In 2012, the Nigerian government launched the National Financial Inclusion Strategy based on data from 2010. From the data, the country had 46.3% of people who were untapped in the financial system in 2010. The government planned to reduce that number to 20% by the end of 2020.
However, the target proved unattainable for the Nigerian government, and the NFIS had to be amended in 2018. This is because the target included a specific percentage of inclusion – 40% – in the insurance sector. The 40% target translates to roughly 43 million people to be covered by insurance products in 2020.
Microfinancing options in the insurance sector can be a solution
The problems faced by the insurtech industry are deeply rooted in the country’s economy – cultural and religious beliefs, weak underwriting, etc. – along with more surface problems like a shortage of disposable income. To obtain the necessary participation of people, the penetration of the insurtech market must increase.
InsurTech solutions with low premiums targeted towards populations with low incomes can be a probable solution. The development of more insurtech solutions in order to increase competition in the market and improve customer experience is a necessity in Nigeria. AI, Machine Learning, and Blockchain-based tech solutions would greatly benefit the penetration of insurance products in the country.
Several startups in the field like Curacel and Helium Health have started using disruptive tech to make their services more efficient and more secure. However, this streak of growth brings the issue of data security into picture.
The Nigerian government has drafted a considerable amount of legislation to ensure adequate data security. However, InsurTech companies which hold the people’s data are going to bear the burden of security.