Low Insurance Penetration In Nigeria Is A ‘Screaming Opportunity’ – Investor

By LOVETH AZODO, Lagos

Over the past decade, Nigeria Insurance Industry has shown positive signs of development as the industry encourages savings and investment, job creation and growth in capital markets and financial assets.

However, there is still room for more growth when compared to other emerging markets such as Morocco which is about 16 times larger and South Africa is 123 times larger than the Nigerian market.

The Nigerian Insurance Industry is faced by some challenges which Includes low penetration levels, for lack of consumer trust, low implementation of compulsory insurance and a lack of professionals that are adequately skilled in this space.

An Investor, Danladi Verheijen, managing partner and co-founder of Verod Capital Management posited that the size of the insurance industry in Nigeria is a screaming opportunity for him.

Verheijen noted that there are few factors driving demand for insurance in Nigeria.

He said, The first is regulation, where proof of insurance is now required for more things, e.g. accessing bank loans, pension accounts, etc. These new regulations are really pushing people – especially corporates – to insure more.

“Nigeria’s demographics are the second factor we see contributing to growth in this sector. Our current population of 200 million people, growing at 3.2% per annum, is expected to double by 2050 (which is not that far away). Nigeria’s average median age is 18 years old, and this young, growing, and dynamic population is great for the insurance industry. The third driver is new insurance products that meet the needs of the population, and the fourth is building significant awareness for these products.”

“Thus far, we have invested in life and general insurance companies and we are looking at also investing in health insurance firms. We’ve learnt you need to create insurance products that are simple to understand and easy to buy. We’re also exploring ways to let people move from paying annually for insurance, to making quarterly or perhaps even monthly payments. There is a lot of room for innovation in this sector,” he said.

The federal government through the insurance regulatory body National Insurance Commission (NAICOM) has made 6 insurance products compulsory by law by the Insurance Act 2003 and other sister legislations including Group life Insurance in line with the Pencom Act 2004, Employers liability in line with the Workmen’s Compensation Act 1987, Buildings under construction-section 64 of the Insurance Act 2003, Occupiers liability insurance –section 65 of the Insurance Act 2003 and Motor Third party Insurance –section 68 of the Insurance Act 2003, Health care Professional indemnity insurance under section 45 of the NHIS Act 1999.

According to PWC, the Nigerian insurance market is overall moderately competitive. Specific segments identified to be intensely competitive include investment products, life risk products, general insurance and health insurance (not medical scheme business). Large established broad-based financial institutions were identified to be the greatest competitive threat in the industry.