What comes to your mind when you hear the word insurance…? For a simple understanding insurance is also called assurance. It is all about two or more parties reaching out an agreement: you pay money to a company that assures you that they will take care of any peril you may face in due time.
By definition, Insurance generally is a form of risk taken by an insurance company to “cover” or guarantee its beneficiaries (mostly referred to as the insured) of unexpected losses which may result from perils either on the beneficiary’s self, his/her properties, or their families or any relative.
The insured governed by a policy makes a financial agreement with the insurer (the company) by paying a certain amount of money called premium for a particular period of time or whole lifetime; the insurer or the insurance company however, is responsible for any loss or damage experienced by the insured, his family, relation, and/or properties depending on the type of insurance and/or cost of premium purchased.
The insurance industry is a financial section that receives small amount of money from people to bear responsibilities of unexpected damages the person may encounter at any agreed moment. However, agreeing to bear responsibilities of someone’s loss is a risk on its own. Many insurance companies still struggle with these challenge due to certain reasons which are discussed further in this article.
As bad as it could sound, some insurance companies acquire reinsurance plans to help them reduce the risk they accepted to bear for their main beneficiaries. Reinsurance help them reduce cases of liabilities which may occur in times of massive damages suffered by their customers e.g. flood or a pandemic like corona virus disease outbreak. The challenges faced in the industry may include:
Inadequate Access To Information Technology
Recent statistics still shows that Africans have limited access to, or cannot access technology\internet devices. Owing to the obvious fact that technology accelerates social economic development and enhances business services.
Even though records show that Nigeria has the highest level of citizens who are internet literates, there are still numerous people in the country who cannot feel an online form, access, or download a document online; with this, what about the other countries…?
This challenge leaves the insurance company with limited customers since their adverts and publications can only reach a handful of individuals.
The insurance companies have left with no choice than two physically contact their customers or cut off the habit of completely channeling their services to be accessed on the internet- this is quiet tedious.
Lack of access to internet may not really be caused by poverty, in most cases ignorance and lack of education may also come into play.
The challenge of ill response or access to internet gadgets is not only on the side of the insured, the workers in various insurance companies too face this challenge-especially when the company not financially buoyant to provide the recommended electronic/ internet gadgets for its efficient services, or provides faulty devices which is heartbreaking and time wasting on both the side of the workers and the insured.
Corruption Or Lack Of Trust For Insurance Companies
If you interview 200,000 Nigerian citizens, less than a hundred thousand will tell you they are ignorant of what insurance is all about; and less than 10 persons out of that 200000 will tell you they have acquired a premium.
The reasons behind poor response to matters of insurance in the country are numerous and complicated, even those that are wealthy enough to acquire premiums may tell you they don’t trust your policies and you cannot blame them because they have been nurtured that way not trust easily because of the corrupt state and high records of fraud cases in the country especially recently.
It’s difficult to convince a Nigerian that he/she should pay you a sum of #200,000 as premium for a car they bought #10,000000. The premium rate is quiet cheap, but the insured in this case will only imagine where the company will get #10,000000 to purchase a new Car for him/her when she only paid #200,000.
If there are many people patronizing the insurance industry, the company may find that easy to afford, but in cases where there are poor responses from the masses will only leave the company in a state of financial crisis or liabilities.
Lack Of Skilled Personnel
Those who wishes to work in the insurance companies may have the willingness or desire to work and earn a living which may still be there to catalyze their enthusiasms, but such employees often showcase ill-skilled professional services in the insurance industry.
Workers in an insurance company need to invocate certain qualifications and other skilled that can aid them work perfectly. For instance, you as a worker in the company must have the ability to convince people who have little or no faith or interest in acquiring premiums, this can be quiet difficult since industries are already experiencing cases of lack of trust, ill access to technology, and internet use. It will be difficult to organize public enlightment seminars hence illiteracy is also a limiting factor.
Even among the educated employees, there are cases of certified candidates who cannot professionally demonstrate or show what they are capable of. Yet they are qualified to.
Ignorance From The Insured About Insurance Services
As said earlier, many people are ignorant of what insurance is all about, some educated handful have little idea or a background knowledge about the concept. Some, for their various psychological, cultural, or religious reasons defy premium acquisition.
For instance, a Christian may believe that positive thinking can stop uncertainties into their life, or somewhat that by buying premiums you are inviting negativities into your life, it may sound absurd but this belief presents a huge setback to the insurance industries.
You will agree with me that poverty is state whereby an individual is unable to provide for his/her basic needs due to lack of money. Now how will such individuals acquire premiums when they are struggling with what to eat, have no house or car to acquire a homeowner insurance?
Some people are aware of the benefits of insurance but have no money to buy premiums. The above five reasons are the major challenges surfacing the insurance industry in African countries precisely Nigeria.