The need for grassroot insurance penetration

IN an effort to reach out to different sectors of the economy for market expansion and penetration in the country, insurers have initiated various means to reach out to the grass roots through innovative products, micro-insurance, takaful, mobile phone to enlighten the public on the benefits of insurance.

For instance, the micro insurance committee of the Nigerian Insurers Association (NIA) recently put together an enlightenment programme in Lagos for operators of the informal sector – market women, traders, artisans and NGOs who believe in insurance as a viable tool for mitigating losses.

According to Swiss Re, insurance penetration in Nigeria hovers around 0.5 per cent in 2008, dropped to 0.3 per cent in 2014 (post debasing); lower than the African average of 2.8 per cent (2014).

This point to the potential growth inherent in the industry with emphasis on the need for new penetration strategies to exploit these potentials. South Africa has the highest insurance density ($925) in Africa.

Stakeholders in the industry have expressed readiness to encourage partnership and alliances in the industry to deepen insurance penetration in all sectors of the economy, as the risk bearers insist, insurance is an important component of the financial system in any country which mitigates risks.

The Chairman of the NIA, GUS Wiggle, in his remarks said our aim is to bring together all stakeholders concerned with micro insurance in Nigeria with the overall objective of ensuring that both the demand side and supply side of micro insurance are brought together to create awareness for our member’s micro insurance products for the informal sector of the economy.

He said “It is common knowledge that insurance culture is very low among the informal sector and it would take deliberate effort like this to win the confidence of this sector. The country diagnostic study says less than one per cent of the adult population in Nigeria have access to an insurance policy. Nigeria is among the least countries in terms of insurance contribution to GDP which is around 0,72 per cent. The Nigerian insurance sector is regarded as ‘a grossly untapped opportunity’ because we have not yet appealed to the informal sector which constitute over 80 per cent of our population.

According to him, the obvious way forward is through closer interaction with this sector, intensive capacity building and greater expertise in micro insurance, providing unique micro insurance services, development of people friendly products, and improved innovative distributive system.
Wiggle said “micro insurance is targeted at the informal sector and the low income masses. It is the most veritable tool for mitigating losses from expected accidents and disasters. Low income groups are invariably exposed to innumerable risks. Micro insurance works on the phenomenon of risk transfer mechanism characterized by low premiums and low coverage limits.”

Also, the Group Managing Director, Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi, a strong advocate of grass root insurance penetration, in his view said the key to deepening insurance penetration in Nigeria is investment in grass root operation in alignment with the Market Development and Restructuring Initiative (MDRI) initiated by the National Insurance Commission (NAICOM) to drive grass root penetration.

He said that the company’s bold investments in grass root operation, where the company has taken the lead in alignment with the commission who has taken the bold step in deepening penetration in the country.

Mutual Benefits Assurance won the best innovative insurance company in Africa award last year, Ogunbiyi said, from statistics published by the commission, we are told that less than one per cent of adult population has one form of insurance or the other. Nigeria has a population of 170 million people and adult population is about 45 per cent , we are saying that less than one per cent of adult population are actually insured. Nobody wants to invest and take insurance to the grass root, this is where we have taken the bold step to deepen insurance, close the gap and find a way of returning to the rural population where they truly need insurance.

He said commission introduced MDRI, the basic objective is to see how insurance practitioners come up with products and services that meet the needs and desire of the rural population. People in the rural areas want to buy insurance but when they cannot buy the original policy, they turn to take fake ones. The people in the rural areas know the value of insurance, that is where we have concentrated in grass root marketing. We have opened 80 new offices in the rural locations, we have taken insurance to the rural locations and keep preaching insurance saying insurance actually add values, provided for their needs and at a cost they can afford. That is why we have come up with 72 new products to meet the desire and demand of the rural population. Besides, we engage them in partnership and empowerment, work with the rural population to find out their needs, and add values to their businesses.


Source: Guardian