Here is a fresh look at Nigeria’s Insurance Industry by shifting the narrative on how Nigerians can reconsider the insurance challenges by uncovering opportunities in Nigeria’s insurance sector with a new lens; viewing insurance industry problems as opportunities for growth.
There are many problems with the insurance industry in Nigeria. But believe it or not, the high rate
of fraud and the lack of effective prevention measures are bigger problems in
the industry.
Fraudulent activities present a substantial challenge to insurance companies in
Nigeria. The industry contends with issues such as false claims, policy
manipulations, and identity theft, all of which have severe implications.
However, experts say the biggest challenges facing the
Insurance companies in Nigeria majorly stem from perception issues.
From being perceived as not transparent with claims management to cumbersome paperwork, many Nigerians don't seem to fully understand how insurance works yet and as such do not consider it a priority.
The information available to insurancepeoplemagazine.com.ng by a Lagos-based insurer, who has engaged a cross-section of Nigerians across socio-economic classes opined that “From experience of talking to an average of 18 people weekly in all spheres of the economy, some of the reasons for prospects not buying insurance as perceived from interactions and as put forward directly by prospects are: lack of awareness, religious beliefs, personal economic restraints, insincerity of Insurance companies and claim payment avoidance, fear of failure or distress of all Nigeria financial systems, and measuring insurance returns against other investment returns.”
Selling Insurance in Nigeria is a herculean task
Over the past years, insurance has remained a hard sell in Nigeria despite significant changes and advancements. However, embedded insurance holds the potential to address these challenges by integrating insurance products with existing services and increasing awareness, accessibility, and trust in the insurance sector.
By examining and addressing these challenges head-on, the Nigerian insurance industry can pave the way for sustained growth and development.
Why Is Insurance a Hard Sell in Nigeria?
On the sales side of insurance in Nigeria, several cultural and socioeconomic factors make it hard for insurance companies to connect to people and make customers out of them. Join us as we address some of these factors below:
- Lack of Awareness and Understanding: The general population needs more awareness and understanding regarding insurance products and their benefits. Many Nigerians need to become more familiar with the various insurance policies available, how they work, and the value they provide. This lack of knowledge makes it challenging to communicate the importance and relevance of insurance.
- Trust and Credibility Issues: Insurance companies in Nigeria face trust and credibility challenges. Some people have experienced difficulties obtaining insurance claims or perceive insurance companies as untrustworthy. Such adverse experiences and perceptions hinder the willingness of potential customers to engage with insurance companies and invest in their policies.
- Cultural and Religious Factors: Cultural and religious beliefs can significantly influence attitudes towards insurance in Nigeria. Some Nigerians view insurance as contradicting their cultural or religious practices, leading to resistance to adopting insurance as a financial instrument. Overcoming these cultural and religious barriers requires targeted education and awareness campaigns to address misconceptions and highlight insurance compatibility with personal beliefs.
- Perception of Financial Burden: Many Nigerians perceive insurance as an additional financial burden rather than a protective measure. With limited disposable income and numerous financial priorities, insurance is often considered a luxury rather than a necessity. This perception makes it challenging to convince individuals to allocate their resources toward insurance premiums.
- Limited Access and Distribution Channels: Nigeria's access to insurance services and distribution channels remains limited. This is particularly prevalent in rural areas where insurance companies need more presence and face challenges in reaching potential customers. The need for more convenient access hampers the ability to sell insurance policies effectively.
While these are some misconceptions still held by many Nigerians, insurance has really advanced across Africa especially with the evolution of AI-powered insurance infrastructure, like Curacel, that facilitates timely, seamless, and transparent insurance claims management processes in real-time.
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