Amidst sundry challenges, insurance sector operators are now mapping out various strategies to increase market penetration across Nigeria, writes Ebere Nwoji
One of the issues currently bothering insurance industry operators and the regulator in particular is how to expand the frontiers of insurance market by deepening its penetration and improve its contributions to the national economy.
Currently, insurance contributions to the GDP is 0.6 percent while the industry’s premium is below N400 billion.
Against this back drop, the regulator and the operators are in earnest search for solutions.
Their current effort is towards ensuring that every Nigerian at least has one insurance policy.
To achieve this, the operators have planned an industry rebranding project that will publicise the entire industry while the regulator aside contributing financially to the rebranding project, has targeted promotion of micro insurance institutions nationwide.
The regulator, the National Insurance Commission (NAICOM) recently released the guidelines for the micro insurance institutions just as it is currently preparing to start issuing licenses to would be operators.
But while these efforts are on going, members of the insuring public and even the regulator are pointing to the fact that the operators need to effect some major changes in their business modus operandi to achieve their desired success.
Indeed, they have challenged the operators to take certain steps especially in the new business year if they must win the level of public patronage they are yearning for.
At the 2018 media retreat recently organised by the Insurance Industry Consultative Council (IICC),the insurance industry operators were challenged to set their agenda right and clear so that other external actors in the business can have a stand to help them.
Speaking on the role of the media in deepening insurance penetration in the country,
The Editorial Page Editor, The Nation Newspapers, Sanya Oni, noted that amidst clamour to deepen insurance penetration in all nooks and crannies of Nigeria by insurance industry operators and the regulator, a lot of challenges currently besieging the industry.
He said the challenges have raised questions on the level of understanding of Nigerian insurance market environment and their peculiarities by the operators.
He also noted that in an environment like the Nigerian insurance market where risks are routinely prayed out and banished as â€˜not my portionâ€™, operators have got the task of convincing prospective consumer of insurance product to accept to dump the intangible of faith for an equally intangible product administered by human institutions.
He also urged the operators to examine themselves and address recurring questions in their business such as relevance of their product offering to consumers’ perception of utility.
He said they should also ask themselves ‘is the problem of non patronage of the industry that of communication or messaging what is their level of technological usage as well as response to other marketing challenges.
He also advised the operators to focus on keeping the rules of industry and codes of self-regulation which he observed have been set aside.
According to him, the most obvious one in this regard is rate cutting. The result is the unhealthy price competition which ensures that less than 50per cent of their expected earnings actually comes into the coffers despite the enormous risk borne by the insurance companies. “Before now, we knew of the roles of offices committee in setting industry wide premiums. Once upon a time, the offices committee which every insurance company as members of NIA belongs, and its self-regulatory mechanism, has been slowly and steadily eroded. In other words, the rules and conventions attenuating have long been jettisoned. Fire for instance which used to be charged at 0.2 percent minimum is currently 0.08per cent. How does the industry survive given that the cost environment is actually spiraling upwards not going down”, he noted.
Oni, said against this back drop, it was time to return to the old path.
Also at the maiden insurance Consumers’ forum organised by NAICOM in Lagos, insurance operators were advised by the President of Dangote Group of Companies, Alhaji Aliko Dangote to add value to the business of their major clients through the acquisition of technical knowledge of their clients’ businesses in order to be in position to educate them on basic safety knowledge.
Dangote, who frowned on the current trend among Nigerian insurers in which he said they are only talking about their premium collection from the very beginning of every insurance policy contract, to the end without thinking about how to reduce their clients’ risk exposure, noted that there is a big gap between Nigerian insurers and technical knowledge of their clients’ businesses.
He therefore challenged the insurers to aspire to get adequate knowledge of modern risks they underwrite such as cyber risks as well as the workings of credit insurance.
According to him, because of lack of adequate knowledge of the risk they underwrite, the insureds are often exposed to unnecessary risks while the insurers delay in the payment of the resulting claims.
The insurers were also advised by economy experts to adopt strategies such as placing customers at the centre of their business plans and strategies; review of products, policies and processes to ensure that they are relevant to customersâ€™ needs; to build capacity in retail businesses; deliver on the promises through simplified claims processes that will leverage on the use of cutting edge technology amongst others.
At the recent business outlook organised by the Chartered Insurance Institute of Nigeria(CIIN), the Deputy Commissioner, Technical, National Insurance Commission, Sunday Thomas, urged insurance operators to focus more on profitable growth rather than top-line or volume growth and that they should place great importance on professional and disciplined underwriting.
According to him, a low and uneven development of insurance business increases the level of risk in the economic decisions taken by individuals and firms, in turn hampering economic activity.
He further added that a sound national insurance sector represents an essential feature of a proper economic system, contributing to economic growth and fostering high employment, even as he stressed that without Insurance, businesses are unable to expand, create jobs and the economy stagnates.
Similarly, Managing Director, Financial Institutions Training Centre, Dr. Lucy Newman, advised the insurers on market intelligence; embracing evolving technology; products innovation; re-orientation of underwriters and brokers, rethinking portfolio and reinsurance provisions, amongst others.
Similarly, at a recent insurance forum in Lagos, the Commissioner for Insurance, Alhaji Mohammed Kari, advised insurance operators to use opportunities and challenges thrown up by factors such as competitive environment, changes in the world economy as a result of globalisation, deregulation, privatisation, financial meltdown, and the modern advancement in technology to transform their business operations and realign with customers by understanding their needs and ensuring an enhanced and efficient delivery of products and services.
He said NAICOM was aware that the satisfaction of consumers of product and services play a vital role in the sustenance of any business.
“The difference between great and poor customer service has always been clear, and businesses on the wrong end of this spectrum usually pay a price. This is as true for insurance as it is for any other customer-facing business. Today, the consequences of subpar service are amplified by the speed and reach of social media. One poorly handled claim, one mistake captured on a smart phone could escalate quickly into a brand-damaging crisis. This is why we believe it has become imperative that insurance firms increased their focus on providing great customer experience,” he advised.
He reminded insurance operators that providing a strong customer experience is not just about reducing the risk of customer service mishaps. It is increasingly a way for companies in competitive markets distinguish their brands, adding that delivering a superior customer experience takes more than developing a mobile application or adding a call centre staff.
He said in addition, it requires significant investments, relentless improvements, and collaboration across customer channels and business functions, from distribution and underwriting to claims handling.
Furthermore, he said understanding what customers want is paramount in building a better customer experience, acknowledging that the commission in recent time has noticed certain behaviours and actions of consumers that are not in psych with this belief which is detrimental and dangerous to the insurance industry in Nigeria.