Life insurance take-up increases due to economic uncertainty
Amid the challenges and slow recovery of the economy, individuals and households are turning to life insurance for protection of future income and dependents.
Some consumers say they decided to purchase insurance for long-term savings and capital accumulation, which could be used for future purposes, child education protection and maintenance in the event of the breadwinner’s death. of family.
These developments have led to an increase in the demand for personal insurance in the Nigerian market, as shown by recent data released by the National Insurance Commission (NAICOM).
According to NAICOM, life business contributed 41.8% of the total insurance market output of 369.2 billion naira in the second quarter of this year, gradually approaching general business, which contributed 59 .3%.
Of this amount, individual life business was the main driver with 41.8% of life premiums generated, annuity business with 24.7% and group life business with 34%.
Chinemere Obilor, a policyholder who took out a 15-year N10 million life insurance policy, said: “I decided to insure myself and my family so that we can have something on support us, whether I’m there for them or not.”
“Many Nigerians don’t see hope in an economic recovery, so people are thinking about what can keep them afloat no matter what.”
On why he sees insurance as the best financial instrument for this purpose, he said, “The problem is that a lot of us don’t understand insurance and its benefits.”
“Life insurance is a double safety measure for protection. It can guarantee you future income and at the same time be a fallback position for your family in the event of your death. For me, it’s better than just keeping money in a savings account,” Obilor added.
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Bankole Banjo, head of brand, media and communications at a life insurance company in Nigeria, said the trend in demand for life insurance products was linked to the overall increase in quest of the average Nigerian, especially the middle class, to secure his future. .
He said, “You see a lot of people on the so-called ‘japa’ train, and the underlying factor for most of that is that people want to do it for themselves, waiting to secure their future.
“I suspect this has also trickled down to the uptake of insurance, as people are more aware than ever to intentionally plan for a better and more secure future. And what better way to do that than by buying insurance. .
Prompt settlement of claims and benefits may also have contributed to increased consumer confidence in life insurance, as data also shows that the company’s life segment recorded claims settlement of 88.90%.
Joyce Ojemudia, Managing Director/CEO of African Alliance Insurance Plc, said paying genuine claims “is a trust we have no intention of breaking”.
“We are not seasoned with the current economic realities. We understand how critical times are, hence our boundless determination and commitment to fulfilling our mantra of being with our customers for life,” he said.
Ojemudia pointed out that the company’s claims payment process is supported by year-over-year evidence of claims being satisfied. “We will continue to ensure that our strategies are updated to meet claims payment demands as they come due.”
Olumide Ibidapo, Managing Director/CEO of FBN Insurance Brokers Limited who expressed confidence in the growth of retail insurance in Nigeria, particularly in the life insurance market, said the potential was huge.
Ibidapo said if the issue of low awareness could be addressed, with lots of investment in financial education programs and technology adoption, a lot could be achieved.
“Several factors are responsible for low insurance take-up in Nigeria, particularly in the retail segment. The most notable factors include poor insurance/risk management/financial proficiency , low disposable income, perceived difficulty in redeeming claims in the event of a loss, and low adoption of the right technology platform by stakeholders to manage and drive retail product distribution, given the volume/population potential or customer base,” he said.
If these major challenges are addressed, there will be significant growth in insurance adoption in the retail segment of the market, he said.