PERCEPTION, EFFICIENCY, EFFECTIVENESS AND CHALLENGES OF MICRO INSURANCE SERVICES IN NIGERIA
Keywords:
Micro-insurance, Penetration, Insurance prospects, intermediation
Abstract
This study evaluates the level of penetration of insurance firms in Nigeria using the Integrated Theoretical Review Design approach. The study similarly evaluates the mitigating factors to macro-insurance actualization in Nigeria and ends by recommending activities, models and frameworks that should be put in place to ensure a higher level of micro-insurance penetration in Nigeria. The study uncovers the fact micro-insurance operation in Nigeria is very fallow judging by the presence of only one stand-alone micro-insurance firm in the whole of Nigeria while other micro-insurance activities are subsumed under various insurance institutions. Various model of micro-insurance implementation was employed and it was discovered that the community – based/mutual micro-insurance model is the most potent as it provides an avenue for the micro-insurance provider to develop products which serve the peculiar needs of each individual community. There is also the added advantage of community participation, which aside from involving the ‘clients’ or ‘policyholders’ in the management and operations of the product, also serves as a medium of intimating the rural dwellers on the necessity and functions of insurance. The study recommends that; Insurance firms should ensure efficient distribution channels, an informed price reviews of its services, they should ensure thorough Scrutiny of Micro-Insurance Claims and Applicants, there should be a more flexible payment of premiums, Niche Marketing should be encouraged, Micro-insurance firms should Partner with Other Intermediaries in the Value Chain, There should be adequate Public Awareness, micro-insurance firms should be Re-Insured, NAICOM should embrace Responsive Regulation and there should be Development of Risk Measurement Models and government should back micro-insurance firms by the provision of social Welfare (Sponsorship).
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References
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Adeola, O., & Evans, O. (2017). Financial inclusion, financial development, and economic diversification in Nigeria. The Journal of Developing Areas, 51(3), 1-15.
Adeyemo, T. A., Odetola, S. K., & Yusuf, S. A. (2017). Aggregate demand for micro-insurance among rural household non-farm enterprises in Nigeria. Developing Country Studies. 7(10), 47-53.
Ajemunigbohun, S. S., Ademola, S. O., &Iyun, A. S. (2014). An exploratory study of the awareness and accessibility of micro-insurance products in selected insurance companies in Lagos, Nigeria. European Journal of Business and Management, 6(28), 1-9.
Akinbola, O. E. (2012). Ethical issue: A problem in Nigeria insurance companies. Journal of Business and Organizational Development, 3(1), 60-74.
Alando, T. A. (2014). An assessment of the effect of micro-insurance on the financial performance of insurance companies in Kenya. Unpublished MBA Project, University of Nairobi.
Alchian, A., &Demsetz, H. (1972). Organization, American, American Economic Association, 62(5), 777-795.
Anja, S., Doubell ,C., Herman, S. & Grieve C.(2010). The Kenya Micro-insurancelandscape, market and regulatory analysis (pp.10-13), Bellville Publishing, South Africa.
Anyanwu, J. C. (2014). Marital status, household size and poverty in Nigeria: evidence from the 2009/2010 survey data. African Development Review, 26(1), 118-137.
Babajide, A. A., Adegboye, F. B., &Omankhanlen, A. E. (2015). Financial inclusion and economic growth in Nigeria. International Journal of Economics and Financial Issues, 5(3), 629-637.
Banarjee, A. (2008) Technology indispensable in marketing micro-insurance Accessible, in Asia insurance review, orientation portal of 3I Infotech. Retrieved on 20/2/2022 by 12:00pm. www.asiainsurancereview.com
Bauchet, J., Damon, A., & Hunter, B. (2016). Asymmetric Information in Micro-insurance Markets: Experimental Evidence from Mexico. DBA Africa Management Review, 8(1), 12-17.
Brown, W. & McChord, M.J. (2000). Virtual conference on micro-insurance, Oct-9th. Oct 27th, 2000’ USAID Micro-enterprise best practice (MBP) project development alternatives USAID 2000
Brown, W. & Churchill, C. (2000). Micro-Insurance: Providing Insurance to Low-Income Households Part 1-a primer on insurance principles and products’. Microenterprise Best Practices Project, Development Alternatives Inc. Bethesda, MD. At http://www.mip.org/pubs/mbp-def.htm accessed 10 July 2022.
