Â Eddie Efekoha, is the Managing Director of Consolidated HallMark Insurance Plc. In this interview with Ebere Nwoji, he spoke on role of insurance in a recessed economy and his company’s journey so far after its merger with three other firms, among other issues. Excerpts:
How do you assess your 10 years in the Nigerian insurance sector, how did it all start?
Yes, 10 years ago; some developments took place in the insurance industry. Principally, we know of the recapitalisation that was induced by government through the National Insurance Commission (NAICOM). It spanned over a period of 18 months and ended February 8, 2007. While some people saw it as an opportunity, others saw it as a challenge. For us, we saw it as an opportunity to increase in size, so, rather than do it alone, we decided to go as a team in order to build capacity. So, our way of responding to the recapitalisation was to go through a merger which was a merger of three companies. They are Consolidated Risk Insurance Plc, Hallmark Assurance and Nigerian General Insurance Company, and fortunately we did that and NAICOM issued us a license. So, by March 1, 2007, we opened to business in the name of Consolidated Hallmark Insurance, taking advantage of our brand combination and this reflected in the choice of our name today. This is how we came about the company we are running today. We are celebrating 10 years from the time of this merger not when the merging entities came into the business of insurance. There were many stakeholders in the merger and the first to give kudos is the investors that went through the court ordered meetings that gave birth to this merger. All of us can vividly remember what happened then, when we had to all face the wall of NAICOM office in Abuja like students waiting for the result of an exam, until your name was called, you were not sure you have scaled through. As soon as we concluded the process of getting our license from NAICOM, we came back happy and the process of integration started. In integrating,Â we looked at key functional areas of the business, issue of staffing was also critical because we ensured that we didnâ€™t lose our best hands, but also were mindful because we needed to ensure we raise our standard and had a minimum benchmark. We had committee empowered by the board and they went round all the company locations, conducted fresh interviews and as soon as you crossed the minimum benchmark, found fit and proper and age is on your side, you had a space. So, when that was concluded, we issued ourselves fresh letters of appointment. That is why as we celebrate 10 this year, many of our staff who was part of us at the beginning have clocked 10 years working with us. We also worked on the technical side of the business and integrated all the operations and processes. We thank God we are where we are today.
Many business that started off 10 years ago are no more today, can you let us know what you did differently to weather the storm?
Â We cannot say itâ€™s by our power, Attaining 10 years is by Godâ€™s grace. They said the race is not for the swift; so we cannot say that we are strong to have survived the past years or everything was just by our own power. I think God got us to where we are. Itâ€™s unfortunate if any company fizzled out within this past 10 years. I wouldnâ€™t say may be they did not pray hard enough, but for us, we prayed and also worked very hard. This is a service business, so itâ€™s largely premised on people and if you donâ€™t have the right people, you are not going to be able to make it. So, as soon as we concluded the merger, we had a retreat where we agreed our core values and also agreed to change our logo and all that stuff. By the time we agreed on core values â€“ we saw that these core values of professionalism, relationship, integrity, customer focus, excellence are people determined not machines. Itâ€™s only people that can drive them, and so we came up with this offline â€œWe are what we haveâ€. So, we focused on people and have continued to build on our strength and capacity.Â We tried to select rightly and that is not to say we did not make mistakes. We also emphasised on technology, which are needed to help our people deliver. People alone cannot deliver and so we emphasised technology. You remember we are the pioneer promoter of online third-party policy and the acting commissioner for insurance at that time was on ground to flag it off and we went all round town. Bye and large, the product got maturedÂ and we went on. In between, we realised that if we must survive these 10 years, we needed to pay attention to these key stakeholders that made this merger possible.Â How do we respond to them? By paying dividends,we did not pay dividend all the years, but we paid dividend most of the years we existed after the merger. And it will interest you to know that a company that was capitalised a little over N3billion, has paid to date about N960 million divided and by the time this yearâ€™s own is added we would have crossed N1billion mark. This has helped us to move from our year zero to year 10. The principal thing in our business is the payment of claims. So, we made sure that in these ten years, we have paid claims the way it is supposed to be paid, against the perception out there about insurance. So, each year, when we go out to say happy New Year to our clients and brokers, we are encouraged about the comments they pass on us on our claims paying practice. So, we are getting our own share of the market. It could be better but we are grateful to God. And we have enjoyed the cooperation of our board, being that they gave us freehand to operate and there is absolute trust between board and management and this has taken us to where we are today.
Looking at the insurance industry pre and post consolidation, what has changed?
