Monday, December 28, 2020 / 06:00PM / By Ekerete Olawoye Gam-Ikon in partnership with Proshare Finance / Header Image Credit: EcoGraphics 

Executive Summary

Insurance remains one of the least understood economic catalysts and the value it offers is readily misplaced when categorized as a cost element by all. Over many centuries after the practice of insurance started, it has developed to be accepted across continents as the most tested risk management mechanism and continues to protect the wealth of individuals, organizations, and governments.

Is it not surprising that despite the existence of insurance through the significant phases of global economic development up till this present digital era, often called the Fourth Industrial Revolution, the level of insurance awareness and education amongst the public have remained low? In Nigeria, findings from public interactions, have revealed that more people have shared tales of dissatisfaction about insurance from one generation to the next, which has mostly affected its purchase and development.

The need for people to know more about the value of insurance, how they can get it and why they should rely on it, in Nigeria as we see in advanced economies, are the key reasons for this report. Insurance serves as the stabilizer when economies suffer contraction or recession through the settlement of claims to policyholders as we have seen even during the current Coronavirus (COVID-19) pandemic.

The experiences of many Nigerians with insurance have been discussed and addressed as problems compounded by the insurance industry and its professionals, who fondly use technical jargons that their customers do not easily understand when reading their contracts. So, this report has deliberately kept it simple and made it easy for everyone to understand the essence of insurance and how the learning points can be applied in our lives.

It has been averred in this report that ignorance, not culture and religion, remains the biggest impediment to many people embracing insurance, and the more enlightened and knowledgeable Nigerians become about it, the more likely the narratives will change to give us the better future we desire.

Some true-life stories in the report will help individuals, families, or persons in position of decision-making to seriously consider insurance as it has continued to serve as that financial instrument that is quietly changing the lives of Nigerians. Though this is mostly at commercial levels of relationships between the industry operators and businesses but steadily, insurance is becoming adopted by those using personal financial planning methodologies to improve their lifestyle and sustain their living standards.

It begins with making the personal decision to live above the daily risks we are faced with and showing compassion to the poor and vulnerable amongst us, relying on insurance, which has worked for people with respect to different aspects of life including security, education, healthcare, transportation, employment, housing, energy and natural resources.

Without insurance, we have suffered from avoidable unfortunate crises and missed opportunities!

Based on the laws and regulations made by the Government of Nigeria through its regulatory agencies, operators of the different categories of insurance are guided on the products and services they deliver to the insuring public, and they are responsible for ensuring higher contribution of the sector to Nigeria's Gross Domestic Product.

It is expected that, while Nigerians become increasingly engaged with the insurance sector, particularly through the deployment of digital solutions, the regulators will be more involved in the process of enforcing the adoption of insurance to keep every Nigerian safe from danger.

In the limit, we all have to be willing to take personal responsibility to buy insurance that will keep us and our families healthy and wealthy.

Part One of this report will serve as an introduction into the concept of insurance as a risk management tool, with a cursory overview of how insurance began and how it has improved over the years; the types of insurance in Nigeria today, the laws backing insurance and the importance of this risk management tool (insurance) for individuals, families, corporates and even the government. 

In the second part of the report, the importance of insurance for families is explained with specific focus on the education of a child. Recall that in our first and second edition of the Personal Finance Series, we addressed the financial implication of weddings and raising a child, respectively. This section of the report will further help to see how insurance can be used to secure a better education for one's child(ren) as well as the various insurance schemes individuals and families can take up to mitigate the risk of future losses.

Part three of the report, examines the determining factors to be considered before choosing an insurance scheme, while Part Four of the report took a quick detour into the Nigerian Insurance Industry with specific focus on the capability of insurers to pay claims while analysing the strengths, weakness, opportunities, and threats of the industry.

Previous Personal Finance Series

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2.      #PFSeries2 - Raising a Baby: The Pleasures, Pressures and Financing

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