Why insurance penetration is low in Nigeria – NCRIB

The Nigerian Council of Registered Insurance Brokers (NCRIB) has pinpointed several critical reasons behind the persistently low insurance penetration in Nigeria, which hovers below one percent, a stark contrast to South Africa's nearly 12 percent and Kenya's over 7 percent.

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But to be realistic, looking at South Africa and Kenya vis-a-vis their insurance market, and the drivers of their insurance penetration, you discover they are mostly pensions and micro insurance.

NCRIB President Mrs. Ekeoma Ezeibe highlighted the exclusion of pensions and micro-insurance as significant missed opportunities. She explained that while pensions were once integrated with insurance, they are now managed by the National Pension Commission. Ezeibe suggested that if pension funds were brought back into the insurance net, Nigeria's penetration rate would dramatically increase, mirroring the success seen in South Africa and Kenya.

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But in Nigeria, pension which used to be part of insurance in Nigeria, is now excised with introduction of Pension Reforms Act and now domiciled with the National Pension Commission.

Furthermore, Ezeibe noted that micro-insurance, which targets lower-income individuals like artisans, farmers, and petty traders, has only recently gained traction in Nigeria. The National Insurance Commission has begun licensing micro-insurance companies to extend the safety net to these underserved populations. She emphasized that even small contributions from this segment could collectively make a substantial impact, likening it to how "little drops of water can really make a mighty ocean."

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When you congregate all these people into the insurance safety net, you can then appreciate that little drops of water can really make a mighty ocean.

Another major impediment identified is the underutilization of technology. Ezeibe stated that Nigeria has not fully embraced technology, which globally offers ease of business, speed, and efficiency. Finally, ignorance among the populace, including some affluent individuals, contributes to the low uptake. Ezeibe stressed the importance of awareness creation, reminding people that while faith is important, human intelligence should also be applied to self-care, including securing insurance.

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Another reason for low insurance penetration is because Nigeria has not fully employed technology which is now globally accepted due to its ease of doing business, speed and efficiency characteristics.