The Nigerian insurance market, like that of so many other countries around the world, has a long way to go in serving the needs of the ordinary people. Indeed, insurance is currently still very much for the elite and the formally employed. Despite third party vehicle insurance and group life insurance (for those employees whose companies have a pension plan) being compulsory, less than 1% of adults have insurance. The focus in recent years has been on microfinance, banking the unbanked, branchless banking and mobile payments, however there is a growing emphasis internationally on microinsurance and the role it can play in expanding the insurance sector.
Microinsurance is defined by the International Association of Insurance Supervisors (IAIS) and international Microinsurance Network (MIN) Joint Working Group on Microinsurance (2007) as â€śinsurance accessed by the low-income marketâ€ť. This means that it is provided according to generally accepted insurance practices. Hence it is not social welfare or social assistance, but a complementary market solution. For microinsurance to be accessed by the low-income market, it needs to be affordable and appropriate to the target marketâ€™s needs and within convenient reach of them. Furthermore, it requires innovative approaches to distribution so as to cost-effectively reach masses of people that may not be formally employed or have a bank account. As such, microinsurance is not just a scaled down version of regular insurance; the product and processes need to be completely reengineered to meet the characteristics and preferences of the low-income market.
Is microinsurance viable in Nigeria? What is the current reach of the market and what is the potential for expanding the client base? What are the challenges and where will the first-mover opportunities be? The Exploring the Nigerian Insurance Market report, sets out to answer these questions by using the insights provided by the EFInA Access to Finance in Nigeria 2010 survey. The report:
- Provides an overview of the Nigerian environment - in terms of the population profile and the general economic context
- Outlines current insurance usage and the profile of those with insurance
- Summarises why insurance penetration is so low, the risk experienced and coping strategies employed by the unserved market, and the potential channels for reaching the unserved market
- Highlights the opportunities for expanding the reach of the insurance market in Nigeria