Online shops and other small scale and medium enterprise (SMEs) need insurance products to safeguard their operations. The lack of insurance cover, most times lead to business issues in matters like customer refunds, return of goods, fire, theft etc. Why is it particularly hard in Nigeria to obtain insurance cover for commercial shops and other sectors that need insurance products? Why is the insurance penetration rate so low in the country?
For one the regulatory environment is complicated. We have four regulatory bodies in charge of insurance in Nigeria. There are: National Insurance Commission (NAICOM httpsss://www.naicom.gov.ng/), National Health Insurance Scheme (NHIS httpsss://www.nhis.gov.ng/), National Social Insurance Trust Fund (NSITF httpsss://www.nsitf.gov.ng/) and National Pensions Commission (PENCOM httpsss://www.pencom.gov.ng/).
This makes it almost impossible for one insurance outfit to offer several interlinked insurance products to end users. Insurance is all about numbers and the numbers cannot add up with this level of segmentation in Nigeria. Therefore, there is a critical need to merge all the regulatory bodies into one that can simplify the insurance transaction environment.
There is also a general lack of awareness about how insurance can protect businesses in Nigeria. We have experienced several market fires that virtually wipe out some traders in big markets in Nigeria. Such losses could have been hedged with the right insurance cover for small and medium enterprises (SMEs).
Insurance firms also need to be proactive and find a way to correct the wrong impression about insurance in Nigeria. Many business owners in Nigeria have the wrong impression that insurance firms exist only to collect premiums and hardly honor their obligations. The industry needs to demonstrate transparency and quicker reaction speed to insurance events.