Smart: Technology Will Improve Service Delivery in Insurance Sector

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The outgoing Chairman, Nigeria Insurers Association, Mr. Tope Smart, in this interview speaks about the relevance of technology in service delivery in the insurance sector, the challenges facing the sector, as well on other issues. Ebere Nwoji provides the excerpts:

You have been piloting the affairs of the Nigeria Insurers Association (NIA) in the past two years, what are the major achievements the industry recorded within the period?

With all sense of modesty, the insurance industry has achieved a lot in the last two years. I will attempt to highlight a few of them. For me, the greatest achievement is the recognition of the insurance sector by President Muhammadu Buhari. This is the first time in the history of the insurance industry in Nigeria that our sector will get the attention and commendation of the number one citizen of Nigeria. This is a big deal and we are building on this so that the insurance industry can take its proper place in the configuration of the country. This is not a mean feat when you look at how the sector has been bastardised in the past. Apart from this, other achievements are our intervention with respect to Covid-19 that came in two parts.

We arranged a life insurance cover for up to 5,000 health and frontline workers all over the federation. We collaborated with other stake holders in the industry and donated the sum of N500 million to the federal government to further contain the spread of the virus. We worked tirelessly, towards the construction of NIA building and it has reached an advanced stage. On recapitalisation, we are in full support of the exercise and we embarked on various engagements with critical stakeholders such as NAICOM and the Nigerian Stock Exchange (NSE). We used the opportunity of our engagement with NSE to solicit the support of capital market operators for our members.

We pursued with renewed vigor, the tax law which was unfavourable to the insurance industry. We escalated the issue up to the National Assembly and thank God, the tax law has finally been amended through the 2020 Finance Bill. In the area of corporate social responsibility, we carried out a renovation of the school hall of Baptist Junior Secondary School in Obanikoro. In the area of professionalism, we are working with another arm of the industry to develop a framework to ensure that the business of insurance is done with utmost professionalism. The implementation of this will soon start.

We also developed the Promotion of Nigeria Insurance Industry Database (NIID) and Nigeria Insurance Industry Platform (NIIP) platforms to eradicate parallel markets from our environment.

The economy is projected to go into recession by the end of 2020. What measures should insurers adopt to cushion the impact on their operations?

My advice is that this is the time to eliminate unreasonable expenses and conserve resources as much as possible in preparation for economic downturn. In addition, the risk management mechanism of each company must be activated in order to withstand the headwinds that may come.

The insurance industry has a new Commissioner. What are some of things you want him to focus on to transform the market?

Once again, let me use this opportunity to congratulate the new Commissioner for Insurance, Mr. Sunday Thomas on his appointment as the Commissioner for Insurance. He is a thorough bred professional and a round peg in a round hole. For me, his priority should be market development. He should come up with strategies to develop the market. By so doing, we shall increase market penetration and also increase our contribution to the GDP. The second area is to focus on confidence building in the minds of the insuring public. Insurance companies must meet their obligations as and when due. Once this is done, members of the public will be motivated towards embracing insurance. Rules should be designed and companies who fail to play by the rules should be sanctioned. The third area of focus should be on digital technology. Technological advancement at NAICOM and also at the level of operators should be a front burner issue for the commission.

What were the challenges encountered in the course of your tenure as NIA Chairman?

I faced a number of challenges during my tenure as Chairman. I will highlight a few of them.
The first was getting every player to key into some laudable initiatives I considered very germane to the upliftment of the industry. Some of our members allowed their selfish motives to override the overall corporate interest of the industry. Until we are able to promote corporate interest over our individual parochial interests, the industry may not be able to reach its full potential. The second one was having to sacrifice the interest of NEM because of my position as the chairman of the association. This I did in a number of ways but I have no regret whatsoever because each time I had to take these decisions, I was focused on the bigger picture. Another challenge was that I had to share my time and devoted more time for the affairs of the association. As a leader, you have to be there for your members. Most of the time, I had to sacrifice my time, energy and also resources in the overall interest of the industry.

You came into the leadership of NIA when the industry was under trial in terms of response to payment of claims, how much were you able to address this situation during your tenure?