Churchill, C. (2006). Protecting the poor: A micro-insurance compendium. Geneva: ILO. Cohen, M. &Sebstad, J. (2006). The Demand for Micro-Insurance in Churchill (2006), Ibidi, P. 22 – 44.
Churchill, C. (2007). Insuring the low-income market: Challenges and solutions for commercial insurers. Geneva Papers on Risk and Insurance, 32, 401–412.
Cohen, M. &Sebstad, J. (2006). The Demand for Micro-insurance. In C. Churchill (Ed), Protecting the Poor: A Micro-insurance Compendium, Vol. 2, Pp. 1-5. Geneva, Switzerland: International Labour Office.
Dalal, A., & Morduch, J. (2010). The Psychology of Micro-insurance: Small Changes Can Make a Surprising Difference. Micro-insurance Paper No. 5. Geneva: ILO.
De Vos. M, Hougaard C. & Smith A.(2011). Opportunities for Insurance Inclusion in Nigeria: Exploring Potential in Nigerian Insurance Market using Data from the EFInA Access to Finance in Nigeria 2010 Survey. Centre for Financial Regulation and Inclusion, 21/02/2019
Dercon, S., Kirchberger, M., Gunning, J. W., &Platteau, J. P. (2008). Literature review on micro-insurance International Labour Office. - Geneva: ILO, 2008, 33 p.
Din, S. M., Abu-Bakar, A., &Regupathi, A. (2017). Does insurance promote economic growth: A comparative study of developed and emerging/developing economies? Cogent Economics & Finance, 5(1), 13-29.
Dror, D. M., Hossain, S. S., Majumdar, A., Koehlmoos, T. L. P., John, D., & Panda, P. K. (2016). What factors affect voluntary uptake of community-based health insurance schemes in low-and middle-income countries? A systematic review and meta-analysis. PLoS One, 11(8), 01-31.
Epetimehin, F.M., &Odunaike, F. (2011). Micro-insurance: A Risk Pooling Instrument for Protection of Low-income Households. Journal of Business and Organizational Development, 3(1), 60-74.
Evelyn, U., &Osifo, S. J. (2018). Microfinance and Female Entrepreneurship in Nigeria. DBA Africa Management Review, 8(1), 51-66.
Fischer, K., & Qureshi, Z. (2006). Cooperatives and Insurance: The Mutual Advantage in Protecting the Poor: A Micro-insurance Compendium. Geneva: International Labour Organization and Munich Re-Foundation Publication.
Garand, D., & Wipf, J. (2006). The Role of Reinsurance. Micro-insurance Newsletter, 3(1), 4–11.
Gitonga, N. (2009). Health Micro-insurance: East African Experience. Insight Health Advisors’ Journal, 8(May), 4-5.
He, E., & Sommer, D. W. (2010). Separation of ownership and control: Implications for board composition. Journal of Risk and Insurance, 77(2), 265-295.
Ikupolati, M. (2008). The Practice of Micro-insurance in West Africa: The Journey So Far. A Paper Delivered at WAICA Educational Conference. Lagos, Nigeria.
Ime, F. B., & Ikechukwu, A. (2017). Micro-insurance and Its Untapped Economic Development Potentials in Nigeria. Journal of Business and Economic Development. 2(1), 22-30.
Irukwu, J. (2010). Micro-insurance: Tracking the Possibilities, A Paper Presented at the Stakeholders Interactive Session held at Abuja, Nigeria on February, 2010.
Larry E. (1994). Greiner Evolution and Revolution as Organizations Grow. International Journal of Financial Research, 4(1), 132-150.
Makove, S. M. (2011). African Policy Approaches: Micro-insurance in Kenya. AIO – A2ii Regulators’ Workshop, Victoria Falls, Zimbabwe May 26, 2011.
