Why are many Nigerians still perplexed by insurance?

Why are many Nigerians still perplexed by insurance

Despite clear threats to their health, assets, and escalating reports of insecurity, a huge number of Nigerians have remained unmoved and unwilling to enroll in insurance.

Random interviews conducted recently to determine the reasons for this continuous apathy toward insurance showed three important reasons:

  1. Lack of insurance information in comparison to cultural and religious beliefs;
  2. In light of necessary demands, low purchasing power and disposable income;
  3. Complete apprehension about where to begin the journey and who to trust.

The first two causes, in my opinion, were probably as ancient as Nigeria’s insurance sector and were unlikely to go away quickly, but the third appeared new and unexpected, demanding more of my attention.

A second attempt to determine the reasons behind anyone’s confusion found three key concerns that these Nigerians have, namely:

1) Nigerians enjoy copying, but I have yet to see anyone who has taken out insurance and is overjoyed at the prospect of being able to duplicate.

Only one out of every 200,000 Nigerians has insurance, and they rarely talk about it. Word of mouth is still the most effective means of spreading awareness, and regrettably, individuals with insurance plans only discuss them when something goes wrong.

The misunderstanding arises from the fact that, if it was a good thing to have, why aren’t certain recognized people and influencers discussing their own policies?

2) The premiums charged by insurance firms are unlikely to enable them to keep their promises when it comes to paying claims.

Many people are perplexed as to how a vehicle worth N10 million can be insured for N200,000 or N300,000 with the assurance that the insurance company will pay even if it is stolen. Discerning individuals who do not understand insurance and the role of reinsurance, on the other hand, say that it is nearly difficult to meet claims when they occur.

I agree with them and believe that inadequate pricing is to blame for the growing difficulties of claim settlement and payment delays. This is exacerbated by inept efforts at marketing and selling insurance, that is, where the goods are tailored to the demands of potential customers.

People do not buy insurance because it is inexpensive; rather, they expect it to be expensive until a sufficient number of people have signed up to bring the price down. Certainly arduous but vital task for Nigeria’s insurance industry.

3) The techniques taken by insurance industry firms differ from those taken by their banking counterparts.

Nigerians are masters at comparing oneself to others based solely on appearances, therefore their perplexity stems from the insurance companies’ perceived failure to provide the same level of service as banks. Many consumers who are daily impacted by their banks find it difficult to see why insurance businesses cannot be as strategic, aggressive, and customer-focused as banks.

Some even accept that banks need to do more, but they’re baffled as to why the difference between the two industries is so enormous.

They believe that, as a result of digitization and Insurtech, we will witness rapid beneficial changes in the insurance business, but that these changes must occur more quickly.

We expect speedier actions in places where we used to pay insurance premiums only once a year and didn’t hear from your insurance provider until the next renewal.

Given the level of skepticism, the enlightenment effort must also be credible and persistent.

The insurance sector in Nigeria must recognize that its products and services are frequently complicated, and keep this in mind while marketing to people of all ranks and professions.

Simply allowing your prospects to tell you their insurance stories may increase your chances of success and give potential for longer-term partnerships.

Please don’t let their trial confuse them any longer.

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