Nigeria is struggling to expand insurance coverage, with the CEO of AXA Mansard Insurance Plc, Kunle Ahmed, warning that the country's huge protection gap poses a significant threat to investment, job creation, and long-term growth. According to Ahmed, millions of Nigerians remain exposed to risks that could wipe out years of savings, disrupt businesses, and push vulnerable households into financial distress due to inadequate insurance protection. This has significant implications for the country's economic development.
The insurance industry in Nigeria is facing a challenge in getting more people to buy insurance, with many households and small businesses regarding it as an additional cost rather than a mechanism for preserving income and wealth. Industry stakeholders believe that rebuilding confidence in the value of protection is crucial, particularly among those who often regard insurance as a luxury they cannot afford. The issue has become more pressing as businesses face multiple risks arising from economic volatility, infrastructure deficits, and climate-related events.
Ahmed made these submissions at the launch of AXA Mansard Insurance Plc's pan-African "Culture of Care" campaign, which aims to promote a stronger insurance culture in Nigeria. He argued that insurance must move beyond being treated simply as a financial product purchased to compensate for losses and become part of the country's economic infrastructure. This is particularly important as individuals, households, and businesses contend with rising costs, economic uncertainty, and growing risks.
The consequences of inadequate protection could extend beyond individual policyholders, as the inability of households and businesses to absorb shocks could weaken consumption, disrupt productive activities, and discourage investment. For instance, a household that loses its major source of income or property without adequate insurance could quickly exhaust its savings. Similarly, an uninsured business hit by fire, theft, or another major operational risk could struggle to reopen, putting jobs and investment at risk.
Nigeria's persistently low insurance penetration has left a large segment of the population and the informal business sector outside the formal risk-transfer system. According to Ahmed, a stronger insurance culture could improve the resilience of Nigerians and give businesses greater confidence to invest and expand. This is critical for the country's economic development, as a more resilient economy is better equipped to stimulate investment and increase productive capacity.
The expansion of the insurance industry is closely tied to the broader question of how Nigeria can build a more resilient economy. The government and businesses are seeking to stimulate investment and increase productive capacity, but the huge protection gap poses a significant challenge. Ahmed's argument highlights the need for a more comprehensive approach to insurance, one that recognizes its role in preserving income and wealth, rather than just compensating for losses.
The launch of the "Culture of Care" campaign is a step in the right direction, as it aims to promote a stronger insurance culture in Nigeria. By working to rebuild confidence in the value of protection and promoting insurance as a mechanism for preserving income and wealth, AXA Mansard Insurance Plc and other industry stakeholders can help to address the country's huge protection gap and promote economic development.
Key points
- Nigeria's huge protection gap poses a significant threat to investment, job creation, and long-term growth.
- A stronger insurance culture could improve the resilience of Nigerians and give businesses greater confidence to invest and expand.
- The expansion of the insurance industry is closely tied to the broader question of how Nigeria can build a more resilient economy.
