Reasons for low performance in the Insurance Industry

Stakeholders in the insurance sector have said until insurance firms display a high sense of integrity, clients will continue to have bias mind towards the services they offer.

Insurance plays important role in the development of any nation by transferring risks among businesses and individuals.

But the major impediments to insurance penetration in Nigeria are the channel of distribution and lack of innovative products and services that could meet the various needs of the people.

To ensure that more people embraced insurance, even beyond the compulsory, the industry needs to do a lot more to create awareness on the benefits of transferring risks through insurance.Therefore, the industry players need to embrace new technologies to drive new products and services, new distribution networks and improved customers’ service delivery in order to increase penetration and growth, expand customers’ access and gain competitive price for service offerings.

Nigeria’s insurance industry is seen to be far behind in information and communication technology given the rapid growth of the Internet and social media, which offer a portent and veritable medium to drive growth, and hence improve their product distribution network and awareness campaign.

Speaking on lack of integrity among some industry practitioners in a telephone interview with The Guardian, the President of Renaissance Shareholders’ Association, Ambassador Olufemi Timothy, expressed concern that despite Nigeria’s huge population, insurance penetration remains low, adding that practitioners are not honest about their business.

According to Timothy, “A lot of trust also needs to be built and this will only be achieved where the principle of utmost good faith and duty of disclosure, which are key insurance principles, are practiced by the insurance companies.”

“If you can’t deliver good services, people will not patronise you. Insurance companies in Nigeria today are not delivering good services; they are not 100 per cent honest about their business. When it is time to pay claims, they give excuses. People see it as a kind of dubious business that is the impression of Nigerians,” he said.

He explained that due to the high level of illiteracy in the country, there is need for mass education about the importance of insurance to the people and the economy.

He also attributed the wrong perception people hold about insurance to the way insurance products are sometimes packaged by the service providers. These often result in the insuring public believing that there is no benefit to derive there from.

Timothy therefore urged the operators not to wait for government to develop the industry for them, as the responsibility rests solely on them.

Also speaking, the Managing Director/Chief Executive, Enterprise Trust Insurance Brokers, Paschal Emeka Eqerue, argued that better policy formulation would facilitate the growth of the insurance market and unlock inherent tremendous growth opportunities in the industry.

He however said insurance companies must create effective strategies to embrace the opportunities arising from InsurTech and artificial intelligence.

“It is no doubt based on the platform of these emerging technologies that creative destruction of existing products and service lines and business models can lead to phenomenal creation and growth of new and diverse income earning opportunities,” he added.