Maleika, M., & Kuriakose, A.T. (2008). Micro-insurance: Extending Pro-Poor Risk Management through the Social Fund Platform. The World Bank, 5(2), 45-54.
Mbogo, S. (2010). Insurance Companies Seek New Strategies to Attract Customers. Business Daily, March 10, 2010.
Mohammed, A. H., & Mukhtar, S. (2012). The prospects of micro-insurance in the rural areas of Nigeria. European Scientific Journal, ESJ, 8(3).
Morelli, E., Onnis, G.A., Ammann, W.J., & Sutter, C. (2010). Micro-insurance: An Innovative Tool for Risk and Disaster Management. Switzerland: Buchdruckerei Davos AG.
Mukhtar, S. (2013). Insuring the uninsurable for poverty alleviation in Nigeria: What micro-insurance can do? Mediterranean Journal of Social Sciences, 4(2), 375.
Mukhtar, S. (2016). An Empirical Investigation into the Prospects of Micro-Insurance in Some Selected Rural Areas of Sokoto State, Nigeria. International Journal of Business and Social Science, 7(12), 37-44.
Njuguna, A. G., &Arunga, A. (2013). Risk management practices: A survey of micro-insurance service providers in Kenya. International Journal of Financial Research, 4(1), 132-150.
Olaosebikan, O. (2013). The determinants of the profitability of micro-life insurers in Nigeria. The Geneva Papers on Risk and Insurance-Issues and Practice, 38(1), 140-159.
Paul, M. (2009). Assessing the success of micro-insurance programmes in meeting the insurance needs of the poor. DESA Working Paper No. 84, USA: United Nations Secretariat.
Prahalad, C. K. (2005). The fortune at the bottom of the pyramid: Eradicating poverty through profits. Upper Saddle River, NJ: Wharton School Publishing.
Roth, J., McCord, M.J., & Liber, D. (2007). The Landscape of Micro-insurance in the World's 100 Poorest Countries. Appleton, WI: The Micro-insurance Centre, LLC.
Rothschild, M., & Stiglitz, J. (1978). Equilibrium in competitive insurance markets: An essay on the economics of imperfect information. In Uncertainty in economics (pp. 257-280). Academic Press.
Shouxi, L. (2007). Ownership, Agency Cost and Agency Efficiency [J]. Economic Research Journal, 1(1), 102-113.
Siegel, P., Alwang, B. J., &Canagarajah, S. (2001). Viewing micro-insurance as a social risk management instrument. Social Protection Discussion Paper Series, 116, Washington, DC, World Bank, Social Protection Unit, Human Development Network: 17-25.
Skees, J., Hazell, P., & Miranda, M. (1999). New Approaches to Crop Yield Insurance in Developing Countries. EPTD Discussion Paper 55, International Food Policy Research Institute.
Smith, C. W. (1989). Agency costs. In Finance (pp. 53-56). Palgrave Macmillan, London.
Suarez, P., &Linnerooth‐Bayer, J. (2010). Micro‐insurance for local adaptation. Wiley Interdisciplinary Reviews: Climate Change, 1(2), 271-278.
Supiot, A. (2010). A legal perspective on the economic crisis of 2008. International Labour Review, 149(2), 151-162.
Tremblay, C., Quirion, M., Langlois, S., &Klutzé, F. (2006). MAFUCECTO, Togo: Micro-insurance, Good and Bad Practices, Case Study No. 25. Geneva: CGAP Working Group Publication.
Vanguard (2018). Nigeria ranks low in insurance penetration in Africa. https://www.vanguardngr.com/2018/02/nigeria-ranks-low-insurance-penetration-africa-oni/
World Bank (2001) Attacking poverty: World development report 2000/01. Washington DC: World Bank.
World Bank (2011) World Bank Development Report. World Bank publications.
Yoseph, A. (2010). Micro-Insurance: A Tool for Growth and Development of the African Insurance Industry. International Insurance Conference, ILO Regional Office for Africa, Lagos: ILO.
Young, C., & Ghoshal, S. (2016). Organization theory and the multinational corporation. Springer.
