Evolving risks, including job losses, drop in consumer spending and cyber onslaughts, heightened by the economic recession, are throwing up prospects for the development of new insurance products.
Nigerians are consequently re-ordering their expenditure priorities in the face of the new economic reality, cutting their budgets on some items, including insurance and dropping others outright.
Insurers on the other hand whose premiums have dropped as a result of falling consumer spending are also thinking outside the box to remain relevant by offering consumers cheaper policies that fall within their reach. With this, they are able to remain in the growth trajectory and sustain their role of helping in risks mitigation for individual and corporate businesses, despite the economic situation.
Pius Apere, managing director/CEO, Linkage Assurance plc, says insurance has a very big role to play in the economy, particularly at this time when Nigerians have been hit with economic recession.
“Individuals and businesses need insurance now, more than ever because with falling income and rising cost of almost everything, asset replacement would be a huge challenge, and this is where insurance has a big role to play,” Apere says.
He also notes that Linkage Assurance has looked at the current economic situation and come up with cheap, affordable and flexible retail products, so that people can protect their assets at affordable cost.
“We have looked at motor insurance and said, for those who could not pay for comprehensive cover because of lack of money, they can take ‘Linkage Third Party Plus.
“Linkage Third Party Plus insures against potential liabilities for bodily injuries and damage to other third party road users and passersby, resulting from the ownership and use of licensed motor vehicles on Nigerian roads, as well as provides cover for own damage up to N250,000 for just N10,000,” he says.
Mayowa Adeduro, managing director/CEO, Anchor Insurance Company Limited, says, “We sympathise with those who have lost theirs jobs as a result of the current economic situation, but what we have done as company is to come up with an unemployment insurance policy, so that those who presently have jobs could take this policy as a protection against job loss.
“Losing a job or getting laid off can happen without warning and it is unfortunate that this very common occurrence can affect anyone at any time. Not having a salary and having your bills pile up without hope of any income can be very devastating and can eventually lead to financial hardships, depression or even death.”
Anchor Insurance Company Limited has provided a solution whereby you can earn salary for a period of 24 months following sudden job loss, Adeduro says.
“An employee who is a member of this scheme will earn benefits of 100 percent of insured salary for the first six months; 75 percent of insured salary for the next six months; 50 percent of insured salary for another six months and 25 percent of insured salary for the last 6 months,” he said.
Analysts at Agusto & Co. in their insurance sector report for 2016 observe that insurance, like most other industries, was adversely impacted by the downturn in the economy, which had its roots in declining crude oil prices since 2014.
“This slowed down activities in various industries, including the insurance industry, while inflationary pressures also had a negative effect on cost of operations, as well as the value of long term savings,” it notes.
According to the report, reduced consumer purchasing power threatened gross premium income growth and increased surrenders in the life business segment, while it also observed a preference for less expensive insurance covers, such as third party insurance cover, as against comprehensive motor insurance cover in the non life insurance category.
Agusto & Co. also believes that going forward, evolving risks such as job losses, cyber risks, among others, will offer prospects for the development of new insurance products.