Improving financial inclusion through insurance – journal of leadership

The insurance industry is now realizing that the sector could improve financial inclusion by effectively deploying insurance products and services. To this end, the 2018 Insurance Industry Advisory Council (IICC), which was held in Abuja, focused last week on the industry. insurance and financial inclusion. ZAKA ABD-KHALIQ reports

Around the world, about 2.5 billion working-age adults do not have access to formal financial services provided by regulated financial institutions. Only 24% of adults in sub-Saharan Africa have a bank account even though the formal financial sector of Africa has increased in recent years.

In Africa, Nigeria is proud to be the giant of the continent. Because the country has an explosive population of 160 million people.

Of this number, more than 60 million have been declared financially excluded from the financial system, according to research conducted by Enhancing Financial Innovation and Access (EFInA). They did not have a bank account, nor any form of financial products, which also include insurance. The study also revealed that 34.9 million adults were financially excluded, since only 28.6 million adults were banked.

Experts, who converged at the 2018 IICC Conference, which took place in Abuja last week, said the financial sector insurance, is the key to the financial inclusion of Nigerians. In addition to the fact that some Nigerians, especially in the informal sector, continue to have misconceptions about insurance products and services, the traditional ways of selling insurance are too slow and l & # 39; The adoption of technology is considered the best way to increase the penetration of insurance. acceptance in the country.

Feedback from Experts

Insurance Commissioner Alhaji Mohammed Kari said that the insurance sector plays a key role in helping to reduce the poverty line, helping entities and individuals manage their insurance needs. risks. According to him: "In 2012, Nigeria launched the National Financial Inclusion Strategy (SNIF) to reduce the percentage of adults excluded from financial services from 46.3% in 2010 to 20% in 2020. The The strategic objectives are guided by a wide range of coordinated interventions, including simplified regulations Know Your Customer (KYC), Banking Agent, Microinsurance and Consumer Protection. "

He noted that alignment On the national target and the need to deepen the penetration of insurance, the National Insurance Commission (NAICOM) has focused on two objectives namely: Insurance Awareness Campaign for it has financially excluded and promoted the development of products and business models that meet the needs of these excluded groups.

Kari argued that financial inclusion is a collective responsibility of all, while calling on stakeholders to support the collective dynamics of the insurance industry. as the regulator advances in creating a favorable and sustainable environment for insurance penetration and increased access to financial services and products.

At the conference, the president of Zenith General Insurance Ltd., Mr. Jim Ovia, said: "Insurance, financial inclusion means making insurance services easily accessible to all.

Given the reasons why people are excluded from insurance products, he said that insurance premiums are too expensive for many in the low-income category. product design, terms and conditions are too complex because the products are not tailored to the needs of low-income people While highlighting that some people continue to be wary of insurers, especially, given the lag between l & # 39; purchase of an insurance product and the moment when it can be enjoyed, it happens that the person who buys the product is not even that This exclusion of insurance products, he said, often results in people being trapped in a cycle of poverty exacerbated by poor health, noting that everyone is at risk. Therefore, insurance enhances the peace of mind that allows people to take more risks with higher returns, while also acting as a stabilizer against shock if these risks materialize.

"For example, access to Medicare reduces the likelihood that a household will have to sell a portion of its productive badets, such as livestock, in order to cover the costs of health of a family member.Insurance is a primary solution to breaking the cycle of poverty.To ensure a million lives, it will take 40 years of traditional insurance, but it will take a year to do it with technology, "he said. the distribution mechanisms can take up to 40 years or more to ensure a million lives in some developing countries, while the same number of people can be reached in less than a year via the mobile operators

the National Insurance Commission (NAICOM) for having issued a directive on microinsurance, he advised future microinsurers to ensure that their products have the right characteristics for that they are relevant and successful.

A key element of insurance products, according to him, is the main document for the terms and conditions, ie the policy document, because many consumers, even the most educated, find it heavy and difficult to follow.

Simplicity, he said, is key to the success of microinsurance products, noting that these products must be easily accessible and highly inclusive.

Other factors he lists, include: Small amounts insured, shorter The SystemSpec chief executive officer, Mr. John Tani Obaro, said that appropriate financial services, such as insurance, can help improve the welfare of households and stimulate the activity of small businesses in a situation of extreme poverty, stating that digital technologies can play a key role in the fight against poverty in the context of poverty. a balanced combination of He said that exciting technological innovation occurs in emerging markets and very much in Nigeria through new products and services launched by start-ups and partnerships with banks and companies.

He called for the development of local technology adapted to the atmosphere of insurance in the country, urging operators to realize that technology is the way to go if the industry is really serious about deepening insurance penetration

Looking to the future Mr. George Onekhena, Assistant Commissioner of Finance and Administration of NAICOM, urged the industry to pay attention to inclusive insurance markets and to invest in these markets because of its promises of the future and government expectations.

Uncertainty, he called on all stakeholders to open up to innovative solutions and productive collaborations, adding that the fundamental badumption the insurance gap in the country is huge, suggesting a large margin for premium income growth, therefore, operators must do everything possible to catch these potentials.

According to him, the deployment of skilled and value-added employees is very high. This should be deliberately managed. In addition, the lessons learned from unhealthy competitive practices in the past should not be lost to us and most importantly, pay attention to insurance fraud. "

Similarly, Mr. Jim Ovia, who is also the chairman of Zenith Bank Plc, said that there are many players in the global financial space via digital channels, which seriously disrupt the Insurance and other financial models to bring financial products to people initially considered uninsurable.These actors, he said, may be on the global scale on a business. other markets, but they are also starting to interest themselves in African markets.

Citing the innovative example of Prudential Life Insurance Ghana which has reached 1.5 million In the last 12 months it has revealed that Prudential Zenith, Nigeria, and other insurance companies were now ready to deploy microinsurance products through mobile phone technology as soon as both The Communications Commission ( NCC) and NAICOM could collaborate advise and approve to do so.

Encouraging NCC and NAICOM to collaborate and endorse the use of mobile phone technology to distribute microinsurance products in Nigeria, he urged them to achieve the 80% target of $ 10,000. financial inclusion by 2020 in Nigeria