Stakeholders in the nation’s insurance sector have called on governments at all levels, and the private sector to support the insurance industry to play its role in galvanising the economy.
The Chairman, the Nigerian Insurers Association (NIA), Eddie Efekoha, argued that for any meaningful economic development to take place in the country, a strong risk management and insurance culture must be imbibed.
Speaking at a risk management and insurance programme organised by the Business Club Ikeja, he noted that effective risk management and insurance coverage will preserve wealth, and reduce anxiety in our society.
With the theme: Leveraging on Risk Management and Insurance for Economic Development, he further said: “truly, not all risks can be insured, so we must adopt best practices in ensuring risks (individual, business and economic risks) are well managed to ensure that exposures are reduced and opportunities are harnessed for greater good.”
Represented by the Executive Director, NIA, Babatunde Daramola, he identified challenges facing the market to include: low insurance awareness and penetration, increasing number of fraudulent claims, inefficient financial market needed to galvanise reliable investment returns, and unstable economy leading to low disposable income available for the purchase of insurance.
Others are activities of unlicensed insurance sellers leading to widespread of fake insurance product, poor understanding of insurance terms leading to dispute at the time of claim, and difficulty in assessing customised insurance products to suit customers’ specification and needs.
Despite these challenges, he insisted that “Risk management and insurance will continue to play critical role in the development of Nigerian economy. Although insurance currently contributes a meagre percentage to the gross domestic product, GDP, it is necessary to note that insurance has, and will always be the backbone of the economy.”
According to him, the roles of risk management in economic development are: building strong institutions, enhancing economic infrastructural development, and reducing economic waste resulting from natural disasters/occurrences e.g. Hurricane Harvey, Lekki-Victoria Island flood etc.
It contributes to the strength and efficiency of the economy; helps curb environmental pollution especially within the oil and gas sector; prevents and reduces spread of diseases; boosts economic confidence, facilitates development of new industry, and makes domestic enterprise in developing countries compete with international standard.