This issue has been largely addressed as I constituted a disciplinary committee and defaulting companies were invited to face the committee and errant members were given a deadline to pay their claims or face expulsion. With this, the response of our members have improved significantly.

What is the level of progress at the ongoing construction of the NIA building?

We are making significant progress with regards to NIA building. But for the lockdown on account of Covid-19, the edifice would have reached about 80 per cent completion by now. Notwithstanding, our contractors have mobilised to site after the relaxation of the lockdown and work on the edifice is progressing.

What support is NIA offering members with the Covid-19 to ensure they survive the recapitalisation?

We have engaged our regulator (National Insurance Commission) to consider the disruption to the process of capitalisation on account of COVID-19. Through our engagement, NAICOM has amended the original recapitalisation circular by extending and segmenting the process into two phases. Members now have up to 30th September, 2021 to comply with the new capital requirements.

With pandemic disrupting global businesses, what can the insurance market in Nigeria do differently to improve lives of policy holders and deepen insurance penetration?

Despite the pandemic and the lockdown, our members have continued to meet their claim obligations even during the lockdown as our members worked throughout the period, albeit remotely. Our policy holders were quite impressed with this, and this action has given them more confidence in the insurance industry.

What should the industry do to fully maximise its potential?

The industry will continue to partner with governments at various levels in the task of nation building. We will ensure that the benefits of insurance are made available to all the policy holders so that we can continue to perform our role as the bedrock of the economy.

NAICOM said it will come up with fresh guidelines on recapitalisation after Covid-19. However, some NIA members said they would have been better off with the tier-based recapitalisation. Is the NIA likely going to request that it should be revisited in place of share capital increase?

The tier-based capital introduced by NAICOM was no doubt a very good model but it failed because of the way the model was implemented. Frankly speaking, I see it as a very good model that will enable operators play according to their different capacities. Also, the model is aspirational in nature. The fact that you are a tier-2 company today does not preclude you from aspiring to be a tier-1 company which can be achieved if you bring in additional capital. Unfortunately, we can’t go back to it as NAICOM has moved from there to minimum paid up capital.

Customers are still complaining of poor service delivery. From the NIA viewpoint, what should companies do?

Technology is one of the ways to improve service delivery. At our recent retreat, we advised our members to upscale their technology in order to improve service delivery.

Can we have a peep into the audited financial statement for NEM Insurance for 2019?

A review of our performance shows that gross premium last year grew by 13 per cent from N15 billion in 2018 to N19.8 billion in 2019. Net premium also increased by 18 per cent from N10.6 billion in 2018 to N12.6 billion in 2019. Shareholders fund also increased from N12.4 billion in 2018 to N14.1billion in 2019. Net claims paid during this period increased by 54 per cent from N2.5 billion to N3.9 billion while investment income decreased by eight per cent, from N953 million to N878 million, due to low yield on investments. The huge claims paid during the period had a negative impact on our bottom line as profit before tax came down from N2.6 billion to N1.9 billion, a decrease of 29 per cent. However, profit after tax increased from N2 billion to N2.4 billion, an increase of 18 per cent due to deferred tax asset. From our associate in Ghana, we achieved an increase in profit from N21.2 million in 2018, to N21.4 million in 2019. We are confident of improving on this next year.

Can you share your best moment during your two-year tenure as NIA Chairman?

Despite all the challenges, I must admit that I enjoyed my time as chairman of the association. The fact that given the time limit, I was able to achieve some of my dreams for the industry gave me so much joy. The intervention initiative of NIA/Industry for which the President personally acknowledged was one of the best moments of my chairmanship. Aside this, as chairman, I had and enjoyed a very good relationship with our regulator. By the grace of God, I was able to get a lot of concessions from the Commission for our members without any rancor. This gave me so much joy and fulfilment. I believe that these modest achievements I recorded have enabled me to take the industry to a new level by the grace of God, without whom all of these would not have been possible. I will also use this opportunity to thank my wife and children, the Board of NEM and all my colleagues who gave me all the support even when I had to sacrifice the interest of NEM because of the industry. I must equally thank all my colleagues in the industry for the massive support I enjoyed during my tenure.