The under-performance of the insurance sector is denying the country a yearly 1.5 per cent increment in Gross Domestic Product (GDP), the Minister of Finance, Mrs. Kemi Adeosun, has said.
At this year’s National Insurance Conference (NIC) in Abuja, the minister said the persistent under-performance of the sector was revealed at the 2014 Insurance Summit.
The conference theme was “Expanding National Resources and Infrastructure in Challenging Times”.
Arguing that the industry was under-performing, compared to its pension and banking counterparts, Adeosun identified low awareness as one of the factors responsible for the sector’s under-performance, pointing out that of the 57 insurance companies in the country, less than 23 advertised 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, she said.
The Minister added that her ministry was working vigorously with the National Insurance Commission (NAICOM) to ensure that premium discounting is eliminated among practitioners. She also said there was need for recapitalisation of most insurance companies.
“The first top three banks have over N3 billion capital base each, while the top three insurance companies’ capital base is between N20 and 25 million each,” she said.
Adeosun said there was the need to immediately address the issues responsible for the under-performance of the insurance sector “because a 0. 33 per cent increase in insurance penetration can result to a growth of 0.5 per cent in GDP.” She pointed out that the increment was capable of creating over 70, 000 jobs yearly.
The Commissioner for Insurance, Alhaji Mohammed Kari, praised the Insurance Industry Consultative Council for organising the conference to reposition the industry.
Kari pledged NAICOM’s commitment to making the industry the next growth area for economic development.