Insurance has always been a sine qua non for guaranteeing comfort and peace of mind of the insuring public. The role Insurance, it must be quickly noted, has, often time, been misconstrued due to the varying perception lens many folks evaluate and view its services. Notwithstanding, this does not relegate its influence and role as a value creation agent to the society. Insurance is seen as the single largest global industry with premiums amounting to some 8% of the Gross Domestic Product (GDP) and some 11 % of assets under its management (Petherick 2011).
The opportunities afforded by insurance investment cannot be over-emphasized. In the developed clime, insurance holds substantial stakes in virtually all sectors of the economy, namely banking, estate management, hospitality industry, to name just a few. At the home front, the insurance industry frontally supports both the national and on few occasions sub-national government in the area of PEP kits, group life assurance and protection to frontline health workers. Although many believe the GDP contribution is still a far cry to what it should be, it could be better in the coming years as economic activities experience an uptick.
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Global growth was projected to expand to 5.6% in 2021 largely on the strength of major economies such as the United States of America (USA) and China. However, many emerging markets and developing economies have continued to struggle with the COVID-19 pandemic and its aftermath. According to World Bank’s claims in its June,2021 Global Economic prospects, insurance mobilizes domestic savings, mitigates loss, provides financial stability and promotes trade and commerce. Prof. Jagdeep Kumari (India) identifies the following as the role of insurance to economic development: providing safety and security, generates financial resources, employment generation, promotes economic growth, spread of financial services in rural or socially less-privileged environment, spreading of risk and source of collecting funds. From the latest data by the National Bureau of Statistics, the insurance sector accounted for 12.45% of the financial sector during the first quarter, 2021. The sector grew by 2.08% in the nominal terms (year on year). No fewer than sixteen companies paid a total claims of N67.12bn in first quarter, 2021 (an analysis of data collated from unaudited financial statements) from N49.18bn in the same period in 2020.
Insurance services as a catalyst to economic growth will continue to be relevant to the society. As insurance institutions and key contributors to the economy, we would require a rejig of our Research and Development Department for new product innovation and digitization of our operations to continually meet the expectations of today’s customers. The world is moving digital, hence all aspect of our operations must be top notch to meet our deliverables as organizations and players in the financial services space. There should be a paradigm shift in the following areas: Human capital development, re-inventing our process value chain and finally technology. The insurance stakeholders, through their joint initiatives, are heralding a new dawn in the way business is being done, customer relationship management and a host of other areas that would make their impact to be felt in the society in the long term.
Adebisi Ikuomola is the Executive Director, Technical, Anchor Insurance Company Ltd.