Abuja, Nigeria. August 27th, 2013 – Latest weekly poll results released by NOIPolls has revealed that almost 9 in 10 Nigerians (86%) do not have any form of insurance cover. The results have also indicated thatVehicle/Car insurance (63%) is the most commonly purchased insurance cover, and Insurance companies (42%) and agents (41%) are the key channels of insurance purchase. Furthermore, the major causes of the low market penetration and poor insurance culture are low awareness and poor enlightenment on the benefits of insurance (40%). The poll also reveals huge potentials for insurance companies and practitioners to design new products to target Nigeria’s bulging youth population. These are the key findings from the Retail Insurance Snap Poll conducted in the week of August 19th, 2013.
According to a recent media report, the insurance culture in Nigeria can best be described as almost non-existent. Despite the fact that the Nigerian environment has a high and increasing level of risk, less than 2% of Insurable risks are covered by insurance. Previous studies have shown that low awareness and lack of knowledge about insurance products characterize people’s opinions about the insurance sector. Apart from these, negative perceptions of Nigerians towards insurance have generally inhibited the growth of the sector. For instance many are of the opinion that insurance companies are more concerned in collecting premiums, than in settling claims thus affecting the general confidence in the insurance companies. There are also cultural and religious factors associated with the slow growth of the insurance sector. Anecdotal evidences suggest that the demand for insurance cover in Nigeria may be affected by various cultural and religious beliefs in the country in a way that it affects people’s perceptions on risk aversion. For instance, some religions have created a strong disapproval to life insurance, declaring that dependence on life insurance brings about a distrust of God‘s protecting care. In view of these, NOIPolls conducted its latest poll on Retail Insurance to explore the insurance culture in Nigeria in terms of the level of patronage and the reasons surrounding poor insurance culture in Nigeria. Respondents were asked four specific questions. Firstly, in order to measure the proportion of Nigerians that have insurance, respondents were asked: At present, do you have any form of insurance cover in your name? Overall, the majority of Nigerians (86%) do not have any form of insurance cover; thus indicating low insurance penetration in the country and poor insurance culture amongst Nigerians. Analysis across geo-political zones, reveal that the South-West zone (34%) had the highest number of Nigerians that have insurance, while the North-East (96%) and North-West (81%)zones both accounted for the highest proportion that indicated they have no insurance of any form. Analysis based on age group showed that the highest proportion of insured Nigerians are within the age category of 45-54 years (34%); followed by people within the 55-65 years age group with 26%, and 65+ group with 22%. On the other hand, there’s very low insurance penetration for youths within the ages of 18-21 (0%) and 22-34 (4%); signalling huge market potentials for insurance companies and practitioners who can design products to target this market segment.
Secondly, in order to gain insight to the forms of insurance cover Nigerians have, respondents that indicated they have insurance cover (14% of the total), were asked: What type of insurance cover do you have in your name? The findings reveal that the most common form of insurance cover that Nigerians buy is Vehicle/Car insurance as specified by majority (63%). This is followed by Life assurance (20%), Property (17%) and Health (16%).
Looking across geo-political zones, findings further reveal that while the South-East zone accounted for the highest proportion of Nigerians that have Vehicle/Car insurance cover (78%), the South-West has the highest proportion of respondents with Life assurance (37%). Furthermore, the North-Central zone (33%) had the highest number of respondents that indicated Property as the form of insurance they currently have.
Further analysis based on age showed that all the respondents aged 55 years and above (100%) claimed to have Vehicle/Car insurance and 50% of respondents within the age category of 65 years and above had life assurance.
Thirdly, in order to explore the channels through which Nigerians purchase their insurance covers, respondents that have insurance covers (14% of the total) were further asked: Where do you buy your insurance from? Responses showed that the slight majority of Nigerians purchase insurance covers directly from insurance companies (42%), closely followed by insurance agents (41%). Also, 11% indicated that they purchase insurance fromBanks.
Furthermore, while more male (50%) than female (31%) respondents purchased their insurance covers through insurance companies, more female (53%) than male (35%) respondents purchase insurance covers from agents.
From the geo-political standpoint, all respondents from the North-West zone that have insurance covers indicated insurance company as their channel of purchase, while the North-Central zone (78%) accounted for the highest proportion of respondents that buy insurance covers from insurance agents.
Finally, respondents that had previously indicated they do not have insurance cover (86% of the total) were asked: Why don’t you have any form of insurance cover? Responses show that the majority (40%) mentioned “I am not aware/Lack of enlightenment about insurance” and its benefits as the main reason why they do not have any form of insurance cover. This is followed by 26% who indicated “it is not necessary; No need for it; No interest in it” and 14% who claimed “it is expensive; I cannot afford it”. In addition 9% stated “I do not trust insurance companies; they are not genuine”, 6% indicated “I do not believe in it; it is against my culture/religion”. It is imperative to note that only 9% stated that they do not trust insurance companies, compared to some decades ago when insurance practitioners were considered fraudulent for use of hidden clauses and non-payment of claims. These findings show that while the image and reputation of insurance companies and practitioners may have improved over the years, the low awareness and poor enlightenment on the benefits of insurance is perceived to be the main factor responsible for the general low patronage.
Further analysis based on geo-political zones show that the North-West zone (58%) had the highest number of people that indicated lack of awareness and poor enlightenment as reasons for not having insurance covers. This is followed by the North-East zone with 53%. Also, the South-South and South-West zones with 33% each accounted for the highest proportion of respondents that claimed “it is not necessary; No need for it; No interest in it”
In conclusion, the results and findings from this poll have revealed that majority of Nigerians (86%) do not have any form of insurance cover, confirming low market penetration and poor insurance culture in Nigeria. Results have also revealed that vehicle/car insurance (63%) is the most commonly purchased insurance cover; compared to a much smaller 20% that have life assurance. Insurance companies (42%) and agents (41%) are the major channels of insurance purchase. Furthermore, the major causes of the poor insurance culture that emerged from the poll are low awareness and poor enlightenment about insurance (40%). Overall, there must be renewed attempts to promote the insurance industry and communicate the benefits of essential Insurance products such as life, accident, burglary and health to the general public. Finally, these findings indicate huge market potentials for insurance companies and practitioners who will be able to invest more in advertising and media campaigns to clearly inform the public on the benefits of insurance; and would be willing to design suitable retail insurance products to meet the needs of the underserved population. In particular, specific products targeted at youths between 18 to 34 years may hold the strongest potential, since they currently have an average insurance penetration of 2%.
The opinion poll was conducted on August 19th to 21st 2013. It involved telephone interviews of a random nationwide sample. 1018 randomly selected phone-owning Nigerians aged 18 years and above, representing the six geopolitical zones in the country, were interviewed. With a sample of this size, we can say with 95% confidence that the results obtained are statistically precise – within a range of plus or minus 3%. NOI Polls Limited is Nigeria’s leading opinion polling and research organisation, which works in technical partnership with the Gallup Organisation (USA), to conduct periodic opinion polls and studies on various socio-economic and political issues in Nigeria. More information is available at www.noi-polls.com
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NOI Polls hereby certifies that all the views expressed in this document accurately reflect its views of respondents surveyed for the poll, and background information is based on information from various sources that it believes are reliable; however, no representation is made that it is accurate or complete. Whilst reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors or fact or for any views expressed herein by NOI Polls for actions taken as a result of information provided in this report. Any ratings, forecasts, estimates, opinions or views herein constitute a judgment as at the date of this document. If the date of this document is not current, the views and content may not reflect NOI Polls’ current findings and/or thinking.