The underwriting sector of the country’s insurance industry appears to be in terrible straits, and the recent flood calamity that devastated approximately 22 states and cost an estimated N1 trillion has only made matters worse.
According to the number of properties damaged so far, industry professionals who talked with The Guardian estimated the cost at roughly N1 trillion, but they cautioned that examinations by government organizations would reveal the true cost.
The amount of insurance acceptance among Nigerians is more concerning. They asserted that despite Nigeria’s sizable population of over 200 million, the country’s insurance penetration rate remains at less than 1%.
But they asserted that by the time the water subsides, a lot will be known, including the precise number of lives lost and the sizeable amount of property damaged in the area.
They claimed that those whose properties have been insured with current premium payments will receive fair compensation.
Apparently, they “in insurance, there are products offered by operators that could cover the flood incidents across the country. People, who have insurance and have insured their homes, are well covered and would get their claims settled appropriately.”
They claimed that the tragedy would serve as a lesson to homeowners nationwide who do not have asset insurance.
It was high time for governments at all levels to start using insurance in the mitigation of such risks to cushion the losses by the people, as is possible in other climes, according to operators, who believe that the situation called for a new idea in stemming the tide by encouraging stakeholders’ engagement on the depression.
The Federal Government reported that the floods that hit Nigeria’s waterways when the Cameroonian authorities released water from its Lagdo Dam affected roughly 2.5 million people through the Minister of Humanitarian Affairs, Disaster Management, and Social Development, Hajiya Sadiya Umar Farouq.
The minister stated that out of this total, 1.3 million people were displaced, 2,407 people were hurt, and 603 people died. While confirming that Nigeria was ready to meet with the Government of the Republic of Cameroun on the release of water from the Lagdo Dam, she made the statement.
The National Insurance Commission (NAICOM) explained that insurance coverage on flooding incidence in the insurance business is not required by law, but it is optional to the general public in an effort by The Guardian to determine the precise number of those who have insured their lives and properties among affected citizens.
Due to the incidence from the underwriting businesses in the industry, many of the victims may not have any type of insurance coverage, putting their lives and property at risk.
Rasaaq Salami, NAICOM’s Head of Corporate Communications and Market Development, specifically expressed the commission’s sympathy for the flood disaster’s victims and reaffirmed the commission’s commitment to ensuring prompt settlement of claims by insurance companies in a phone conversation with The Guardian.
He states that given the severity of the disaster, insurance companies are preparing to pay out claims to policyholders who were impacted by the flood that devastated several areas of the country.
He said, “It is a time to implore the governments to convoke stakeholders’ engagement and also factor in insurance into the management of disasters in the country, to free governments funds often expended on palliatives for other pressing public good.”
Nigeria still has an extremely low insurance penetration rate when compared to what is considered acceptable in other nations.
According to Valentine Ojumah, the former Managing Director/Chief Executive Officer of First Bank of Nigeria, FBN Insurance, life assurance still has a low penetration rate of just 1%, while general insurance has a penetration rate of just 1.5%, despite the industry’s significant capacity for expansion.
“Low penetration and slow growth are some of the challenges of the Nigerian insurance sector. These are challenges we are coming together to tackle. These are some of the reasons we are in business,” he stated.
In developed nations, the insurance business makes up a sizeable portion of the entire economy, the speaker noted, making it a crucial component of the financial sector.
He claimed that insurers were better able to gather a sizable pool of money that could be invested for short- or long-term periods of time than other organizations since they were able to collect relatively little premiums from a big number of people in the economy.
Although the industry is older, its level of acceptance and stage of development compared to its sister sector, the banking industry, is still not satisfactory, according to industry observers who also spoke to The Guardian about the development in the sector. At this point of insurance practice in Nigeria, the operators have no choice but to continue doing what they are currently doing.
Nevertheless, the insurance sector continues to face a number of difficulties that have slowed its expansion.
The flood is still occurring, and as a federal government we are waiting for the flood to be receding by then it is now possible to know the extent of the damages, said Magdalene Omosimua, Assistant General Manager of Corporate Services, Nigerian Agricultural Insurance Corporation (NAIC), in a statement to The Guardian.
She said that the National Emergency Management (NEMA) and NAIC worked together to conduct a flood assessment, and that this work would be completed in batches before we could release numbers and estimate the magnitude of the harm the flood caused to Nigerians.
Earlier, the NAIC expressed its sympathy to flood victims all around the nation, stressing that the company understood their suffering and committed to support them during this tough time.
“Therefore, as a caring and responsive organisation, we are using this medium to assure our insured clients that their genuine claims will be given urgent attention to enable them to go back to living their normal productive lives.”
“In the same vein, NAIC wishes to advise that the property and business endeavours of our teeming citizens are promptly insured.”
