THE LAPSES AND INEFFECTIVENESS OF THE NIGERIAN INSURANCE INDUSTRY | CAUSES AND SOLUTIONS

REASONS WHY INSURANCE IS NOT  YET APPRECIATED IN NIGERIA

INTRODUCTION: Nigeria is a big country and the most populated black African nation with about 150 million people living within the country, with all of its natural resources, I can tell you Nigeria is a blessed country and should be an eye opening for other African countries but do I need to shock you that as big as Nigeria, she is lacking behind in so many prosperous areas that would have been a source of wealth and national development to the country. What am I saying in essence is that Nigeria is gifted in so many areas and I can boldly tell you that the country  is lacking in so many areas because of its political system and the mindset of the people which had narrowed them to the extent that relevant things have become irrelevant thereby causing damage to the nation at large both politically, economically, in safety and business wise….okay enough of the stories, we are here to discuss on the lapses of the insurance industry in Nigeria and why insurance is not been appreciated in the country even though its regarded as the giant of Africa.

POPULATION: Nigeria is a country that would flourish independently in the insurance industry because of its massive population and the wealth of 65% of Nigerians is a very good start to the development and appreciation of insurance industry, the citizens do not appreciate the industry but what do we have; a neglect to the industry due t certain factors which has led to the feeling of its irrelevancy in the country. Talking about United Kingdom and the US, insurance is an industry which is going stronger and they have a vast population which created a rapid increase and buoyancy in the industry. Infact in his countries it is mandatory that every individual to have a health insurance cover and every driver to posse a car insurance cover if you really want to drive on the road and imagine the population of these countries if every driver is to take up health and car insurance cover, tell me why the industry should not blossom.

INSURANCE: We have been talking about insurance all the way, okay let’s say a novice visited this page and wants to really know what Insurance is all about. Insurance is a kind of contract you “the insured” enter with another party called the “insurer” which is the insurance company through a fee called a premium and when such events occur, the insurance company indemnifies you of the benefit or to your beneficiary depending on the policy you op in for. There could be another person usually an agent or a broker who stand as an intermediary between you and the insurance company….An Insurance broker works for different insurance company depending on your quest while the insurance agent stands for a particular insurance company referring a client to only the insurance company he/she works. 

For example if you take up a life insurance policy this is saying that you actually want to insure your life and family or one of the many life insurance policies…..

You could check different life insurance policies here or you could take up take up a car insurance policy to insure your car against accident, incidents like bodily scratch or causing damage against another, when any of these occur, the insurance company will take up the coverage for you depending on the policy agreement and based on your premium

Read about Liability Insurance here

Having brief about what insurance is, lets now talk about the types of insurance that is compulsory and commonly practiced in the Nigeria system and they are:

1 Occupiers Liability Insurance

2 Health care Professional Indemnity Insurance

3 Builders Liability Insurance

4 Motor third party liability insurance

5 Employers Liability Insurance

6 Employers liability Insurance (Group Life)

1 Occupiers liability Insurance: this is an insurance policy mandated by law for the owners and occupiers of public buildings used as residents, offices, filling stations, hostels e.t.c. Compensation is paid to the business users and members of the public in case of natural disasters, death or building collapse.

2 Health care professional insurance: this is mandatory for all medical professionals, institutions and centers to buy. The institution is to register under the National HealthInsurance Scheme (NHIS) and compensation is provided under this scheme and failure to comply will result in the revocation of the permit of the medical institution and also the offender will be charged for involuntary minder.

3 Builders Liability Insurance: This policy is compulsory for contractors and owners of buildings higher than two floors. This is just to provide for their workers in case of building collapse, injury and death at the construction site. Failure to comply attracts a penalty of #250,000; three years jail term sealing and demolition of the affected building.

4 Motor third party liability Insurance: This policy is made compulsory for car owners and drivers of vehicles, motorcycles and special types of vehicles (both private and commercial) and this covers against death, damage to property or bodily injury of a third party.

Read third party insurance

The life cover is unlimited while the property damage is #i million and the penalty for failure to comply is #250,000 or one year imprisonment or even both.

5 Employers liability insurance this kind of policy is targeted at employers and requires them to have insurance that will provide compensation for their workers in the event of injury illness or death in the course of the employment. For employees that fail to comply the penalty is #250,000 and sealing of the employers business premise.

