Why insurance sector’s contribution to GDP is abysmally low
The Managing Director/CEO, Universal Insurance Plc, Benedict Ujoatuonu has advanced several reasons as to why the insurance sector’s contribution to national Gross Domestic Product (GDP) in Nigeria is abysmally low.
Insurance sector is said to contribute just a meagre 5 percent to Nigeria’s national GDP which is seen as one of the worst contributors to GDP in the African continent, especially compared to similar countries in the East and Southern Africa, including Kenya, Uganda and South Africa.
Speaking during an exclusive interview with MARKETING EDGE in Lagos, recently, Ujoatuonu adduced several reasons in respect of the insurance sector’s low contribution to Nigeria’s economy, noting that in Nigeria, insurance was being “sold” rather than “bought” as the case may be.
“The insurance industry generally has not contributed much; it’s not more than 5 percent contribution to the national GDP. And the answer is simple; in this part of the world insurance is not bought, it is sold. People even evade the compulsory insurances. But insurance should be the ordinary way of life, the retainer of business and all the rest of them.
“Of course, you have to know that insurance is a product or service people buy when they have enough disposable income. If you do your schedule of list, most often, insurance is in the list. For some people you don’t even see insurance in their schedule list, and for those you would see it, it is the last thing,” he said.
He continued: “What it means is that when you don’t have enough disposable income you have to shut down insurance completely. So, these are the issues that affect the performance and contribution of the insurance industry to the national GDP. It is still quite very low and the industry is aware of it. We are looking at what can be done to ensure that this is improved upon to the extent of what happens in other climes.
“So, what the industry is doing is to look at a way of deepening insurance penetration. The industry and the commission (NAICOM) have developed NDRI which is aimed at developing products that will help to deepen insurance penetration, so that the insurance industry contribution to national GDP will increase.”
The insurance guru, however, predicted that despite the shortfalls in investment in Nigeria’s insurance sector, the future of the industry was highly secured considering that insurance was the pivot upon which every other business in the economy revolves.
“The fact that insurance contribution to national GDP is very small tells you that there is a huge opportunity within the insurance space in Nigeria, so there is still a very great future for the industry,” he concluded.
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