The emergence of the COVID-19 pandemic in 2020 across the world with disruption to economic activities in its wake, creativity, as well as development of insurance products and services tailored at meeting insurance needs across the globe, especially in the areas of health and life insurance, has come to bear in the present time, including in Nigeria.
However, the growth of the insurance and pension sub-sectors of the finance industry can be described as being on a gradual trend despite the existence of lower income groups who seem to have cut themselves out from the benefits of both industries. This could be hinged on the fact that the penetration rate has remained at an average of 0.4 percent of gross domestic product (GDP), a situation largely driven by a general lack of understanding and awareness of the inclusive benefits of insurance products, unambiguously, amongst low-income households.
To accelerate the growth of the industry, as well as financially include all demographics into the system amidst the pandemic, practitioners and insurance experts have called on operators within the Nigerian insurance and pension sectors to leverage on the opportunities thrown by the pandemic to grow the industry and in turn contribute immensely to the nation’s economy.
Folashade Onanuga, a former director-general, Lagos State Pension Commission (LASPEC), delivering the theme paper at the 2021 National Conference of the National Association of Insurance and Pension Correspondents (NAIPCO) recently in Lagos, charged operators on the need for creativity and innovation in their product development and service delivery by focusing on meeting the needs of citizens and also enhance capacity financially.
Focusing on the theme: ‘COVID-19 Impact on Financial Inclusion: Opportunities for Insurance and Pension Sectors,’ Onanuga stated that several opportunities have been created by the pandemic to grow the customer base despite the severe disruptions that was brought to bear on the industry. She said the need to grow the base is hinged on the fact that there is no real social security arrangement by the government in the event of sudden and unexpected events and so citizens needed to make plans by themselves for wellness both in business and family life.
In her words: “Economic shocks like sudden loss of job, illness or death can send people living just above the poverty line into abject poverty. The sudden and unforeseen calamities created by the pandemic have highlighted the need to plan for unforeseen circumstances and even early retirement.”
Taking advantage of open opportunities
According to the former director-general, taking advantage of the opportunities thrown at operators means that both the insurance and pension industries must stay committed to the inclusive growth of the economy of Nigeria and at the same time creating opportunities for lower income groups in the country to become part of the broader financial system.
She further noted that when adult Nigerians have access to affordable financial products and services that meet their financial needs, then financial inclusion can be achieved as she stressed that the opportunities to increase insurance penetration and the customer base still exist both in the retail and corporate segments of the market as long as the right moves are being made.
“Financial inclusion can only be achieved when financial transaction processes and documentations are transparent, simplified and seen as meeting needs of the people and at the same time being beneficial to the financial services sector,” Onanuga said.
All the same, she noted the need for finance operators to build trust and also improve performance of the industry above the current level just like can be found in the banking sector that have managed to bridge this gap to a large extent with innovative products and services tailored at meeting the financial needs of Nigerians.
“Attempts have been made to improve the performance of the insurance industry through regulation and legislation; just like the new capitalisation requirements have been announced by the regulators and reviews of several key laws are being discussed to bring them up to current realities,” Onanuga added.