6 Employers liability insurance (group life): employers with staff strength that’s greater than four are mandated by law to buy into this policy. The law cuts across both public and private employers and under this law they are required to pay for pension subsidy in the event of mental or physical disability or disappearance while in service

OTHER TYPES OF INSURANCE PRACTICED IN NIGERIA

Home content insurance

Few people actually realize what the total value of one’s home content truly calculates to. Just to name one example is that of the window coverings such as curtains or blinds as that alone is costly, not even to mention carpets and/or bedding. If one actually has to add every single item in one’s home up, the total value would undeniably come as a huge surprise. However, it is highly advisable to do just that to determine the closest estimated value, thereby ensuring that you are not over or underinsured. Why would you want to insure every single item in your home? To safeguard yourself financially against losses due to fire, flood, burst geyser or an earthquake.

Property insurance

It is mandatory to insure one’s property for the estimated value, if it is financed. No person/entity will ever receive a home loan without sufficient property insurance.

Vehicle insurance

Vehicle insurance is also enforceable by law if a vehicle is financed.

Why Would You Insure Your Assets?

Why would anyone concern themselves with the variety of insurance types available to them if they happen to believe it to be a waste of hard earned money and just not a justifiable expense?

For example, why would anyone spend even one cent on life insurance of they have no intention of dying anytime soon? After all, life insurance is for the elderly, is it not?

And why on earth would one insure a vehicle if he/she is a good responsible driver who has never had a vehicle collision ever before? Why waste money on vehicle insurance?

And what about home insurance, surely that is a huge waste of money especially if one has the best security systems and features in place to protect all valuables?

Why would a builder spend his/her hard earned money on monthly insurance premiums if he/she is fully qualified in the field, and has never caused damage to anyone’s property or equipment before? Why would he/she then lessen the profits by adding an extra worthless monthly expense such as a builder’s insurance premium?

Why would anyone on earth waste money on an unemployed insurance policy if he/she is in permanent employment and has been for years.

All of the above might seem realistic and true, but only for those who live in a perfect world without crime, natural disasters and unforeseen events. If one takes one natural disaster such as a fire as an example, it will automatically give justifiable reasons to all of the above and confirm the necessity of insurance rather than a waste of money.

And yes, life insurance might not be to your immediate benefit now, but accidents do happen, and should anything happen to you, you will at least have ensured that your loved ones are not burdened with your funeral costs, debts etc.

And even though you might be a responsible good driver, another vehicle driver might not be and collide into your vehicle by accident. This is why vehicle insurance is of such importance to have, so much so that it is enforceable by law in many instances.

TYPES OF INSURANCE COMPANIES IN NIGERIA

1 Consolidated Hallmark Insurance Plc

4, Eziukwu Road, Aba, Abia Nigeria+234 818 000 1164, +234 818 000 1163, 082 223216
Consolidated Hallmark Insurance Plc services includes bonds insurance, burglary insurance, fire & special perils, all risks insurance and home insurance, professional indemnity and lots more.


2 FBN Insurance

34, Marina, Lagos Island, Lagos, Nigeria 0709 812 3827, 0808 047 9319, 01 905 4364
FBN Insurance is a Lagos based financial service outlet for vehicle, fire and corporate insurance services.


3 Great Nigeria Insurance Plc
8 Omo Osagie Street, South West Ikoyi, Lagos, Nigeria 08052601713, 01 342 9161
Great Nigeria Insurance PLC offers financial services on fire and special perils insurance services.


4 Guinea Insurance Plc
33 Ikorodu Road, Jibowu, Lagos+234 1 293 4575, +234 1 293 4577
Guinea Insurance Plc is an insurance services provider in Nigeria.


5 Industrial & General Insurance Plc
Plot 741, Adeola Hopewell Street, Victoria Island, Lagos Nigeria 08033049507, 01 2918854, 01 2918853
Industrial & General Insurance Plc (IGI) offers life and non life insurance products.


6 Law Union & Rock Insurance Plc
Law union House 14 Hughes Avenue, Alagomeji Yaba, Lagos, Nigeria01 454 0071, 01 454 0074, 01 454 0075
Law Union & Rock Insurance Plc is one of the leading insurance company in Nigeria.


7 Mutual Benefits Assurance Plc
Rainbow Tower, Kilometer 127, Idiroko Rd. Near NNPC Filling Station, Ota, Ogun State Nigeria+234 803 431 8658
Mutual Benefits Assurance Plc is one of the leading insurance companies in Nigeria providing excellent services in general business claim and life assurance.