Yusuf O.T. (2006) Insurance in Muslim countries: Nigeria’s Takaful scheme in focus. Journal of Islamic Banking and Finance. 6(2), 15-33.
Yusuf, T. O. (2006). Attitudes of Nigerians towards Insurance Services: An Empirical Study. African Journal of Accounting, Economics, Finance and Banking Research, 4(4), 34-46.
Yusuf, T.O., & Mobolaji, A.I. (2012). The Role of Islamic Micro-insurance in Economic Growth and Development: The Nigerian Experience: A case study of Al-Barakah Microfinance Bank, Lagos. International Journal of Business and Commerce, 1(10), 106-122.
Zingales, L. (2009). The future of securities regulation. Journal of Accounting Research, 47(2), 391–425.
Adeola, O., & Evans, O. (2017). Financial inclusion, financial development, and economic diversification in Nigeria. The Journal of Developing Areas, 51(3), 1-15.
Adeyemo, T. A., Odetola, S. K., & Yusuf, S. A. (2017). Aggregate demand for micro-insurance among rural household non-farm enterprises in Nigeria. Developing Country Studies. 7(10), 47-53.
Ajemunigbohun, S. S., Ademola, S. O., &Iyun, A. S. (2014). An exploratory study of the awareness and accessibility of micro-insurance products in selected insurance companies in Lagos, Nigeria. European Journal of Business and Management, 6(28), 1-9.
Akinbola, O. E. (2012). Ethical issue: A problem in Nigeria insurance companies. Journal of Business and Organizational Development, 3(1), 60-74.
Alando, T. A. (2014). An assessment of the effect of micro-insurance on the financial performance of insurance companies in Kenya. Unpublished MBA Project, University of Nairobi.
Alchian, A., &Demsetz, H. (1972). Organization, American, American Economic Association, 62(5), 777-795.
Anja, S., Doubell ,C., Herman, S. & Grieve C.(2010). The Kenya Micro-insurancelandscape, market and regulatory analysis (pp.10-13), Bellville Publishing, South Africa.
Anyanwu, J. C. (2014). Marital status, household size and poverty in Nigeria: evidence from the 2009/2010 survey data. African Development Review, 26(1), 118-137.
Babajide, A. A., Adegboye, F. B., &Omankhanlen, A. E. (2015). Financial inclusion and economic growth in Nigeria. International Journal of Economics and Financial Issues, 5(3), 629-637.
Banarjee, A. (2008) Technology indispensable in marketing micro-insurance Accessible, in Asia insurance review, orientation portal of 3I Infotech. Retrieved on 20/2/2022 by 12:00pm. www.asiainsurancereview.com
Bauchet, J., Damon, A., & Hunter, B. (2016). Asymmetric Information in Micro-insurance Markets: Experimental Evidence from Mexico. DBA Africa Management Review, 8(1), 12-17.
Brown, W. & McChord, M.J. (2000). Virtual conference on micro-insurance, Oct-9th. Oct 27th, 2000’ USAID Micro-enterprise best practice (MBP) project development alternatives USAID 2000
Brown, W. & Churchill, C. (2000). Micro-Insurance: Providing Insurance to Low-Income Households Part 1-a primer on insurance principles and products’. Microenterprise Best Practices Project, Development Alternatives Inc. Bethesda, MD. At http://www.mip.org/pubs/mbp-def.htm accessed 10 July 2022.
Churchill, C. (2006). Protecting the poor: A micro-insurance compendium. Geneva: ILO. Cohen, M. &Sebstad, J. (2006). The Demand for Micro-Insurance in Churchill (2006), Ibidi, P. 22 – 44.
Churchill, C. (2007). Insuring the low-income market: Challenges and solutions for commercial insurers. Geneva Papers on Risk and Insurance, 32, 401–412.
Cohen, M. &Sebstad, J. (2006). The Demand for Micro-insurance. In C. Churchill (Ed), Protecting the Poor: A Micro-insurance Compendium, Vol. 2, Pp. 1-5. Geneva, Switzerland: International Labour Office.
Dalal, A., & Morduch, J. (2010). The Psychology of Micro-insurance: Small Changes Can Make a Surprising Difference. Micro-insurance Paper No. 5. Geneva: ILO.