Â I think before consolidation, our attitude and way to business of insurance was far low. Today it is better. Reasons are not far-fetched. First, is that the industry had more money post consolidation. The average wage bill has gone up; the average expenditure on publicity is more. There is more money for advertisement, there is more money for awareness. We are engaged in one education activity or the other. Today many insurance companies are engaged in sponsorship of golf. How many could do it at that time? If you say they are doing only one advertisement now, before they were not doing anything at all. We were not having insurance as subject in secondary schools, today itâ€™s offered at WAEC level. Many higher institutions today offer insurance as a course, unlike accounting that you find in every institution. You will see that post consolidation, things are happening. Are we there yet? The answer is no. But are we better? The answer is obvious yes. We have done something, but it could be better.
Nigeria is currently in a recession, how has the insurance industry fared at this time?
Â Recession is a matter of a very short time. Yesterday and today, World Bank said Nigeria is out of recession and the presidency said they are conscious of it and they are waiting for the figures from the Bureau of Statistics. Truly, you will feel it. Yes, we are beginning to feel it. When we are in recession, we felt it, so as we are getting out we are also feeling it. If the federal government can fund the foreign exchange demand the way they have done and have been doing it, we wouldnâ€™t have gotten to this level. And for them to have funded it and still grow reserve is a pointer to the fact that we are out of it. And when you look at it sectorally, you find out the financial services did not really go down like that. Oil and gas ran into hitches, no thanks to restiveness and insecurity by the boys. But a few visits initiated by the presidency and anchored by the vice president and talking to the leaders and the boys have brought the whole situation under control.Â Just a word of reassurance; we value you; we are part of you and all that. We no longer hear bombing of pipelines and all that. Every individual is important, even in our companies. Recession yes! It takes time for values to go up, it will also take time for it to come down. There have been job losses here and there, but the ingenuity in us has also helped us to remain growing and insurance has really found relevance in the current situation. The current situation has thought people on the need to save and that has further re-echoed the need for insurance. While it lasted, it impacted the business, no doubt. The capacity of most of us to buy insurance was limited, some factories closed down and all of these impacted on the business.
As a major stakeholder, what is the future of insurance in Nigeria and where is CHI in the picture?
Â The indices are clear. If you look around us, you will see that a lot of our friends from outside Nigeria are looking at Nigeria and if they are doing so, then you donâ€™t need any one to tell you that there is something good about us or a potential they are seeing. It then means that those of us here should equally watch out. You have seen that the minister recently engaged the market and has continued to engage the market to unlock its potential. This has been further strengthened with recent developments in NAICOM and all of these are to help harness the potential of the industry. Unlike before, government is beginning to understand that in its bid to get out of recession, to grow the economy, to get out of recession insurance cannot be handled the way it has been. For us as operators, we should roll up our sleeves and see how we can take advantage of the opportunities in our industry.
You are an expert in aviation insurance, often times, airline operators in Nigeria have complained about high rate of aviation insurance in Nigeria compared with the rates in other countries, what is your reaction to this?
Â You find out that we have multiplicity of problems when it comes to aviation insurance in Nigeria and you must take all of these into account in your rating.
What is rating?Â First of all, it starts with underwriting; look at the good featuresÂ and look at the bad features and all these help you to determine your average rate, The good ones will help you to determineÂ your discount rate, the bad ones will help you to blow the rates in order to come with the rates that apply to that particular risk.
When you bring all of these into specific operators, you then look at their managements. We had issues; I don’t have to name them. Number one, airline has problem; andÂ when there are financial problems, what happens; what do you do you begin to cut corners.Â So, what do you expect the rates to be. Do you expect the rates to be lowest compared with emirate, or compare with BA, who are they comparing with? Emirates that had a fleet of almost a thousandÂ or if you want to compare them, the largest we had in NigeriaÂ before was about 28 today, the largest is not more than 15 .Is that what you want to compare is it up to fleet an individual will own in America. So there is no basis of comparison. Countries’ risks differ. All these aviation operatorsÂ over there do they pay premium on monthly or daily basis andÂ when you get to the airport, look atÂ our airports, with all the touts and what have you so everything is wrong with it so the rates cannot but be high. When we get our things right, the premium can reduce. Of course size is an issue. You are generating a premium for instance that cannot buy one plane but like the likes of BA, their premium can buy three Planes. So size is an issue for instance, if I am running a factory, I should not expect toÂ enjoy the same premium with a company like WAMCO or Dangote, so size is an issue. I think our complaint is as a result of level of our literacy in insurance. Insurance is a specialised profession so we don’t expect that everybody will understand it that is why it is a profession.