8 NICON Insurance Plc
Nicon Plaza, Plot 242, Muhammadu Buhari Way, Central Business District, Abuja FCT Nigeria+234 809 504 1234, +234 805 508 4597
NICON Insurance Plc is a Nigerian service financial insurance foremost corporation.


9 Niger Insurance Plc
48/50, Odunlami Street, Lagos Island, Lagos 0803 308 5970, 01-894 7226, 01-872 0344
Niger Insurance Plc transacts all classes of Insurance business and offers a wide range of innovative and customer-oriented products and services.


10 Nigeria Deposit Insurance Corporation
Plot 447/448 Constitution Avenue Central Business District, Garki, Abuja, Nigeria 09 460 1380 - 9
NDIC is an independent agency of the Federal Government of Nigeria to protect depositors and guarantee prompt and efficient settlement of insured funds in the event of failure of insured participating institutions.


11 Nigerian Insurers Association
42, Saka Tinubu Street, Opposite Eletu Ogabi Street, Victoria Island, Lagos Nigeria 0818 887 7140, 0701 178 4884, 0803 040 080401 804 3840
Nigerian Insurers Association was established to protect & advance the common interests of Insurers in Nigeria by creating and sustaining a positive image for the Insurance industry.


12 Regency Alliance Insurance Plc
2 Ebun Street, Gbagada Expressway Phase 1, Gbagada, Lagos, Nigeria 0805 349 9070, 0805 349 9074, 0809 765 65460814 323 3727
Regency Alliance Insurance Plc offers risk underwriting and risk management services.


13 Sovereign Trust Insurance Plc
35 Adetokunbo Ademola Street, Victoria Island, Lagos, Nigeria 01 262 3940, 01-261 9011
Sovereign Trust Insurance Plc offers insurance protection and risk management services in Nigeria.


14 Sterling Assurance Nigeria Ltd
1st Floor, Union Bank Building (4th floor), 37, Niger Street, Kano, Kano State+234 805 769 6098, +234 803 450 9093
Sterling Assurance Nigeria Limited provides services in fire and peril insurance, motor and money insurance, plant and machinery all risk, and more.


15 WAPIC Insurance Plc
No 119 Awolowo Road, Falomo Ikoyi, Lagos, Nigeria 070034592742, 01 277 4500, 01 277 4555
WAPIC Insurance Plc is offering a comprehensive range of insurance coverage.


16 Zenith General Insurance
Plot 280a, Ajose Adeogun Street, Victoria Island, Lagos, Nigeria 01 278 3421, 01 270 100401 461 3705
Zenith General Insurance is a Nigerian insurance service company for aviation, marine and risk management services.

Others here: Insurance companies in Nigeria 

LAPSES AND INEFFECTIVENESS OF INSURANCE IN NIGERIA

There are a lot of causes to the lapses and ineffectiveness of insurance in Nigeria and this lapses have eaten deep to the extent that it has made insurance as god as not existing. It will take a very persistent and mobilized set of insurance professionals to revitalized and rebuild the pot-holes in the insurance world. Its sad that majority of Nigerians do not really 

understand what insurance is all about not to talk of hoe it works , some mistake insurance for a banking industry performing the same activity of savings, deposit loans and transfers and other banking functions, in this cause we shall b discussing about the lapses and ineffectiveness of the insurance industry in Nigeria and suggested solutions without wasting much time let’s talk about some of these factors and the suggested solutions I mean is more disappointing that as civilized as the world is and more also as civilized as the people of Nigerians are, they seem not to understand and fully take part in the insurance industry and this makes it look dead and inefficient but have you considered the reason for this “ I guess not” and here is few!!!

Corruption I would say has eaten deep into the system; I would not be going in-depth of corruption in Nigeria, as we all know that corruption in Nigeria is the order of the day from the head to the least person on the street. Corruption is mostly effective in the areas where it has to do with finance where people sort out ways to embezzle funds and actually deceive the people to get what they want, now how does this corruption affects the insurance industry in Nigeria. In a situation where someone is caught on the road without an insurance coverage whatsoever and what should be put in place? 

The system should be that when such person is caught he/she should be  taken to court and tried but in Nigeria, the police will prefer settle out of court notice after collecting its share of the offense charge and therefore the at-fault party is free to parade the streets without having the insurance coverage in the case of car insurance and what is the cause of this , the economy and political system deeply affect the industry and has made it difficult for the masses that they seek other cheap measures to make money fast if the economy and political system are doing great, such things would not occur infact the policy of compulsory insurance policy would be put in place and effective.

