Insurance in Nigeria: An Untapped Goldmine
Insurance is a groundbreaking discovery not just in people economics but, in the general standard of living, Nigeria leads a couple of other countries that have not yet tapped into this goldmine. The most recent research put the number of Nigerians that subscribe to insurance at 0.2 percent. Sometimes, numbers alone do not deliver the actual representation of reality, so to put this in perspective, let us use an analogy. The Nigerian situation when it comes to insurance is similar to a contractor that agrees to use two hundred naira to execute a project that should have cost one hundred thousand naira.
It is like having just two people in a one thousand seat auditorium or a hundred in an Olympic-sized stadium. The gaps will be too obvious to ignore. The reasons for our non-participation, whatever they are, do not invalidate any of the provisions, it only edges the country out of the benefits being enjoyed by those that are fully aware of them and are adequately harnessing them. Nigerians certainly have their different reasons for not subscribing to the concept of insurance. To begin with, most people simply do not understand what insurance is all about and are therefore not interested in it. Hence, it would be very instrumental to consider the term.
Since the world began, man has always had to deal with the reality that things may not always go as planned, this is what is known as risk. From everyday life to special duties, it is hard to imagine a slice of life outside the confines of risk. From totally ignoring its existence to bracing for the worst, man has invented several ways and recorded several levels of successes in dealing with the risk issue. With the coming of insurance, this success reaches its zenith. The concept of risk in the life of man has never remained the same, and it will never be.
The general proposition of Insurance is simply, whatever is worth owning at all is what owning for life. In another sense, it warns that one may not really claim ownership of anything that one has not insured. Today, individuals, companies and governments can carry on with their activities unhindered by what may be, and they adequately protected against what is still unknown.
Contrary to what many believe, insurance is not a totally new concept in life. It surfaces in our everyday practice; we don’t just realize it. When one gets anything of value, thoughts and acts to prevent any form of damage or theft. At the purchase of a very expensive phone, for instance, some of the things that come to mind is to get a screen guard to protect the screen from damage and then one thinks of getting a pouch for it among several other preventive measures. All of these happens because one places value on the substance and put measures in check to prevent its loss or damage.
Some Nigerians do not bother to insure their businesses, properties or even life because they feel they don’t need it. The thing is that they do. To deal with risk in the collective system that modern insurance ensures surpasses anything that individuals can mount up to cope with instances when things do not go to plan. The aim of insurance is to secure the financial, and by extension, overall well being of an individual, company and other institutions entity in case of unexpected loss. It is the aggregation of funds from several insured entities to pay for their losses as a way of protecting many from risk.
Insurance serves as a form of guarantee to cover up for a loss in the form of payments to individuals or companies that have paid to an insurance company beforehand. The essence of every business organisation is to make profit. This fact is not obscure to the world of insurance. An insured businessman or trader is given the provision of normal profit margin at all points. A profit margin is the percentage of profit a trader gets at the point of sale of each commodity. The insurance policy by implication provides the insured with protection from unforeseen losses.
Another issue that many Nigerians may have with insurance is their lack of faith that they have in the promise of insurance. Stories that insurance companies collect premiums and do nothing when the unforeseen happens are rampant and spread wide amounts people through word of mouth. Most of these stories are baseless because regulatory bodies today make it impossible for insurance companies to escape their responsibilities.
Some others do not subscribe to insurance because they feel it is a waste of money. Conversely, the distribution of risk is an important phenomenon that is obtainable in insurance. Insurance is necessary because both life and business environment are characterized by risk and uncertainty. Today, one loses something and have to worry about replacement, but with insurance, one doesn’t get to pay for it alone. At every point of purchase of any valuable, if insured, one has only contributed a certain percentage in a general purse alongside every other insured. When the unexpected happens, damages or losses will be taken care of by more than the percentage one has kept. In other words, one pays less for what one gets eventually.
The traditional beliefs predominant in the nation also lends itself to the low insurance patronage in the country. The belief that bad will not happen to one if one does not do bad, or that trying to protect yourself from a bad event that has not even happened, is to attract it, in a way. With the right sensitization and information, these obstacles will be taken out of the way leading to a massive increase in growth and development.