Retail Assurance In Nigeria
– Assesing fundamental Consumer Perspective
Insurance in Nigeria – a brief overview
Valued at about N300 billion, Nigeria’s insurance industry has contributed significantly to the growth and development of the country’s economy. With the first insurance company in Nigeria, Royal Exchange Assurance, established in 1913, there are presently over 50 registered insurance companies. Though the industry has developed over the last century, there are still significant opportunities for growth -as its current performance is largely attributed to only a small fraction of its target customers. The main types of insurance products available to customers include vehicle insurance, home insurance – burglary and fire protection, life insurance, health insurance amongst others.
The low adoption of insurance products and services in Nigeria may largely be as a result of a low level of awareness about the importance of insurance. Also, a significant number of those aware have little confidence in the value and quality of services offered by local insurance companies. Furthermore, customers are not certain about insurance companies settling claims when the need arises, for example settling of claims on a house or car insured after a fire or accident. Nigeria’s insurance market has more corporate consumers than retail consumers across the various insurance products available.
Third party vehicle insurance, which is insurance purchased for protection against the actions of another party – is the most patronized. This is due to the fact that Federal Road Safety Commission has made it obligatory for all vehicle owners to have at the minimum third party insurance. Health insurance is also very common because it provides health care benefits, which makes it possible to visit doctors at an affordable cost. Health insurance is also driven largely by the introduction of the law, which makes it mandatory for organizations with ten or more employees to register its employees with a Health Maintenance Organization (HMO) under the National Health Insurance Scheme (NHIS).
Nigeria’s Retail Insurance Opportunity
With over a 100 million active consumers of retail commodities, Nigeria’s retail insurance sub-segment remains significantly untapped. By developing relevant insurance products for everyday personal and household commodities, an insurance company can create and capture significant market value. As affirmed by the Market Development and Restructuring Initiatives (MDRI), the Nigerian insurance industry needs to be developed in the area of product innovation. The National Insurance Commission (NAICOM) –the industry regulator – also attests that a key growth factor for Nigeria’s insurance industry is for its operators to develop retail-focused products that have consumer appeal.
Retail insurance is essentially the provision of insurance products to cover individuals’ personal and household items against loss, damage or theft. These items range from jewellery, electronics, and furniture to vehicles and equipment, etc.
To effectively design and deploy retail insurance products and services, insurance operators need to have a good knowledge of consumer behavior and preferences. A recent high-level survey carried out by Ciuci Consulting provided some valuable insights that forwardlooking insurance operators can use.
