Title: Why Nigerians Shy Away from Insurance: Exploring the Factors
As a skilled reporter for Media Talk Africa, I have been tasked with investigating the low adoption of insurance in Nigeria. Despite being known for their entrepreneurial spirit, Nigerians have a surprisingly low insurance penetration rate of 13.4%. This raises the question: why do Nigerians shy away from insurance when it offers protection against financial loss?
In this article, I will explore the different factors contributing to this phenomenon, including complete dependency on divine protection, lack of faith in insurance companies, economic considerations, ignorance, and lack of knowledge about insurance products.
Complete Dependency on Divine Protection
Nigerians are known for their deep religious faith, which can influence decisions, including those related to insurance and financial planning. The rainy season offers an illustration of this influence: two neighbors living side by side, Neighbour A is known for their unwavering faith and generosity, while Neighbour B is a practical individual who is always prepared. When a severe rainstorm threatens their homes, Neighbour A turns to prayer, seeking divine protection. In contrast, Neighbour B promptly files a claim with their insurance company. This contrast highlights the different approaches to risk management.
Lack of Faith in Insurance Companies
Another factor hindering insurance uptake in Nigeria is the public’s perception of slow claim settlements by insurance companies. While past issues existed due to inadequate capital and other factors, the National Insurance Commission (NAICOM) has taken steps to address them. Insurance companies have also improved their service delivery, with Coronation Insurance, for instance, paying out claims promptly.
Economic Considerations
Many Nigerians prioritize immediate needs and spending over long-term financial planning, including insurance. This approach can be attributed to several factors, including a limited savings culture, often due to low income. However, the rise of financial inclusion initiatives is changing the landscape, with retail and micro-insurance products becoming more accessible to Nigerians in the informal sector and those with limited income.
Ignorance
Ignorance is an even greater barrier. When an individual lacks knowledge, it can be difficult to internalize a concept and take action based on it. This challenge is common in the Nigerian public’s perception of insurance. Many Nigerians, despite experiencing losses, struggle to grasp the benefits insurance offer. It can provide much-needed stability in the face of unexpected events, helping individuals bounce back from financial shocks. Overcoming this lack of awareness requires continuous public engagement and educational efforts.
Lack of Knowledge about Insurance Products
Knowledge of insurance goes beyond basic concepts. Many Nigerians lack awareness of specific products that could address their unique needs. For example, some may be familiar with third-party motor insurance but unaware of a third-party, fire & theft option. This more robust and affordable policy offers protection against fire and theft for the insured, even if a comprehensive plan may be out of budget.
Process Involved in Buying Insurance
A complex insurance buying process and difficult-to-understand policy are often cited by many Nigerians as deterrents to purchasing insurance. Faster turnaround times for receiving policy documents, both upon onboarding and during claims processing, would be a welcome improvement.
Conclusion
In conclusion, the low adoption of insurance in Nigeria can be attributed to a combination of factors, including complete dependency on divine protection, lack of faith in insurance companies, economic considerations, ignorance, and lack of knowledge about insurance products. However, the industry is actively working to address these concerns, with service delivery improving significantly. Insurance companies can bridge the knowledge gap by actively promoting a wider range of products relevant to the public need. By doing so, they can help Nigerians better understand the benefits of insurance and make informed decisions about their financial security.
Partner with Coronation Insurance
To learn more about the different insurance options available and how they can benefit you, visit Coronation Insurance’s website at www.coronation.ng or contact a licensed insurance agent today.