De Vos. M, Hougaard C. & Smith A.(2011). Opportunities for Insurance Inclusion in Nigeria: Exploring Potential in Nigerian Insurance Market using Data from the EFInA Access to Finance in Nigeria 2010 Survey. Centre for Financial Regulation and Inclusion, 21/02/2019
Dercon, S., Kirchberger, M., Gunning, J. W., &Platteau, J. P. (2008). Literature review on micro-insurance International Labour Office. - Geneva: ILO, 2008, 33 p.
Din, S. M., Abu-Bakar, A., &Regupathi, A. (2017). Does insurance promote economic growth: A comparative study of developed and emerging/developing economies? Cogent Economics & Finance, 5(1), 13-29.
Dror, D. M., Hossain, S. S., Majumdar, A., Koehlmoos, T. L. P., John, D., & Panda, P. K. (2016). What factors affect voluntary uptake of community-based health insurance schemes in low-and middle-income countries? A systematic review and meta-analysis. PLoS One, 11(8), 01-31.
Epetimehin, F.M., &Odunaike, F. (2011). Micro-insurance: A Risk Pooling Instrument for Protection of Low-income Households. Journal of Business and Organizational Development, 3(1), 60-74.
Evelyn, U., &Osifo, S. J. (2018). Microfinance and Female Entrepreneurship in Nigeria. DBA Africa Management Review, 8(1), 51-66.
Fischer, K., & Qureshi, Z. (2006). Cooperatives and Insurance: The Mutual Advantage in Protecting the Poor: A Micro-insurance Compendium. Geneva: International Labour Organization and Munich Re-Foundation Publication.
Garand, D., & Wipf, J. (2006). The Role of Reinsurance. Micro-insurance Newsletter, 3(1), 4–11.
Gitonga, N. (2009). Health Micro-insurance: East African Experience. Insight Health Advisors’ Journal, 8(May), 4-5.
He, E., & Sommer, D. W. (2010). Separation of ownership and control: Implications for board composition. Journal of Risk and Insurance, 77(2), 265-295.
Ikupolati, M. (2008). The Practice of Micro-insurance in West Africa: The Journey So Far. A Paper Delivered at WAICA Educational Conference. Lagos, Nigeria.
Ime, F. B., & Ikechukwu, A. (2017). Micro-insurance and Its Untapped Economic Development Potentials in Nigeria. Journal of Business and Economic Development. 2(1), 22-30.
Irukwu, J. (2010). Micro-insurance: Tracking the Possibilities, A Paper Presented at the Stakeholders Interactive Session held at Abuja, Nigeria on February, 2010.
Larry E. (1994). Greiner Evolution and Revolution as Organizations Grow. International Journal of Financial Research, 4(1), 132-150.
Makove, S. M. (2011). African Policy Approaches: Micro-insurance in Kenya. AIO – A2ii Regulators’ Workshop, Victoria Falls, Zimbabwe May 26, 2011.
Maleika, M., & Kuriakose, A.T. (2008). Micro-insurance: Extending Pro-Poor Risk Management through the Social Fund Platform. The World Bank, 5(2), 45-54.
Mbogo, S. (2010). Insurance Companies Seek New Strategies to Attract Customers. Business Daily, March 10, 2010.
Mohammed, A. H., & Mukhtar, S. (2012). The prospects of micro-insurance in the rural areas of Nigeria. European Scientific Journal, ESJ, 8(3).
Morelli, E., Onnis, G.A., Ammann, W.J., & Sutter, C. (2010). Micro-insurance: An Innovative Tool for Risk and Disaster Management. Switzerland: Buchdruckerei Davos AG.
Mukhtar, S. (2013). Insuring the uninsurable for poverty alleviation in Nigeria: What micro-insurance can do? Mediterranean Journal of Social Sciences, 4(2), 375.
Mukhtar, S. (2016). An Empirical Investigation into the Prospects of Micro-Insurance in Some Selected Rural Areas of Sokoto State, Nigeria. International Journal of Business and Social Science, 7(12), 37-44.
