Nigerians may witness the emergence of a vibrant insurance market in the very near future. As there are clear indications pointing to that effect. This was contained in a paper titled “Trends in Global Insurance and Preparing Nigeria for the Global Challenge” delivered by Kunle Elebute, Partner, KPMG at the just concluded Insurance Future Summit held in Abuja Nigeria.
Elebute in his presentation affirmed that GDP growth and per capita income have doubled in the last five years compared with the previous two decades. With an iincreasing literacy levels from 60 percent in 2006 to about 68 percent in 2007, indicating a 13.33 percent increase.
“A survey conducted by Standard & Poor’s revealed that the wealthiest 20 percent of Nigeria’s population accounts for 80 percent of national output and an estimated market of 28 million people with a per capita Gross Domestic Product (GDP) of United States (US) $4,000 per annum (PA)” he said.
“The survey further revealed that this select population is responsible for much of underlying consumer market demand that is beginning to come to light in Nigeria” Elebute noted.
He says in his research that the key growth drivers for the emergence of a vibrant insurance market in Nigeria over the medium term would include ongoing economic growth, compulsory insurances and pension reform.
“Others are industry consolidation, mortgage/real estate/infrastructure spend and local retention which include oil and gas, aviation, marine and solid minerals” he disclosed.
According to him, some of the following are expected to be witnessed in the insurance sector of the Nigerian economy these include; market-induced consolidation which will lead to a restratification of the sector and diversification into related financial services/ businesses.
Others are entry by foreign operators in the form of equity-based partners and technical management teams which will modernize and standardise the industry.
Also the industry will increasingly imbibe world class practices and processes. While increasing investment in people and technology as key business enablers.
“Bancassurance and other innovative channels will play a major role in improving penetration levels in the industry (aligns with the retail strategy of banks)” Elebute said.
Apart from these, he affirmed that marketing and asset management skills will flow from banking to the insurance sector.
According to him, another factor that would drive growth in the emergence of a vibrant insurance market in Nigeria is the enhancement in the regulatory capacity and more proactive regulatory measures to achieve and maintain better standards including higher levels of professional and ethical conduct in the industry.
He also affirmed that growth in the middle class will drive emergence of life business in the insurance industry. While the llisting of insurance companies on the floors of the Nigerian Stock Exchange (NSE), would stimulate and enhance public awareness of insurance.