Another thing I would like to point out is the fact that most of this insurance company, broker, or agents are all up and ready seeking different means to profit out of nothing from those who show interest in carrying out an insurance policy. I was with a client and he was explaining to me how he was scammed by an insurance agent, this type of instances can make a person choose not to involve his/her finance in something that will not profit him/her at the long run. I think a principle should be put in place and a strong law backing and enforcing these principles in order to curb out this evil men in the insurance industry for it to work effectively. 

Imagine an insurance company which could not meet up with claims made when they are due to but yet refuse to handover its certificate to National insurance commission (NAICOM) , this is what  we are really saying, when the mindset of the people in the industry are filled with evil thoughts to scam clients why will the followers not do same. But this companies about to wind up will still stay put hoping that something good will happen and that there will be a revitalization of their company and what measures or actions are been taken or put in place to prevent this from happening but none and they hope it just happens.

If majority of the clients are complaining of unpaid claims what would be their testimony, definitely it wouldn’t be a testimony that would encourage others to participate into the program so among the suggested solution should be that this deceit and ineffectiveness should be wiped out starting from the insurance industry itself.

Another major cause is lack of awareness, in a situation where their the people don’t even know what insurance is about as we have mentioned above, that alone can eat deep into the system negatively and infact lack of awareness is lack of its existence…We can vividly see adverts for commercial products, these companies spend so much on advertising in order to create awareness of a certain product and thereby creating awareness of the general product for example: if  Coca-cola company makes an advert for one of their new product, by so doing they are also creating awareness for the general products and the company itself while that particular product gets the highest awareness because it is targeted, this can also be applied to the insurance industry. An insurance company could decide to run an advert for its cheap quote and offer discount on them and by this means it is also creating awareness of the insurance company in general and what they really do.

In The Nigerian system we sort for cheaper ways to do things, well some people could blame it on the substandard economy of the country, some will say they barely feed well come to talk of insuring properties, so the economy of the country plays a vital role, but the cheapest ways aren’t always the best to do things and could affect in the long run. We prefer handling situations with quarrels and fights incase of an accident or collision when making a claim on the at-fault party. We prefer to dig up the situation immediately and right there at the accident rather than making a claim which in turn leads to quarrel and fight, so in essence maturity speaks and only the matured minds acts maturely. If we have to talk about the security agents are playing heavily to the downfall of this system where they only seek in the areas that will fill their pockets and worry less on how things should be done appropriately.

National Insurance Commission (NAICOM) as the sole registrar and licensing of the insurance companies in Nigeria should also play vital role in the coordinating and supervising of these insurance companies, agents and brokers to ensure things are done appropriately  following its standard and their functions if been put to place and strictly adhere to, should lead to a better insurance industry. I will highlighting some of the functions of NAICOM and with that you should critically examine what areas are not been put in place couple with some of the weakness mentioned above and in that way we will put heads together to make the insurance industry grow rather than declining. 

The functions include:

1 Approve rates of insurance premiums to be paid in respect of all classes of insurance business

2 Encourage adequate protection of strategic government assets and other prospectus

3 Provide safe and stable standards for the conduct of insurance business in Nigeria

4 Approve rates and commission to be paid in respect of all classes of insurance business

5 Regulate transactions between insurers and re-insurers in Nigeria and also those outside Nigeria.

6 Act as adviser to the federal government on all insurance related matters.

7 Approve standards, conditions and warranties applicable to all classes of insurance contracts.

8 Publish for sale and distribution to the public, annual reports and statistics on the insurance industry

9 Liaise with and advise federal ministries, extra ministerial departments, statutory bodies and other government agencies on all matters relating to insurance contained in any technical agreements to which Nigeria is a signatory.

10 Contribute to the educational programmes of the Chartered Insurance Institute of Nigeria and the West African Insurance Institute and also

11Carryout such other activities connected or incidental to its other functions under their decree…

Having analyzed the functions of NAICOM in Nigeria we could strategically and carefully examine each of these functions and grow are they are been put in place in order to curb corruptions and make the insurance system grow bigger and better if the head is not performing its duties with cross supervision that’s where it gives the members of the body an opportunity to start misbehaving and this will definitely lead to corruption (scam, deceit and embezzlement) and what impression is been created in the face of clients or those who don’t have knowledge of what insurance is all about, so we must ensure things are done the right way and insurance will be appreciated just as it happens in the 1^st-tier countries like USA, UK, Canada, and others

So what do you have to say about this?? Your contribution and suggestions will be highly appreciated….

Drop comments below…..