The significance of the insurance sector to any economy cannot be overstated. Its features offer a secure framework which can be leveraged upon for a sustainable development and growth.
In fact, experts have affirmed that insurance serves as a critical tool for not only reducing poverty but also for assisting those who emerged from poverty to manage their risk to avoid sliding back into poverty. This is important because the financial uncertainties that provoke poverty could be better managed through insurance.
However, despite the important role this industry plays, it is appalling to know that its uptake is extremely low in Nigeria; a country with a bubbling population.
According to Enhancing Financial Innovation and Access (EFInA) 2018 survey, only 1.7 per cent of Nigerians have any form of insurance, this is linked to the fact that the number of those financially excluded in Nigeria is over 50 per cent of the 99 million adult population; as only 38 per cent of adult Nigerians are operating one or more accounts in financial institutions.
Worried by these results, experts have stressed that financial exclusion is a burden that must be lifted, stating that it is difficult to achieve financial inclusion, but with adequate financial planning through insurance could be the answer.
Speaking at the 47th edition of the annual education seminar of the Chartered Insurance Institute of Nigeria (CIIN) in Enugu, the Vice-Chancellor of Enugu State University, ESUT, Professor Anike Okechukwu, said that with insurance many Nigerians will be lifted out of poverty.
He said, “The root of the poverty rate in Nigeria lies in the deprivation of people’s access to basic necessities such as food, shelter, healthcare, education, security, and assets and to solve these issues there must be concerted efforts toward financial inclusion for all citizens.”
Speaking on the theme, ‘financial inclusion in Nigeria through insurance: challenges and prospects,’ Okechukwu stated that insurance is critical in every country because it reduces the burden of the risk associated with everyday life and through insurance individuals or entities are protected against losses and are supported to maintain financial stability.
While explaning financial inclusion as a deliberate strategy towards ensuring that every adult has easy access to a wide range of financial services, he stressed that negative impacts of financial exclusion are frustrating access to insurance policy of any kind by the nation’s adult population.
Okechukwu emphasised that appropriate financial services can help vulnerable households reduce risk, build resilience, smoothen consumption, safeguard savings, better manage the consequences of unforeseen events and invest in assets and grow businesses and to achieve this, insurance remains strategic.
Going further, he listed numerous ways through which insurance could ensure financial inclusion in Nigeria saying; “Increased health insurance can ensure adequate healthcare for many families and reduce out-of-pocket expenditure. In fact, health insurance is linked to economic growth, and reduction in poverty. The former Minister of Health, Prof. Isaac Adewole, stated in 2018 that 95 per cent of the Nigeria’s 190 million people are not enrolled in any health insurance plan, despite availability of National Health Insurance Scheme.”
He added that another vital area that insurance could cover is education as this could ensure that parents and guardians save up enough money to ensure stability in the education of their wards.
“If education insurance is taken up, the stability in providing quality education is guaranteed even in the event of the death of parents and guardians. Data from CBN, 2018 indicate that less than 1 per cent of Nigerians have access to education insurance despite repeated campaigns.
“Housing or property insurance is fundamental in ensuring that a great majority of Nigerians have access to affordable shelter and protection against natural or man-made disasters. Effectively, if one is covered by housing insurance, it will ensure easy access to funds in any event. As you know, many families are homeless today because they are financially excluded,” he added.
He gave some of the reasons for financial exclusion to include; rural-urban gap, dwindling income, low awareness and weak government policy.
“One of the major reasons for financial exclusion is the number of rural population that do not have access to financial services. Majority of the estimated 40 million financially excluded Nigerians lack knowledge of the services and benefits derivable from accessing financial services.
“Another major challenge, is the inability of the populace to save as a result of double digit inflation in the economy. Most families in Nigeria don’t have enough to take care of their basic needs let alone save or engage in insurance. “The extent and frequency of media campaign on insurance is very poor. Most Nigerians have limited knowledge level on the need to take up an insurance cover. This has no doubt affected their perception of insurance and several policies initiated by the Central Bank of Nigeria in the past to ensure financial inclusion are weak and unstable,” he pointed out.
Suggesting on the way forward, he said “Aggressive media campaigns should be launched to educate Nigerians on the importance of insurance. Such campaigns will enrich the knowledge level of both rural and urban populace on the need for insurance.
“Effort must be put in place to create jobs for the teeming youth. More jobs, no doubt, will increase financial access. This is because reduction in formal employment will lead to reduced in disposable income and savings. This will ultimately affect insurance.
“Finally, all should embrace insurance, as that is the key to sustainable financial inclusion. There is no future without insurance,” he stated.
Earlier in his opening remarks, CIIN President, Eddie Efekoha, stressed the importance of financial inclusion and the need for creativity in service offerings of insurance stakeholders to grow the industry.
He said, “It is common knowledge that insurance penetration is nowhere near where it should be in the country. As practitioners, we can also acknowledge that companies are doing all that they can within the tenets of the law to reach out to customers in order to create a sustained demand for insurance products. The question is, are our best efforts enough? What more can we do to improve our lot?”, he inquired.