By Lekan Amusan
The Group Chairman of Mutual Benefits Assurance Plc, Akin Ogunbiyi, has decried the low trust index in the Nigeria insurance industry compared to other sub-sectors of the financial sector.
Ogunbiyi who revealed thisin an interview over the weekend said that Nigeria’s insurance industry is still at an infancy stage despite been over 100 years old.
“Even though insurance is over 100 years in Nigeria, it is still at an infancy stage. If I am not mistaken, insurance penetration in Nigeria today is still under 0.25, and that number has been quoted in the last 10 years.
“In fact, I have had them quote it in the last 20 years. To be frank, when I came into the industry, they were still quoting 0.25, and that situation is very unfortunate”.
He blamed the sector’s slow growth on its focus on the corporate end, instead of making efforts to penetrate the informal sector.
“There hasn’t been any attempt whatsoever to penetrate the informal sector. This is because if insurance is to develop, it is the informal sector where every transaction that happens in Nigeria today is on a ratio of 1:9.
“That means it is one per cent for the formal sector and nine per cent for the informal sector. The informal sector players are not captured in statistics in any way. If you get to Idumota, trillions of naira transactions go on there. If you get to major markets across the nation, it is the same experience.
“So, I would say insurance is not developed. We focus majorly on corporate insurance. If you look at the big-time players, where do you find them? You find them in the cities. There are companies whose strategy is to work on a regional basis.
“The top-flight insurance companies do not have branches everywhere. They have in Lagos, they have in Kaduna, they have in Abuja and they have in Port Harcourt. All the big-time insurance companies that have ever operated have carried on their business this way. Nobody has really taken time to develop the informal sector, he noted.
The Mutual Benefits Assurance boss also spoke on the recent suspension of the licences of some big insurance companies by the National Insurance Commission (NAICOM).
According to him, the move is overdue, while insisting that the insurance industry would have done better if there had been strong regulations.
“People say there is over-regulation, but I am telling you, we have extremely weak regulations. I really wish we had very powerful, reasonable regulations.
“We have had companies that have been on the brink, but the boldness to sanitise the industry was not there. If you look at the companies distorting the market today, it is still those big players. They dictate to NAICOM.
“When you have the regulated dictating for the regulator, it is a major issue. We have always had these challenges. All the insurance companies that went under died natural deaths, not because NAICOM was involved, not because NAICOM did what they were supposed to do.
“If NAICOM did what they were supposed to do, they would have taken their licences. They allowed them to die natural deaths because there was no boldness on the part of NAICOM to do the right thing.
“People say we are over-regulated, but it is only on a capital base that they are always mentioning. We are not over-regulated anywhere. NAICOM doesn’t have the capacity to effectively supervise this industry. They don’t have the capacity to do what the Central Bank of Nigeria was doing to banks. We would have done better in the insurance industry if there had been strong regulations”, he argued.