Nigeria loses 1.5% GDP growth to low insurance performance

The Minister of Finance, Mrs Kemi Adeosun, Monday lamented the under-performance of the nation’s insurance sector was denying government an annual 1.5 per cent Gross Domestic Product (GDP) growth.
The Minister made the disclosure at the 2016 National Insurance Conference (NIC) with the theme “Expanding National Resources and Infrastructure in Challenging Times”, which kicked off  in Abuja, said the persistent under-performance of the sector was revealed during the 2014 Insurance Summit.
Adeosun noted the need to immediately address the issues responsible for the under-performance “because a 0. 33 per cent increase in insurance penetration can result to a growth of 0.5 per cent in GDP and create over 70,000 jobs annually.”
She argued that the industry was under-performing, compared to its pension and banking counterparts, having identified low awareness as one of the factors responsible for this poor-run, even as she pointed out that out of 57 insurance companies in the country, less than 23 advertise their products.
“The companies put in less than 20 adverts on television, less than 10 adverts on radio and less than 10 adverts on social media. Other factors include poor distribution channels and unethical practices among operators. I’m working vigorously with the National Insurance Commission (NAICOM) to ensure that premium discounting is eliminated among practitioners,” she stated.
The Minister also said there was need for recapitalisation of most insurance companies, pointing out that “The first top three banks have over N300 billion capital base each, while the top three insurance companies’ capital base is between N14 billion and N25 billion each.”
The Commissioner for Insurance, Alhaji Mohammed Kari, commended the Insurance Industry Consultative Council for organising the conference to reposition the industry.
He pledged NAICOM’s commitment to making the industry the next growth area for economic development.