Insurance in Nigeria is very much the same as in any part of the world. It is basically for the same reason that people have insurances – life being unpredictable. While everything may be smooth at a moment, you never can tell what happens the next minute. Hence, the need to be protected when the unexpected happens.
Inasmuch as we cannot see the future, unsurprisingly, people tend to insure what is valuable to them. This is in order to protect themselves or their loved ones in cases such as fire outbreak, terminal illness or death. However, there is still a kind of response that people give when they come across insurance related topics.
Before we go deep into the article, there are certain things you should know about insurance. The insurance industry in Nigeria, like every other industry, as no doubt evolved over the years. So, the aim of the article is to equip you with the necessary knowledge about insurance and insurance in Nigeria.
Contents
History of Insurance in Nigeria
Insurance is Nigeria didn’t just start today or a few years back. In fact, it dates back to the colonial era; during which most of the insurance companies then were of European origin. The Royal Exchange Assurance Agency at that time was synonymous to insurance in the country.
However, before Nigeria’s independence, African Insurance Company Limited was established. African Insurance Company Limited became the first indigenous insurance company in Nigeria in 1958. After Nigeria gained independence, there was a rise in the number of subsidiaries created by the European companies.
One notable thing about this was that it was a loss on Nigeria’s path as more money went into foreign accounts. The government in order to tackle this started the creation of state-owned insurance companies. While more indigenous private insurance companies came to limelight in the early 90s. With time, the private insurance companies took over the state-owned insurance companies.
The Federal Government of Nigeria in order to manage the old and new insurance companies established the National Insurance Commision in 1997. Which was a total of 157 insurance companies at that time. It is, however, important to note that the Nigerian Insurance Act was signed a year earlier. Though it didn’t cover the regulatory requirements for insurer’s solvency until 1993.
Though there have been various changes over the years, like every other industry, it still has its challenges.
Types of Insurance In Nigeria
It is evident that insurance in Nigeria has over the years evolved. This means the industry today is definitely not what it is as at when it started. There are no doubt improved laws, increased number of insurance companies in Nigeria among other things.
Below are some of the available types of insurance in Nigeria:
- Life Insurance or Personal Insurance.
- Property Insurance.
- Marine Insurance.
- Fire Insurance.
Life Insurance
Life insurance is arguably one of the most popular types of insurance in Nigeria. It is also known as personal insurance. Life insurance is definitely different from all other forms of insurance. Here, what is being insured is life itself.
It is also arguably the most important of all types of insurance. Though we cannot predict the time of a person’s death, we can, however, make insurance. What life insurance does is to provide protection against premature death or ensure an adequate amount of money at old age.
The life insurance is, however, more than just protection, it is also a form of investment. This is due to the fact that a particular amount is returnable at death or the expiry of a period.
Property Insurance
Another important type of insurance is property insurance. In fact, it is one of the most common types of insurance in Nigeria. The property insurance allows the insured to make claims to reimbursement as long as they are covered. People often make use of property insurance to protect their property/properties from unexpected losses. Which may be as a result of fire outbreak, flood or other occurrences.
It is, however, important that before a claim can be made, it must be as a result of the specified risk. Most landlord and real estate investors make use of this in order to safeguard their property. The property insurance may include homeowners insurance, renters insurance, flood insurance etc.
Marine Insurance
Marine insurance is a type of insurance that provides protection against loss of marine perils. In this case, marine perils include cases or situations like a collision with rocks or other ships, attacks from enemies, fire etc. All these are forms of damages opened to marines.
So, the overall idea of a marine insurance is to insure the ship, cargo and freight. Unlike before where the number of risks handled is small, there is a wide range of marine insurance today. In fact, it has further been divided into Ocean Marine Insurance and Inland Marine Insurance.
Fire Insurance
Fire Insurance is also an important type of insurance in Nigeria. This form of insurance covers all the risks that are results of fire. It is important as every other insurance policy because they are things we do not have control over.
While you may be careful enough with fire in your house, you really cannot speak for your neighbour. The truth is, you can never be too careful in cases like this. Once your property is covered by fire insurance, you can always make claims when losses are results of fire.
