The Commissioner for Insurance at the National Insurance Commission (NAICOM), Mr. Sunday Thomas, on Thursday solicited the cooperation of insurance entities and banks in the current drive to deepen insurance penetration in the country.
The industry regulator, who canvassed the collaboration of the stakeholders in the financial system in the efforts to deepen and improve the contributions of the insurance sector to the nation’s GDP, at a virtual meeting organized by Ernst and Young Nigeria, noted that the insurance and banking sectors can deepen their penetration in Nigeria by looking beyond the traditional distribution channels.
Thomas, at a virtual forum with the topic ‘Bancassurance in Nigeria – unlocking growth for Banks and Insurers, organised on Thursday in Lagos, disclosed that Nigeria’s insurance penetration rate currently stood at .5 per cent, describing the rate as undesirable for sustainable growth of the sector and the nation’s economy.
He said: “We believe that we should begin to look beyond the traditional distribution channels for the purpose of reaching out to the unreached, insurance wise. Not just people in the sense of national population, but an organised set of people who have the capability of meeting the requirements for insurance purposes.
“As at December 2020, about 111.5 million active bank accounts exist in Nigeria; when you look at these numbers, compare to the number of people that have one form of insurance or the other. By my record, it is less than 10 million; it’s a far cry! It portends a great opportunity for the insurance sector to be able to reach out to deliver insurance benefits to the people”, Thomas lamented
He expressed optimism that with Bancassurance, stakeholders in the insurance sector could reach out to more people for policy covers, adding that to achieve this operators should adopt the referral model of Bancassurance for the purpose of distribution as other models will require issuance of special licenses and certificates.
The industry regulator explained that the referral model is the model which the present structure and relationship within the financial services sector and principally between NAICOM and the Central Bank of Nigeria allowed. The insurance commissioner supported deepened retail market, noting that it was the future of insurance sector.
In his contribution at the meeting, Partner and Insurance Sector Leader, EY West Africa, Mr. Rotimi Okpaise, listed three success factors that have the potential of transforming the insurance industry.
He expatiated: “Moving from a low level of penetration now to where we want will require a transformative spirit of mindset. First, is having an active client centricity, where people actually understand what insurance is and what the benefits are.
“The second and third are having both plans toward distribution channels and retaining and attracting talents with regards to clients centricity.”
Also contributing to the discussions, Okpaise’s counterpart and Director, Business Consulting, EY West Africa, Dr Tosin Oshinubi, urged Nigeria to join countries using Bancassurance to scale up the industry’s growth and contributions to the GDP, especially in retail expansion in view of its invaluable benefits.
The expert said: “To the insurer, you have access to active market; an insurance company is able to quickly scale and spread their tentacles to areas where they do not have strong geographical presence leveraging the distribution channels of the banks among others.
“To the banks, while the benefits of the commission may not be juicy as they want it, it is still a way to diversify their revenue base because they already have the channels and the customers. So, this is just like an added income on what they currently have today, and so on.
“To the economy at large, the benefit is that it helps to improve insurance penetration and then more lives and goods are covered”, the Director added.