Why Is Insurance Not In Discussions On National Economic Policies In Nigeria?

By Ekerete Ola Gam-Ikon

One of the common questions we hear from persons outside the insurance industry in Nigeria is: “Why are our insurance companies not like the ones abroad that own banks?”

Often, my simple response is: “That’s like any other thing about Nigeria, opposite of the world. Check it!” Then we’ll either go into the analysis of the situation or laugh it off.

The real answer to that question is that, very early in the existence of those economies, they understood the importance of insurance in the lives of their people and enterprises.

Insurance was like that incentive that you gave your employees to make them worry less about the future while focusing happily on the present. Pensions derive from insurance.

For example, so important was insurance to the United Kingdom that their citizen’s identification number has been their insurance number. I’m sure many of us know this.

Typical of us in Nigeria, we either don’t copy what will put our citizens first or we copy and paste something different, which gives the advantage to the persons on “the high table”.

You may know that pensions currently managed by National Pensions Commission (PENCOM) used to be under the insurance industry and the billions of Naira generated then were most useful in building the foundation of the Federal Capital Territory of Nigeria.

It was disastrous for the insurance industry when pensions was taken away, however with personal determination of some insurance professionals, the industry is still standing today.

Those who did that damage to the insurance industry in Nigeria thought it had no more to offer the economy and by the turn of the century, not much was heard from or about the industry.

The balkanization of the insurance industry in Nigeria did not just start with pensions, health insurance had earlier been taken out in 1999 with the creation of the National Health Insurance Scheme (NHIS) now known as the National Health Insurance Authority (NHIA).

Subsequently, The Nigeria Social Insurance Trust Fund (NSITF) captured the Workmen’s Compensation (WC) now called the Employees Compensation Scheme where one percent of the remuneration of all employees in Nigeria is held to take care of injured workers.

It is only in Nigeria that the insurance industry is so balkanized with 3-4 regulators, and when the comparative analyses we see are done, only the figures for conventional and takaful insurance from the National Insurance Commission (NAICOM) are considered for determining the contribution of insurance to the Gross Domestic Product (GDP)!

Just imagine for a moment what that contribution to the GDP would’ve been if the figures from PENCOM, NHIA, NSITF and NAICOM were put in one place as the contribution of the entire insurance industry in Nigeria.

In those other economies where the insurance companies are strong, everything insurance is in one place. Is it true that the Government of South Africa gave MTN funds from that country’s pension fund for the acquisition of the GSM license and early investment in our telecoms sector?

Do you know that Liberty Holdings, owners of Liberty Life of South Africa, is the single largest shareholder of Standard Bank Group? Those are the examples we refer to but don’t want to discuss how our own insurance industry had been balkanized.

Our population is our strength for the transformation of the insurance industry in Nigeria. Insurance is a BUSINESS of NUMBERS.  Unsurprisingly, the largest insurance company in the world is Ping An of China while in Africa, Nigeria is in 6th position despite our population.

Methink the uphill task of the insurance industry in Nigeria to sell itself to the Federal Government can only be overcome if INSURANCE is on the agenda of meetings and one voice speaks for all rather than what we have today.

There is so much the insurance industry in Nigeria can do to boost government revenue, reduce unemployment and sustain livelihoods. I know that our leaders both at political and economic levels are very much aware of insurance and its benefits/challenges and know too well how it can address the people issues we have today.

Let’s get insurance back on the agenda. The resilience of our economy is reinforced by the claims paid by the insurance industry in Nigeria; last year, it paid claims amounting to N318b to organizations and individuals.

What do you think? Share your thoughts.

Ekerete Ola Gam-Ikon is a Management Consultant and Founder/CEO, Finterate Projects. He writes via olagamola@gmail.com, +234-802-585-0344