Nigeria: Low Financial Literacy Drives Low Insurance Penetration

Financial literacy professionals are buzzing over the report by Nigerian Commissioner for Insurance, Fola Daniel, that poor financial literacy in Nigeria and some other countries is driving low levels of insurance penetration.  Daniel is calling on insurance providers to help increase the focus on financial education in the region, as the lack of awareness and understanding of financial matters ultimately leaves individuals and families inadequately protected from an insurance standpoint.

Many observers contend that if operators focus more on providing financial education, and less on ways in which they can keep raising their annual premiums, there would be a steep rise in the number of individuals seeking insurance products, which would translate into greater revenues for the insurance providers than they otherwise would generate merely by premium increases.  In that way, greater financial education would be a “win-win” for both consumers and operators.

Daniel’s remarks come at a time of significant efforts being expended by the insurance industry globally to dedicate more resources to financial literacy programs.  With the outlook for the global economy remaining uncertain, this move towards greater financial literacy and capability is widely anticipated to benefit consumers and, in that regard, Daniel’s focus on doing so in Nigeria is in line with the broader financial education movement.