The horrible state of insurance penetration in the country has been further highlighted alongside other emerging market countries.
According to a new research from Lloyd’s and the Centre for Economics and Business Research (CEBR), an estimated $163 billion of assets are underinsured in the world today, leaving an exposure gap that poses a significant threat to livelihoods and global prosperity.
Londonlovesbusiness quoted the research as listing Nigeria, Bangladesh, India, Vietnam, Philippines, Indonesia and Egypt as individually having an insurance penetration rate of less than per cent.
Specifically, for a country like Nigeria with a population of over 180 million and endowed with the best in terms of human and natural resources, it remains an aberration for the yearly premium to peak at less than N400 billion in the last five years.
Besides the poor state of the economy and lack of huge disposable income, apathy, poor awareness campaign on the part of operators and inability to design products to meet the immediate needs of the public have been partly blamed for the poor state of insurance in the country.
Even with the institution of six Compulsory Insurances backed by law to among others give Nigerians a sense of belonging and to also boost the nation’s insurance sector’s gross premium has not done enough to address the appalling state of the sector.
According to the CEBR, the average insurance penetration rate (total insurance premiums as a percentage of GDP) in developed nations is twice as high as the average in emerging, or lower income countries, which account for almost all ($160bn) of the global insurance protection gap.
It noted that many of the countries with the lowest levels of insurance were among the most exposed to risks such as climate change and are the least able to fund recovery efforts.
According to the research, “The country with the highest expected annual loss from natural disasters, Bangladesh, also has the largest insurance gap relative to GDP (2.1%). Expressed in absolute dollar values this equates to an insurance gap of almost $6bn in Bangladesh. Second highest is Indonesia at 1.4% of GDP, equivalent to an insurance gap of $15bn.
“Countries with more wealth stand to lose more in pure financial terms. China is the country with the highest insurance gap expressed in dollar values ($76bn) due to the size of its economy and the fact that its insurance market is still developing.”
It further revealed that global economic losses from natural disasters were substantial and growing with annual expected economic losses of $165bn, according to Lloyd’s City Risk Index. They will continue to increase, driven by greater wealth, hazard exposure and, for some events, climate change.
“The underinsurance gap, however, is hardly closing. In 2012 Lloyd’s and CEBR revealed that $168bn in assets globally were underinsured. This means the gap has closed by less than three per cent over a period of six years,” the report stated.