‘Microinsurance represents growth potential for Insurance sector’
Micro insurance has been identified as a core growth potential for the Nigerian insurance industry if the operators harness the untapped potentials of the industry.
Head of Research at Coronation Asset Management, Coronation Merchant Bank, Guy Czartoryski, said this in his paper presentated at the Insurance Sector Forum with theme: “Recapitalisation: Panacea For Insurance Industry Growth.”
He noted that with over 39 million Bank Verification Number (BVN) holders and 130 million active cell phone users across the country, insurance operators have the opportunity to tap into this database to sell their products and services through the deployment of technology platforms, adding that innovative product offering tailored to specific needs of the insuring public is another way the industry can break even in the new capital regime.
Czartoryski stated that insurance industry has the potential to grow its penetration from the current 0.31per cent to about 3.4per cent in the next few years.
According to him, microinsurance represents a core growth potential for the sector, adding that with the growing use of mobile telephone in the country, insurance products and services could be sold to consumers through such platform.
Likening the Indian experience in the deployment of microinsurance initiative which achieved a 12per cent growth in 2018, he said that Nigerian insurance industry has the potential to grow by 25per cent in the next 10 years.
“If Nigeria (Insurance) grows in the Indian insurance space, it means that the industry will have grown by 25per cent in 10 years,” said Guy Czartoryski.
Speaking on the benefits of re-capitalsiation, he said that the banking industry consolidation of 2005 had brought about strong banks, transformed the sector and this, he said, attracted the unbanked populace through innovative products offering basically driven by technology.
According to him, the industry though, would experience a shrink in the numbers of operators in the post consolidation market; the companies would have enough liquidity to pick up high ticket businesses.
Also speaking on the benefits of re-capitalisation, the panel discussants drawn from both the regulatory and operators perspectives spoke in favour of the NAICOM’s re-capitalisationinitiative and agreed that the timing was apt and presents a panacea for the sector’s growth.
Mrs. Yetunde Ilori, Director General, Nigerian Insurers Association (NIA) said that the capital raise was timely and right.
She, however, reasoned that it could have come under the Tier Based Capital regime.
In the same vein, Mr Bode Oyeniyi, Executive Director, Wapic Insurance Plc supporting the re-capitalisation initiative said it is the right thing to do, adding that one of the challenges of low capital regime in the marketplace today is the premium flight.
He expressed optimism that the new capital regime will stem the tide.
For Adeosun Dolapo, Associate Director, KPMG Group, said that increase in capital is meant to drive growth.
She urged the industry regulatory body, the National Insurance Commission (NAICOM), and the operators to embark on massive insurance awareness and customer education on the benefits of insurance.
She added that insurance should take a cue from the banking sector that has now adopted agency banking as a way of reaching out to the unbanked populace in the remote areas of the country.
