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Insurance is the safest form of risk transfer mechanism -Ilori

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Director General of the Nigerian Insurers Association, NIA, Mrs. Yetunde Ilori, in this interview speaks on factors hindering Nigerians from fully adopting insurance culture. Excerpt

By Rosemary Onuoha and Cynthia Alo

Nigerians don’t seem to understand the concept of insurance, why is that so?

We have different kind of losses and they could be financial, psychological, emotional or sentimental. On the other hand, people have different ways of handling their risk either through risk avoidance, risk reduction, risk retention, risk sharing and risk transfer. There is one way of risk handling that is cultural but fast disappearing especially when it comes to supporting ourselves, which is our large family culture.

Yetunde Ilori

However, it is fast disappearing. Nowadays it is no longer seen as fashionable because people now want to have just a child while some would say two is a maximum. Meanwhile, insurance is a risk transfer mechanism which is another way of managing risk. I know that I can manage my risk but there are people that can take up the responsibility and manage it for me and that becomes the concept of insurance. Insurance is a formal social device for transferring risk to corporate entities.

So unlike the family set up where everybody come together and share risks, corporate entities have come up as insurance companies or insurers. They are saying that we can hand over the risk that we can insure to them. Accordingly, insurance companies don’t cover emotional, psychological or sentimental loss but we can cover financial loss to put you back to where you were just before you suffered the financial loss. So insurance will always come up with an agreed fund that you pay before it takes on the responsibility of covering your risk.

Why has the adoption of insurance been slow in Nigeria?

Though insurance have been around in Nigeria for some time, the adoption by Nigerians is very slow because the concept of insurance is actually foreign to us. However, we are adopting it and the adoption has been very slow. Despite the benefit of insurance, the low uptake resulted from the fact that sometimes people come up with a kind of mirage that insurance companies don’t pay claims. However, if you ask the person saying that if they have had any form of insurance, you would realize that sometimes, some people never had the experience of insurance.

But what has happened that is making people say that? It is just lack of trust because when people have good experience of something, they don’t talk about it, they rather want to talk about the bad experience. People hardly come out to say how much that have been paid to them by their insurance company as a result of claims the make. But when people are not compensated, you get to hear it all over town.

What can the sector do to rebuild trust on the path of the public?

Nigerians should form the habit of interfacing with the insurance companies. The buying public needs to know the truth, hence they should interface with us regularly. In the NIA for instance, there is a desk dedicated to review and resolution of complaints between the insurance company and the customer. After that you can then say who is at fault. A major challenge we are facing in the sector is the issue of fraud.

Also, due to the poor economic situation, frauds are real and they are on the high side. So apart from other issues that the insurance companies have to grapple with, fraud is something killing our business. So people should not be quick to jump into conclusion that insurers don’t pay claims. We have a legal desk in NIA so we will do everything possible to get to the root of the case and ensure they are resolved amicably.

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