Njuguna, A. G., &Arunga, A. (2013). Risk management practices: A survey of micro-insurance service providers in Kenya. International Journal of Financial Research, 4(1), 132-150.
Olaosebikan, O. (2013). The determinants of the profitability of micro-life insurers in Nigeria. The Geneva Papers on Risk and Insurance-Issues and Practice, 38(1), 140-159.
Paul, M. (2009). Assessing the success of micro-insurance programmes in meeting the insurance needs of the poor. DESA Working Paper No. 84, USA: United Nations Secretariat.
Prahalad, C. K. (2005). The fortune at the bottom of the pyramid: Eradicating poverty through profits. Upper Saddle River, NJ: Wharton School Publishing.
Roth, J., McCord, M.J., & Liber, D. (2007). The Landscape of Micro-insurance in the World's 100 Poorest Countries. Appleton, WI: The Micro-insurance Centre, LLC.
Rothschild, M., & Stiglitz, J. (1978). Equilibrium in competitive insurance markets: An essay on the economics of imperfect information. In Uncertainty in economics (pp. 257-280). Academic Press.
Shouxi, L. (2007). Ownership, Agency Cost and Agency Efficiency [J]. Economic Research Journal, 1(1), 102-113.
Siegel, P., Alwang, B. J., &Canagarajah, S. (2001). Viewing micro-insurance as a social risk management instrument. Social Protection Discussion Paper Series, 116, Washington, DC, World Bank, Social Protection Unit, Human Development Network: 17-25.
Skees, J., Hazell, P., & Miranda, M. (1999). New Approaches to Crop Yield Insurance in Developing Countries. EPTD Discussion Paper 55, International Food Policy Research Institute.
Smith, C. W. (1989). Agency costs. In Finance (pp. 53-56). Palgrave Macmillan, London.
Suarez, P., &Linnerooth‐Bayer, J. (2010). Micro‐insurance for local adaptation. Wiley Interdisciplinary Reviews: Climate Change, 1(2), 271-278.
Supiot, A. (2010). A legal perspective on the economic crisis of 2008. International Labour Review, 149(2), 151-162.
Tremblay, C., Quirion, M., Langlois, S., &Klutzé, F. (2006). MAFUCECTO, Togo: Micro-insurance, Good and Bad Practices, Case Study No. 25. Geneva: CGAP Working Group Publication.
Vanguard (2018). Nigeria ranks low in insurance penetration in Africa. https://www.vanguardngr.com/2018/02/nigeria-ranks-low-insurance-penetration-africa-oni/
World Bank (2001) Attacking poverty: World development report 2000/01. Washington DC: World Bank.
World Bank (2011) World Bank Development Report. World Bank publications.
Yoseph, A. (2010). Micro-Insurance: A Tool for Growth and Development of the African Insurance Industry. International Insurance Conference, ILO Regional Office for Africa, Lagos: ILO.
Young, C., & Ghoshal, S. (2016). Organization theory and the multinational corporation. Springer.
Yusuf O.T. (2006) Insurance in Muslim countries: Nigeria’s Takaful scheme in focus. Journal of Islamic Banking and Finance. 6(2), 15-33.
Yusuf, T. O. (2006). Attitudes of Nigerians towards Insurance Services: An Empirical Study. African Journal of Accounting, Economics, Finance and Banking Research, 4(4), 34-46.
Yusuf, T.O., & Mobolaji, A.I. (2012). The Role of Islamic Micro-insurance in Economic Growth and Development: The Nigerian Experience: A case study of Al-Barakah Microfinance Bank, Lagos. International Journal of Business and Commerce, 1(10), 106-122.
Zingales, L. (2009). The future of securities regulation. Journal of Accounting Research, 47(2), 391–425.
Published
2023-07-09
How to Cite
Nsisong Boniface, U., & G. Olafuyi, S. (2023). PERCEPTION, EFFICIENCY, EFFECTIVENESS AND CHALLENGES OF MICRO INSURANCE SERVICES IN NIGERIA. GPH-International Journal of Social Science and Humanities Research, 6(06), 127-162. https://doi.org/10.5281/zenodo.8127381
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