Sector’s GDP contribution may undermine growth projections
… Regulator set to brainstorm with insurance consumers
Despite efforts by stakeholders in the nation’s insurance industry to grow insurance penetration in Nigeria, and boost sector’s contributions to the Gross Domestic Product (GDP), the sector merely recorded 0.32 per cent growth in first nine months of 2017.
This performance nose-dived -24.53 per cent compared to the -21.56 per cent recorded in the corresponding period in 2016, and weakens growth projections for the year.A third quarter (Q3) 2017 GDP report released by the National Bureau of Statistics (NBS), the Finance Sector consists of two sub-sectors – Financial Institutions, and Insurance, which account for 87.09 per cent and 12.91 per cent of the sector respectively in real terms.
According to the report, as a whole, the sector grew at -3.88 per cent in nominal terms (year-on-year), with the Financial Institutions recording -4.47 per cent, and Insurance sector 0.32 per cent growth rate by the.The report further explained that the overall growth rate was lower than that of Q3 2016 by -24.53 per cent points, and lower by -21.56 per cent points than the preceding quarter.
The sector’s contribution to the overall nominal GDP was 3.04 per cent in Q3 2017, lower than the 3.51 per cent achieved a year ago, and still lower than the 3.75 per cent recorded in Q2.Again driven by the financial institutions’ activity, the growth of Insurance sector in real terms totalled -5.96 per cent, lower by -8.61 per cent points recorded in Q3 2016, and down by -16.42 per cent compared to Q2 levels.
“Quarter on quarter, growth in real terms stood at -11.67 per cent. The contribution of Finance and Insurance to real GDP totalled 2.69, lower than the contribution of 2.90 per cent recorded in the third quarter of 2016, yet lower than 3.32 per cent recorded in the preceding quarter,” the report said.
This shows that the insurance sector has maintained its position as the poor cousin of the banking sector, which continues to lead the finance sector of the economy.The performance may also undermine the projection by the sector regulator, National Insurance Commission (NAICOM), that the industry would grow its overall premium from the current level of N400billion to N1.1trillion, riding on the back of the much-talked about Market Development and Restructuring Initiative (MDRI), a medium term plan for the industry launched in 2009.
The initiative is targeted at creating 50,000 jobs in the industry through agency system, improving insurance contribution to the GDP to 3.0 per cent; grow premium income generation to over N1trillion through the enforcement of compulsory insurances, and fight against the activities of fake insurance operators in Nigeria.In view of the continued poor performance, operators vowed not to rest on their oars in their efforts to improve the sector’s performance, going forward.
Meanwhile, NAICOM has revealed plans to have an interactive session with major consumers of insurance products and services, to help understand their views, concern, and challenges about insurance products in Nigeria.
Spokesman for the Commission, Rasaaq Salami, said in a statement that the one-day event billed for February 1st, is themed: “Improving Insurance Service Delivery to Consumers,” and also aims to facilitate seamless regulatory policies, and ensure the protection of consumers and businesses.
Speakers and discussants will include the Dangote Group; Nigerian Insurers Association; Nigerian Council of Registered Insurance Brokers (NCRIB); Nigerian Labour Congress; Manufacturers Association of Nigeria; oil and Gas; Aviation; Head of Civil Service of the Federation; Security Agencies; Construction and Public Works entities, and the Federal Road Safety Corps.
The President, NCRIB, Funmi Babington-Ashaye, said poor perception of insurance by Nigerians and religious and cultural beliefs also constitute a big problem for the industry.She however said operators will not give up, but would intensify efforts at awareness creation especially among youths through the industry’s catch them young programme, adding that the rebranding project expected to kick off this month, will go a long way to solving these problems.
The Director General, Chartered Insurance Institute of Nigeria (CIIN), Richard Borokini, who spoke to The Guardian on the development, said the sector’s major problem has remained lack of awareness of its value in Nigerians’ day to day living. He also said poor purchasing power of the masses in the face of a dwindling economy, directly affects insurance products sale, as consumers always strike out insurance from their budget once there is lack of funds to meet their needs.
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