It’s embarrassing Nigeria has less than 2% insurance penetration, says Elumelu

The Chairman, Heirs Insurance Group, Mr. Tony Elumelu has expressed that it is embarrassing that Nigeria has less than two per cent insurance penetration, in a nation of over 200 million people, struggling to survive, amidst the harshest economic realities.

Elumelu, who was the keynote speaker at the 2023 National Insurance Conference in Abuja with the theme: “on Redefining Safety: Insurance Solutions for Public Buildings and Buildings under Construction”, said Nigeria is failing to enforce the insurance of public buildings in Nigeria, an indicative of much wider issues within the insurance industry.

He said the insurance industry is one that requires significant transformation, stressing that the sector, of course, a vibrant industry is meant to support businesses, enables savings, and supports investment.

According to him, “Insurance has a strategic role in our country’s future and development. A healthy, trusted, and innovative insurance sector should be the mechanism for creating savings and channelling these savings into the infrastructure investments our country needs.

“We ventured into the Insurance space in 2021, because we saw the opportunity to significantly contribute to the transformation of the sector and I must say that it has been exciting to see our Heirs Insurance Group quickly become the fastest growing insurance Groups in Nigeria.

“But there is more to do. Insurance in Nigeria needs to play the kind of role it plays in mobilising investments and protecting lives in other countries such as the USA, UK, Netherlands, and closer to home in South Africa, Ghana, and Kenya.”

He said, building collapses in Nigeria is a problem that requires a multi sectoral approach to holistically deal with the root cause, citing Sections 64 and 65 of the Insurance Act 2003 with specify that no person shall construct any building of more than two floors without insuring with a registered insurer.

According to him, “Nigeria needs to build – Nigeria needs ports, roads, power stations, we need schools and hospitals, our people need homes. But this cannot happen if building codes, and legislation are flouted. Insurance should be as central to our construction industry, as the concrete that binds our buildings.

He stated that poor legislation, inefficient Insurance processes especially around settlement of claims which fosters the public’s lack of confidence and trust in insurers and insurance regulatory framework, the mindset of insurance practitioners in Nigeria and poor capitalisation requirements in the insurance are the broader ills of the industry.

In term of legislation, he said, “We need to pass the bill and ensure that the new act can drive the implementation and enforcement of compulsory Insurance in Nigeria.

“We need stronger punitive enforcement measures for people that avoid contractors’ insurance in construction to ensure that due process is followed and in the event of any unforeseen incidents, insurance is there to act as a risk mitigant.

“NAICOM must work with relevant government bodies to ensure compliance and enforcement of the provisions of the laws governing insurance,” he said.

He further said the insurance industry still has manual, inefficient processes, especially around critical issues such as claims payments.

“Insurance companies in the US and Europe can pay out claims in minutes with little human intervention. We should aim for no less! This is my charge to practitioners in the room here today,” he said.

The chairman of UBA group, however, proposed that the sector capital base must be increased, calling on National Insurance Commission (NAICOM) to focus on substance and things that will shape the sector.

He proposed that, “We should increase the capital base of Insurance Companies to N20Billion for Life and N30Billion for Non-life respectively.

“Review the dichotomy in Insurance authorisations/licences between life and non-life. Consolidated operators should have N50billion. Let us use regulation to shape behaviour and enforce compliance.

“NAICOM should focus on substance and things that will shape the sector and stop approving adverts. Use that time for more important aspects of regulation and save taxpayers money for more catalytic actions.

“All insurers should mandatorily contribute 0.5 per cent of total revenue to drive industry awareness for 5 years. NIA should administer this professionally.

“Insurance Brokers capital base should be increased to N1billion.”

He added that, NAICOM must allow brilliant minds to come into the insurance sector and limit years of experience only to technical areas, stressing that the sector must be opened to young and innovative minds.

“With the right enabling environment, we will see the transformation of the Nigerian insurance sector,” he said.

He emphasized that the regulators and the government have a critical role to play in making insurance a common right of every Nigerian citizen.

Part of what he proposed was for stakeholders to re-assess and eliminate the stifling policies, roadblocks, and complacency in the insurance system, to encourage innovation and provide people with simple and accessible insurance, not as an option, but as a fundamental right to secure their future.

“All within a regulatory framework that serves both clients and grows our industry,” he said.