As part of efforts to increase insurance coverage, the National Insurance Commission and insurance companies are planning to extend the bancassurance strategy to the microfinance banks.
Bancassurance is a method in which insurance companies sell their products through the banking channels to customers of the bank.
The Commissioner for Insurance, Alhaji Mohammed Kari, said, “The introduction of bancassurance in collaboration with the Central Bank of Nigeria leveraging the widespread of banks in Nigeria is also an initiative aimed at increasing access to insurance products and enhancing penetration.
This is being extended to cover the microfinance banks and their consumers.
The commission would continue to expand the distribution channel to ensure the excluded becomes the included.”
According to him, the insurance industry had value creation at its core and this enhanced value for policyholders who put their trust in an insurance product; for shareholders who invest in the business; for intermediaries who depend on it for their income and the insurance company itself which interlinks all stakeholders.
He added that the interlinking, if done in a balanced manner while keeping the costs low, it would ultimately create a long-term success story.
The commissioner also said to be more effective, insurers should focus on three areas which were to determine and target promising customer groups; Create customised, bundled solutions of existing products and adjacent services; and deliver products and services through the channels that fit the lifestyles of targeted consumer groups.
He added that one major source of concern to the commission which hindered insurance penetration was the lack of spread of insurance companies across the country.
Kari said that the spatial distribution of insurers and intermediary activities were alarmingly skewed.
Virtually all insurance companies were headquartered in Lagos with a few in Abuja and this concentration was complimented by very poor branch network, he added.
According to him, in most states, the presence of insurance entities was near absent making access to operators difficult due to proximity issues.
He said, “It is therefore a paramount need for companies to spread beyond the urban cities to the hinterland, open new branches for purposes of proximity to prospective consumers.
There should be a concerted effort to develop the retail sector of our business.”
The commissioner said that insurance played a pivotal role in financial inclusion because it reduced the poverty line, helped people to manage their risk and protected them from any negative adverse effect of any unforeseeable circumstances and increased access to other financial services.
In order to deepen insurance penetration, he said, the commission had two main objectives which were focused insurance awareness campaign for the financially excluded; and promoting the development of products and business models that met the needs of the financially excluded group.