Brokers want premium for life assurance altered
The Professionals Think-Tank Group of the Nigerian Council of Registered Insurance Brokers (NCRIB) has called for a rethinking of the existing widely accepted life expectancy index for Africa being currently used as a basis for Life Assurance policies.
This was contained in a submission by the Group which queried the life expectancy age currently put at between 50 and 65 years in Africa, criteria that was being significantly used to determine rates for Life insurance policies, especially Group Life.
Leading the discussion, Pascal Egerue, opined that good as the guide may be for insurance underwriting, it had been a blackmail on the Africans, submitting that “Africans were even initially said to be uninsurable, but this notion eased off with time.”
He opined that there were seemingly good reasons for the actuarial forecast on Africa but following the same reasons, Africa would have been a massive grave yard due to Covid-19 global devastation, but contrariwise the continent emerged better than Europe and other parts of the world after the crisis.
Egerue averred that it is evident by empirical observation that some critical factors were not or may not have been taken into consideration the extant rather jaundiced statistical table, noting that a sociological delineation may indicate three types of Africans with their respective impacts on our insured population.
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The submission identified Africans as being classable into three groups, namely the native Africans. living close to nature on subsistence farming who are by modern standard, poor, very contented, use herbs mainly as food and traditional medicine and trek most of the time to and fro destinations, thus physically fit. These people live between 120/150 years and more. Unfortunately, these group does not subscribe to modern insurance and as such not captured by underwriters for any meaningful portfolio evaluation.
Egerue identified the second type who are the urban poor that live in slums with perilously unhygienic environment and are usually overstressed by financial burdens arising from family upkeep, children’s minimal education expenses, rents. They fall sick now and then and die due to poor health care. These are the people mainly captured in our life expectancy statistics. They are the outliers that tend to give a dominant outlook on Africa’s life expectancy table. Insurance is the least in the priority of this group. These people live by the day and are largely religious, believing fatalistically that whatever happens to them is from God.
“The biggest existential financial instrument used by them is “esusu” which gives them a kind of pseudo protection on short term basis. Insurance Companies are yet to develop life insurance products that can appeal to the human and financial sensibilities of this group. Currently, this group doesn’t constitute a reasonable number in our life insurance portfolio. This perhaps is why our life insurance penetration level is still low despite our huge population”. Egerue noted
The NCRIB Group identified the third category which is the educated urban elite who are the drivers of the economy and the most privileged in a sea of poverty. This group constitute about 80 percent of the 2 percent penetration level of Africa either as individuals or through the corporations. While the life expectancy level here is not as high as type one, it is by far better than type 2.
“These people generally live up to 75 to 100 years but with heavy medical support. They are more of medical/health insurance risk than life Assurance risk. Most if not all of them live in their own houses. Their children are educated and in good careers. The major risk these people face are the general risk of insecurity to life as a result of assassination, armed robbery and kidnapping for ransom”
The NCRIB Group, which also held the view that actuarial tables derived from this bias will be fundamentally flawed for contemporary underwriting decisions, advised African Insurance professionals to sit back to review these issues that had adversely pegged insurance penetration in Africa and particularly Nigeria to less than 2 percent, despite over 100 years of its existence in the continent.