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Insurance Companies In Nigeria
There are a good number of insurance companies in Nigeria. It is not surprising because insurance in Nigeria has evolved. Although the industry faces lots of challenges, there are also lots of positives in the industry. The number of insurance companies in Nigeria is on the rise because of the lucrative future of the industry.
We have compiled a list of insurance companies in Nigeria.
- African Alliance Insurance Company
- AIICO Insurance
- Capital Express Assurance
- Cornerstone Insurance Plc
- Consolidated Hallmark
- Continental Reinsurance Plc
- Custodian and Allied Insurance
- Equity Assurance
- FBN Insurance
- Goldlink Insurance Plc
- Guinea Insurance Plc
- Lasaco Assurance Plc
- Law Union & Rock Insurance
- Leadway Assurance
- Linkage Assurance
- Mutual Benefit Assurance
- NEM Insurance Plc
- Niger Insurance Plc
- Sovereign Trust Insurance
- Staco Insurance Plc
- Zenith General Insurance
- UBA Metropolitan Life Insurance
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Challenges Facing Insurance in Nigeria
As mentioned earlier, there are also a number of challenges insurance in Nigeria faces like every other industry. Most of which is due to people’s perception of the industry, lack of skilled personnel, weak regulatory framework among other things.
Lack Of Skilled Personnel
One of the major challenges that face insurance in Nigeria is lack of skilled personnel. It is one thing that has become a major problem faced by all the industries in Nigeria. Â This is because there are more people in industries in which they know little or nothing about.
It is the same with insurance in Nigeria. There is a shortage in the number of skilled professionals in the industry; brokers, underwriters, actuaries etc. Though there is the argument that people learn on the job, it is often not reliable. The reason is that most insurance companies do not train their staffs adequately.
Hence, they have little or no experience of the field they find themselves. Inasmuch as this is the case, more effort should be put in place to train employees who do not have the technical background of the field.
Weak Regulatory Framework
The framework for insurance in Nigeria is weak. The policy guiding the industry is no doubt due for reviews but they are yet to be looked into. It is important to note that most of these policies in places today are old and are a result of the dominance of foreign insurance companies.
That is, most of the insurance policies were either to combat the foreign dominance on the insurance industry or direct copy of foreign policies.
Though the National Insurance Commission ensures the effective administration, regulation and control of the insurance in Nigeria. There are still a number of things that need to be looked into: it’s inability to set standard premium rates for certain insurance products.
Inadequate Access to Information Technology
The world continues to shrink from a global village to a global street, thanks to the introduction of newer technologies. It is, however, a drawback as some of the insurance companies in Nigeria have not embraced the benefits of the technology.
In cases like document management, things are still done manually in most insurance companies. Which puts the industry behind when compared with other industries in the country. Often times, the slow process of things lead to delay in settlement of claims, fraudulent practices and sometimes errors in the whole process of business.
However, this does not mean that all insurance companies in Nigeria still go about insurance business like in the 90s. It is, however, a wake-up call for more companies to embrace technology, for the benefit of insurance in Nigeria.
Perception Of Insurance In Nigeria
Another major challenge faced by insurance in Nigeria is the perception people have about the industry. Over the years, it is usually hard convincing the average Nigerian to sign up for insurance policies. Which is largely due to their perception of the industry.
Most people are sceptical about how insurance in Nigeria works. They do not trust the system. Some of the reasons are because of the slow process of settling claims or denying claims totally. Hence, people tend to not want anything to do with insurance companies in Nigeria.
However, insurance companies in Nigeria need to do more to enlighten the public in order to right the perception of people towards the industry. They should properly educate prospective clients; especially during the process of signing insurance policies. So as to know what they are signing for entails.
So, there you have it. By now, you should have knowledge of insurance in Nigeria; its history, types, challenges and insurance companies in Nigeria. Though the insurance industry like every other industry needs to step up, it is in the same vein that people must change their perception about insurance in Nigeria.
Kindly share your view(s) or experience(s) about insurance in Nigeria with fellow PropertyPro.ng readers.
