Given the substantial informal business approach in Nigeria, many people don’t understand the importance of insurance in Nigeria. Several businesses in Nigeria are run by semi-educated men and women who don’t always understand the modern method of running a business. Several such informal businessmen and women may not understand the meaning of insurance or how it can benefit their businesses.

In Nigeria, the majority of businessmen, especially in the Southeast part of the country, left school earlier in life to pursue business knowledge through an apprenticeship system. The Eastern part of the country has the highest number of middle class. This spells a concern if the most commercialized part of the country isn’t paying much attention to modern business practices.

The Easterners usually enter the business space by going for business apprenticeships. This usually follows a withdrawal from formal education into the semi-formal Igbo apprenticeship system. This doesn’t give apprentice participants who would later emerge as businessmen upon graduation from the apprenticeship an opportunity to learn formal business practices.

Although the apprenticeship system is one of Africa’s biggest business incubators, the majority of the products of the system don’t make use of the several opportunities that the formal business sector offers. One such opportunity is insurance. People need to understand the importance of insurance in Nigeria both to the economy and the individual businessman or woman.

Understanding the importance of insurance in Nigeria as an individual or business owner 

The people in the informal business sector in Nigeria need first to understand the meaning of insurance before they can realize its importance. To help achieve this understanding, we would use simple analogies. Now, insurance is like subscribing to a system that will take care of bad things that may happen to you, your properties or your business in the future.

In this case, let’s assume that you are running a provision store in Nigeria. When you subscribe to an insurance program it means that you are trying to solve a problem that is yet to befall your business. Business is risky, and sometimes unforeseen circumstances can occur that may hurt the business or the individual running it.

The importance of insurance in Nigeria isn’t just about guaranteeing protection from terrible things that may happen to you or your business. The insurance sector is also another business sector that can be run by our people if we understand the value.

Insurance is a business sector on its own. It is a business that takes care of risks in life or in business. This means that when you insure your business, if something goes wrong, depending on the terms of insurance, the insurance company that you subscribed to could be your saving grace. When such an unfortunate situation befalls you or your business, that’s when the insurance that you earlier subscribed to comes in.

The insurance company is going to try to fix such a problem, thereby saving your business or even your health from total collapse. Perhaps you didn’t subscribe to insurance earlier; it means that if such a problem is overwhelming, your business or even health may fail unless you have relatives who may be capable of bringing you back to your feet.

The lack of understanding of the importance of insurance in Nigeria could explain why so many small to medium-scale enterprises close whenever they face overwhelming challenges. Nigeria is not just the biggest market in Africa; it is also Africa’s biggest economy. It is important to ensure business stability in the informal business sector, which drives the country’s middle class.

Importance of Insurance to Nigeria’s Economy

The importance of insurance in Nigeria is not just about the individual and his or her business. The country also gets to benefit from a positive insurance impact. As we have noted earlier, insurance is more like running the business of saving businesses, properties and even lives.

This means that the insurance sector in itself is a full-fledged business sector, and its growth can contribute to the economic growth of the country.

The Importance of Insurance in Nigeria’s economy is such that businesses become less risky, more stable and possibly more profitable. When an insured business also turns out profitable, that means the business has been operating without overwhelming loss; insurance companies also make profits. A strong insurance sector will inspire a stronger economy.

A stable economy is the dream of every Nation. Because insurance boosts confidence, insured businesses are more likely to perform better. Insurance companies receive a fraction in subscription with the promise of saving you a big potential loss in the future.

Because what you would receive in such insurance may not be as lucrative as running your business successfully, it creates a mechanism whereby it is more profitable to run your business effectively but won’t lose everything in case of severe damage or loss.

The most likely Importance of Insurance in Nigeria is the sense of security and peace that comes with it. Insuring your business creates a sense of safety and peace needed to run an effective business or even make use of your properties effectively. Note that insurance legal clauses protect insurance companies and insurance subscribers from potential abuse of one party by the other.

When safety is guaranteed, businesses perform better, and when businesses perform better, insurance gets bigger, bringing an overall bigger individual and national economy.

The Need for Local Entry into the Insurance Sector 

For our people to maximize the benefits of the insurance sector, there’s a need for local participation in the whole insurance value chain. It is likely that a lack of understanding of the whole process makes access to insurance tough for small to medium-scale enterprises.

Although running an insurance company takes a lot more than what is required to run a business in the informal Nigerian sector, maybe when people understand the value of insurance, they may consider partaking in the insurance market.

Many Nigerian-owned banks are operational today. The same level of professionalism needed to run a bank can be applicable to the insurance sector. So far insurance has not been very popular with the semi-formal and the informal business sector; as such, there’s less attention to the Importance of Insurance in Nigeria.

But if local investors begin to run insurance companies, maybe local businesses may see more need to insure their businesses, health and properties. Most of these informal business sectors as we have noted earlier, don’t yet understand the role of insurance. Sometimes, things need to be explained in the language that local people understand.

Literally, language can also be a barrier and may contribute to the reason most of the informal sectors in Nigeria don’t patronize insurance. Running an insurance company has a lucrative potential in Nigeria. The Igbo apprenticeship system as a wealth incubator has created more middle class than any other business model in Africa.

This means that venturing into the insurance business in the Southeast region would prove lucrative as businessmen and women within the region are usually experienced and passionate, thereby ensuring fewer losses. Maybe this experience has contributed to their confidence in not paying much attention to insurance; however, sometimes accidents and other unplanned events happen in business, impacts of such events could have been mitigated through insurance.

The expertise in the East especially would be very vital to the insurance sector, but it seems to breed overconfidence in the side of business owners who may not see the need to subscribe to insurance until the unthinkable happens.

Every year, several businesses in Nigeria close because of market fire. Often victims have to either hope that the government comes to their aid or that could be the end of such business. With insurance, even in the face of such a disaster, businessmen and women can still have a glimpse of hope, knowing that their insurance may come through for them. A situation like this indicates the Importance of Insurance in Nigeria.

Apart from business insurance, health insurance also does exist. Nigeria has one of the worst health sectors in the world. Life expectancy is also very low. People need to start maximizing the different types of insurance available. Nigerians need to take major steps in establishing insurance companies. Maybe our people would prefer to patronize local insurance companies. This is important to save lives, businesses and other properties.

Conclusion 

If insurance is not a vital life practice the business of insurance could not have survived to this day. Insurance is very crucial to modern society. The importance of Insurance in Nigeria needs to be realized. More local insurance companies need to emerge to provide both insurance services and education to the people. When this happens, maybe more Nigerians can realize the values they stand to gain when they subscribe to insurance.

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