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By Sola Alabadan
The inability of Nigerian insurance industry to make meaningful contribution to the nation’s economy has been blamed on the failure of the insurance operators to give favourable consideration to retail insurance business.
Yemi Soladoye, Managing Director, Riskguard-Africa Nigeria Limited, who stated this during a chat with Daily Independent in Lagos recently, pointed out that the insurance industry is not occupying its rightful position in the country because the operators have neglected the retail aspect of the business for a very long time.
Soladoye emphasised that the growth of insurance industry remain stunted due to the fact that insurers have concentrated more on wholesale business while completely neglecting retailing business because it is easy to make money quickly from wholesale business.
He therefore enjoined the insurance operators to devote more time and resources to retail business in order to make the industry contribute its expected quota to the nation’s Gross Domestic Product (GDP).
Retail insurance is the service offered to the general public to help them achieve security by assessing the probability of negative events and suggesting the most suitable policies to protect against these.
On the other hand, wholesale insurance is the service offered to large companies and institutions to assist them in managing their risks and offering them security by selecting the most suitable insurance policies to protect against these risks.
Soladoye also explained that the insurance operators have been running away from the retail business because it takes a longer time to mature unlike the wholesale business which has short gestation period.
Again, with very few branch networks and small number of employees, he said insurers engaging in wholesale business can easily break even, while the insurance firms dealing in retail business would have to open more branches and employ more salesmen in order to be successful.
Soladoye stressed that even though microinsurance remains the panacea for poverty eradication in the country, it is unfortunate that the conventional insurance companies have established themselves in the wholesale market because they are not ready for the peanut premiums in microinsurance.
He added that microinsurance has not been growing as expected because the big insurance players have refused to embrace it due to the erroneous impression that retail insurance is only for life or composite companies.
The underwriters who appreciate the benefits of retail insurance, he added are also not embracing it due to the cost of establishing one, the low expertise in the segment and the long gestation period required to mature.