According to an insurance industry survey carried out by Augusto & Co in 2022, the insurance penetration level in Nigeria is still less than 1 per cent despite the Nigerian regulatory body’s announcement of surpassing the ₦1 Trillion gross premium mark in Q4 2023. This is highly commendable for an industry plagued by a lot of socio-political and economic factors. As we all know, the National Insurance Commission (NAICOM) plays a pivotal role in regulating and promoting the insurance sector in Nigeria. However, this role cannot be fully stated as complete and adhering up to the grassroot level without the support of insurance agents who also double as “being brother’s keepers to the average Nigerian man on the street”. 

During a recent visit to executives of the Association of Registered Insurance Agents of Nigeria (ARIAN), the NAICOM’s big boss, Olusegun Omosehin revealed that the regulator would work closely with ARIAN to increase the number of agents from 50,000 to 300,000 active members by the end of 2024 and subsequently move the number to three million agents. Given this laudable and strategic initiative, below are some of the benefits this move can have on the industry and Nigeria:

Increasing Insurance Penetration

One of the primary benefits of recruiting more insurance agents is the potential to increase insurance penetration across Nigeria. Insurance penetration in Nigeria remains relatively low, with many people either unaware of insurance products or mistrustful of their benefits.

For instance, in rural areas like Ikorodu in Lagos State, many residents rely on traditional methods for risk management. By recruiting and training local insurance agents from these communities, NAICOM can introduce tailored insurance products  through insurance companies that meet the specific needs of the population. Insurance agents who understand the culture and language of their communities can more effectively communicate the benefits of insurance, thereby increasing uptake. For Example, between 2011 and 2012, Sovereign Trust Insurance Plc used some of the best insurance agents (who later climbed up the ladder of leadership) to penetrate some communities in Lambe and Ishaga area of Lagos state through CDAs to introduce their personal accident insurance policy to the communities which was greatly welcome because the insurance agents selling this product were also part of the communities, so they were able to communicate easily with the leadership and the people.

Enhancing Financial Inclusion

Recruiting more insurance agents contributes to financial inclusion by bringing insurance products to the underserved and unbanked populations. In regions like Kano State, where a significant portion of the population operates within the informal sector, insurance agents can provide access to microinsurance products. Aggregators like Fintechs and InsurTech fall into these categories as they can effectively utilise the insurance agents for their business operations while educating, promoting and creating reward-based systems that recognises their innovative sales efforts.

Consider the example of Fatima, a market trader in Kano. With limited knowledge of traditional banking and insurance products, she has always been wary of saving money in banks or purchasing insurance. An insurance agent, familiar with the economic activities and challenges of the area, can educate Fatima about microinsurance options that protect her goods against theft or fire, thus safeguarding her livelihood.

Creating Employment Opportunities

The recruitment of more insurance agents by NAICOM also has a direct impact on employment. The insurance industry offers substantial job opportunities, especially for young people and those looking to start a career in financial services.

Take the example of Chinedu, a recent university graduate in Enugu State struggling to find employment. By becoming an insurance agent, Chinedu not only secures a job but also acquires valuable skills in sales, customer service, and financial literacy. This job provides him with a stable income and the potential for career growth within the insurance industry.

Boosting Economic Growth

Insurance is a critical component of a robust economy. By mitigating risks, insurance allows businesses and individuals to undertake ventures that they might otherwise avoid. More insurance agents mean more widespread dissemination of insurance products, leading to greater economic stability and growth.

In a farming community in Benue State, for example, the presence of insurance agents offering agricultural insurance can transform the local economy. Farmers like Bonaventure, who have historically faced devastating losses due to unpredictable weather, can now insure their crops. This security encourages them to invest more in their farming activities, leading to increased productivity and economic prosperity in the region.

Improving Trust and Transparency

The insurance sector in Nigeria has historically struggled with issues of trust and transparency. By recruiting more insurance agents who are well-trained, digitally savvy and regulated, NAICOM can improve the overall perception of the industry. Agents can provide face-to-face interactions that build trust and explain policy details clearly, reducing the chances of misunderstandings and fostering long-term customer relationships.

For example, in the urban areas of Abuja, a well-trained insurance agent can demystify complex insurance products for customers, ensuring they understand the terms and conditions. This transparency helps in building a trustworthy relationship between insurers and the insured, leading to higher customer satisfaction and loyalty.

Enhancing Disaster Preparedness and Response

In a country prone to natural disasters such as floods and droughts, having more insurance agents on the ground can significantly improve disaster preparedness and response. Insurance agents can educate communities about risk management and the importance of insuring their assets against natural calamities.

In places like Bayelsa State, which frequently experiences flooding, insurance agents can play a crucial role in helping residents understand and purchase flood insurance. This preparedness not only protects individual households but also aids in quicker recovery and rebuilding efforts post-disaster.

Conclusion

Recruiting more insurance agents through initiatives by NAICOM offers multifaceted benefits for Nigeria’s insurance ecosystem. From increasing insurance penetration and financial inclusion to creating jobs and boosting economic growth, the impact of this strategic move is profound. By leveraging the grassroots reach of local agents, NAICOM can ensure that insurance becomes an integral part of Nigeria’s financial landscape, fostering resilience and prosperity across the nation.