Institutionalising Technology-driven Business Model  Via Insurtech Guidelines 

With the recent release of insuretech operational guidelines by the National Insurance Commission, the stage is now set for full adoption of technology driven business model by insurance sector operators, writes Ebere Nwoji

The National Insurance Commission (NAICOM), penultimate week released  operational guidelines for Insurtech businesses in Nigeria.

Industry analysts said this is a signal to the regulator’s readiness for full adoption of technology driven business model for the insurance sector.

Insurtech, a short form for  “insurance technology,” refers to the innovative application of technology within the insurance industry to improve efficiency, reduce costs, and enhance customer experience by leveraging tools like AI, big data analytics, blockchain, and the Internet of Things(IoT). It aims to streamline processes such as underwriting, claims management, and customer service, while creating personalised insurance products and fostering financial inclusion. 

Before now, insurance operators like every other operator in the finance services sector  have been experimenting on the use of technology in today’s insurance business operations.

By the application of technology, the sector has taken the bold step of disrupting the  old business model to pave way for the new model of business  embedded on the use  of technology .

The operators, foresaw the relevance of technology in driving insurance growth in Nigeria when way back in 2019 they organised a mega  insurance conference with the theme  “Disruption Through the Use of Modern Technology”.

By this, the operators said  time was ripe for them to discard the old business model that had over the years left the sector in the quagmire of stunted growth and toddler  development .

Discussants at the conference, agreed  that if Nigeria insurance sector should achieve the projected trajectory growth, which has been a tall dream of the regulator, NAICOM in particular and the industry operators, it needed to disrupt the existing business model which it has been using over the years and embrace a novelty model which is anchored on modern technology utilisation.

This, they said, should cut across all activities in the business of insurance such as marketing, product design, distribution and service delivery model among others.

old insurance business model

Some of these old business model very prevalent in the industry include the use of insurance brokers and agents in marketing  as foot soldiers of the industry. With this, the industry has  not achieved much in the area of product distribution as both brokers and agents could not do more than their physical strength could permit them as well as their finances could carry them in terms of cost of transportation. With this old marketing model, majority of Nigerians remained ignorant of value of insurance and so do not purchase insurance.

Also recycling of old products in the name of new product design especially  life insurance products. 

Another barrier was the use of bogus policy statements with hidden clauses which are only interpreted when claims occur leading to prolonged argument between the insured and policy sellers.

Delayed claims processes and claims payment which often demoralises members of the insuring public .These are just but few of these old business models which the insurers have decided to discard and embrace new business model like  use of Artificial intelligence AI, big data analytics, blockchain, and the Internet of Things.

THISDAY notes that Nigerian insurers in particular  became more familiar with these new business model tools during the COVID-19 pandemic when lockdown on businesses compelled them to engage in remote operations.

Most of them who hitherto were indifferent to remote marketing using online method swung into action when for close to six months they could not go to their offices let alone visiting  prospective clients’ offices to do one -on -one marketing.

Technology and foreign insurers

Analysing how other insurers outside Nigeria got into use of technology for insurance business, Senior Technical Consultant Accelerite Business unit, Srithin Nair, said digital transformation in the insurance industry has revolutionised how insurers operate, interact with customers, and manage risk. 

He quoted Swiss Re Insurance report, as saying that during the next decade (2024‒34), total premiums would be more than double (inflation adjusted), and insurance penetration would  increase from 3.8 percent currently to 4.5 percent in 2034. 

He however,  noted that several challenges have emerged, including low-interest rates, increased competition, and shifting regulatory landscapes. He further observed that the rise of the Insurtech revolution has introduced new players, forcing traditional insurers to embrace technology-driven insurance innovations.

According to the AI expert,key  advancements, such as AI, data analytics, and blockchain, have created a significant impact on efficiency and customer service. 

While issuing the guideline a fortnight ago, NAICOM said the guidelines were issued after extensive stakeholder consultation and engagement. It said the guidelines,  which took  effective from August 1, 2025, were designed to provide a clear and unified regulatory framework for the licensing, operations, and supervision of  Insurtech firms in Nigeria.

According to NAICOM, the guidelines aim at fostering innovation that can lead to the development of new and innovative insurance products and services.

Ensure consumer protection and improve consumer experience.

The commission added that the document which aimed at prioritising consumer interests and providing better services, also provides clarity on regulatory requirements, reducing uncertainty and ambiguity.

The insurtech guidelines

With the release of the insuretech guidelines, insurers now know that the stage is  set for their full  adoption of insuretech business model in place of the old model and this will spark off various alliances and partnerships with various insuretech firms.

But there are two fearful areas in the whole issue.

One is the fear of rendering human labour irrelevant in the face of technological application.

The second is fear of the insuretech  firms themselves hijacking the businesses they have been contracted to push from insurers leading to the insurers’ loosing some lines of businesses  in the nearest future as has happened before.

But NAICOM seems  to be conscious of this as in the guidelines it  made provisions for issues like  conflict resolution saying in case of dispute between the insurtech firms and their insurance partners, the commission said  insurers must first follow arbitration protocols outlined in their agreements before approaching NAICOM. It also said consumers might  refer to unresolved issues from insurance transactions directly to the Commission for review and resolution.

Speaking on the  possibility of technology rendering human labour irrelevant, Managing Director Afriglobal Insurance, Mr Casmir Azubuike said the relevance of technological innovations in insurance business and its short, medium and long term effects cannot be overemphasised. He said technology was important and highly needed in modern insurance business transaction.

He however said this should not in any way rule out the indispensability of human workforce in the industry whether in the short or long term.

He quite agree with the power and efficiency of such technological solution as Artificial Intelligence but said it could not  and would not displace human labour force in insurance business.

He said, “The question is to what extent will Artificial Intelligence  work, will it do all that human does? the answer is no. This is because there are aspect of roles and responsibility Artificial Intelligence will handle but not all.Again even the artificial intelligence is controlled by humans to a large extent.”

He cited instance of what happened in some countries during the COVID-19 lockdown where an artificial intelligent object knocked at people’s door with the intention of delivering medicine but when the occupant of the room opened the door, the AI object was starring at him without performing any action .

He said AI could work perfectly but cannot do all things without human factor coming in especially in this part of the world where literacy level was low.