. But let me emphasise the potential. First, it’s an industry that is growing at double digits and there are significant opportunities in micro-insurance. For example, there’s high demand for low-end products that address the needs of individuals and even small businesses. There’s potential for growth for takaful insurance for example. Takaful is a faith-based product considering the huge Muslim population of Nigeria. So, people tend to look for non-interest insurance products.

Also, cyber insurance is a potential area of growth because of the risk that has been associated with technology adoption across the entire value chain of payments, banking and financial services generally. So, in a nutshell, I will tell you that the insurance landscape is one with great potential but for some of the challenges which we have.

We’re used to double digits when the Central Bank of Nigeria (CBN) talks about interest rates. What are the double digits in insurance?

It’s great when we talk about growth. Let me simplify this, when you listen to economists speak, they will tell you that for this year, the gross domestic product or national output of Nigeria has grown at a rate of say maybe about 3.5%, that is single digit but when you have a sector that is growing at about 20% annually, that is significant. We are even growing better than the economy itself, which is significant and that’s what I meant when I said that we are growing at a double-digit rate. That has been the trend and we are hoping this will continue for a long time because the reason is not farfetched, insurance penetration in Nigeria is still very low.

What’s the progress on insurance penetration in Nigeria?

Insurance penetration in Nigeria is currently at about 1% of the population of Nigeria. Nigeria has over 200 million people. The long-term goal of the insurance regulator is to see how we can move this to about 5% in 10 years and a whole lot of reforms and activities have been put together to make this happen. Because of the low adoption of insurance as a culture for managing our risks in Nigeria, we still have a situation where not quite a number of the population is taking up insurance as a risk management mechanism. Rather, what you see happening is a situation where perhaps because of our socio-cultural beliefs and what have you, there’s a social system that is taking the place of insurance.

For example, I’m sure you belong to various groups and associations, maybe an old student association, and what have you. You find that when anything happens, there’s a call among the group members to make contributions because that is our culture. So, in a way, you are donating N50,000, everybody pulls it together and you give to the individual as support but that is the role insurance should be playing.

Rather than contributing N50,000, what they (Nigerians) need to do at the beginning of a year is to just pull those resources together into a pool, an insurance pool and it will not be up to that. If the N50,000 instances happen like 10 times in a year, you contribute 10 times, but for insurance, you only make that contribution once a year.

So these products exist?

It exists but a lot of Nigerians are unaware of the benefit of insurance as a financial protection mechanism. So, it’s a major problem and how are we dealing with this? We are embarking on mass education, public awareness, enlightenment campaigns and what have you. So, it’s a whole bulk of the work that needs to be done.

We’ve commenced a lot of this and it’s never enough, at least for now. I tell you what I also expect from this programme is this interaction should be a way of educating Nigerians about the benefits of insurance and how people can take full advantage of the opportunities of insurance products, particularly in an environment of high inflation rate. So, you shouldn’t just be dipping money in your pocket, money that is not even there at every point in time.

Looking at the 1% insurance penetration in Nigeria, are the business community into insurance?

The global average when I talked about the penetration rate of Nigeria being around 1%, the global average is around 7%, if you take the average globally it’s around 7%. So, we have some gaps to cover but interestingly the sector that is benefiting from insurance currently is the corporate segment of our society — all the big businesses, all the major multinationals: oil and gas, aviation, manufacturing, the major ones, they are taking up insurance, but what is the percentage of that compared to the total population?

So, when we are talking about penetration, we’re looking at the percentage relative to the total population. Relative to the total population, the majority of individuals are not taking up insurance. There are several reasons you can adduce to that. Some are taking up insurance due to societal factors. Some are due to issues around public trust. The National Insurance Commission is the regulator, it is the agency of the government that is responsible for supervising, regulating and the development of the sector.

The second bucket of our role is around consumer protection. We are in the sector to protect insurance consumers such that when they have issues, they should come to us, we are their voice. The last bucket of our role is as an adviser to the government on insurance matters and also to ensure that all our critical national assets are adequately covered.

I take note of the way you broke down those three parts. Let me start with the insurance companies themselves. You are meant to regulate them. How is that going?

It’s going pretty well. You know the commission will license and register insurance companies and these companies are grouped depending on the focus or line of business. So, these are registered companies that provide services to the Nigerian public, and we get periodic returns from them and also monitor the way they run their business in such a manner that the stability of the sector is guaranteed.

We have what we call the prudential requirements which are requirements around what their financial status should be at different points in time and where there are issues, we are forced to, if need be, intervene to take some specific regulatory actions. So, in a nutshell, ours is a role to ensure the stability of the insurance sector within that bigger space of the financial services sector.

So, let me move to the second part, the consumers themselves.

That’s the greater part of our work. We’ve created a unit that handles complaints from the public, we call it the complaints bureau, it’s a consumer protection unit of the commission that takes complaints and displeasure that are experienced by Nigerian people and addresses this with the operators. So, we have an adjudication process that will sit and decide on these cases and often I tell you if we receive complaints within 24 hours, these are dealt with. Have there been gaps in the past? The answer is yes but those are things we are working on very strongly to ensure that we quickly address some of these issues.

Some of the issues also go beyond what you see on the surface, some are even issues that have to do with the legal and the regulatory framework upon which the regulator stands and I’m happy that we have a process of reform that is currently ongoing. I’m sure you might be aware of the 2024 Insurance Reform Bill which has passed through the Senate, it’s currently with the House of Reps for concurrence. We’re hopeful that once this bill is finally assented to by the President, we then have a more stable legal and regulatory framework on which the insurance business will sit more properly to empower the regulator to take decisive actions at appropriate times and also allow the operators have leeway and the proper environment to operate.

And of course, one key element you find in the new law is the minimum capital requirement that has substantially moved the capital of insurance institutions to a much higher level and that is to give comfort to the Nigerian people right in our ability to stand tall and de-risk the economy because what we are providing is that assurance, that comfort, that confidence for all our businesses to go there and venture and take their risk because we assume the risk from them and then we allow them to go and take those risk.

I can tell you in the area of claims and management of claims and ensuring that the operators live up to their promise, that is why we exist and we are there to support and protect the Nigerian people.

There’s a whole lot of reforms going on now but what will make it evident, and people can see, the Nigerian public, will be the passage of that bill. It will help a lot with helping us to then put all of that out there.

Even as we speak there’s a whole lot of reforms, reforms around claims payment. For instance, since the advent of the new leadership of the commission our mantra is simple, find a reason to pay a claim. Every operator in this market knows that because we have zero tolerance for non-settlement of genuine claims. So, we have that understanding with the operators and in all honesty, they’ve all risen to that level that we are even very proud of. (Channels TV)