Despite the growing awareness of financial literacy and risk management, insurance remains one of the most misunderstood concepts in many parts of the world, particularly in developing countries. The hesitation around embracing it is rooted in a complex web of cultural, religious, economic, and systemic factors. Below are some of the key reasons why it is still viewed with suspicion or indifference:
6. Inadequate knowledge about the role of a broker as an advocate in claims settlement:
Too few people understand that insurance brokers exist to serve them and their interests, not just the insurance companies. Unlike agents who typically work for insurers, brokers are independent professionals who solicit on behalf of their clients to facilitate better deals, navigate policy terms, and advocate for faster claims settlements.
This lack of awareness means many of the insured go it alone, without the required professional guidance. A well-informed broker puts their client’s interest as their top priority. The best insurance offerings occur before a claim is made by an established broker.
Read also: Why insurance remains misunderstood in our society
7. Lack of collaborative efforts by insurance professionals in developing stakeholder participation within their communities:
Insurance practitioners often fail to build genuine relationships with the communities they hope to serve. While similar service providers in the financial industry often sponsor local events across sports, food, and fashion festivals, etc., the insurance industry largely struggles to communicate to its captive audience. This distance between the insurance practitioners and their clientele base leaves room for myths to grow unchecked. Insurance must be demystified and embedded into our communities and should be seen as a social tool for good in managing economic risks.
8. Competition instead of collaboration
Lastly, the industry’s internal structure doesn’t help. Companies often operate in isolation, chasing after market share instead of joining forces to raise sector-wide trust while promoting insurance literacy. Ironically, most elites of our society, especially the educated ones, are the most reluctant to ensure their valuable assets.
Imagine what could be achieved if insurers, brokers, regulators, and the media collaborated on national awareness campaigns to promote the benefits of insurance coverage.
So, what can we do?
To shift mindsets, the insurance industry must develop capacity in training their personnel as well as design innovative and tailor-made products that are relevant to clients’ needs and must include empathy and consistent service delivery. Influencers can also play a powerful role in changing the narrative.
The insured, who have experienced prompt claim settlement, are the best advocates to share their experience with the public through recommendations and referrals.
Ask questions. Seek clarity. Engage brokers.
Abimbola Afolabi is the Admin & Executive Assistant at Impact Insurance Brokers Limited. The company was incorporated on the 19th of March 1981, with incorporation number RC 38225 as an unlimited liability company under the Companies Act, 1968, but now as a Limited Liability Company under the Insurance Decree No. 2 1997, having fulfilled all requirements.
