Post-COVID-19, the Future is Bright for Nigeria’s Insurance Industry

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AHMED SALAWUDEEN

Dr. Ahmed Olaniyi Salawudeen is one of Nigeria’s most respected insurance icons. Salawudeen, who is the president and chief executive officer of Standard Insurance Consultants Limited (SICL), founded the company some 40 years ago and has, against all odds, built it into a world recognised company. Standard Insurance Consultants Limited, an insurance broker, based in Lagos, took the name of Nigeria to the highest level when it was awarded with one of the world most important business award called, “The Bizz Awards”, in an annual recognition awards organised by the World Confederation of Businesses (WORLDCOB) in 2017. Speaking on the 40th anniversary of SICL, Salawudeen tells Bamidele Famoofo that most companies in the industry must begin to think about mergers, if they must build the required capacity to perform as he says, the future of the industry is bright post-Covid-19 era. Excerpts:

How will you assess the business of insurance brokerage in Nigeria?

Generally to my assessment, the provision of using the services of insurance brokers as intermediaries by the public in Nigeria is still very far behind. The services being provided by the brokers are still not well known probably because of perception or misinformation. Therefore, I believe that the Insurance brokerage fraternity will have to do a lot more with the present awareness of the benefits associated with the usage of professional brokers’ services in the Industry.

Simply put, by practice, insurance brokers will not take fees from their clients; rather brokerage commission is paid by the risk carriers/underwriters with whom insurance business is placed. This doctrine has been in practice over centuries and I feel the brokers’ fraternity need to make this well known to the generality of the public in Nigeria. We should let them know that the insured is not losing anything by going through the medium of an insurance broker.

In reality, the benefits to be derived by the public in arranging their insurance requirements through a qualified professional insurance broker are enormous. For example, the public will benefit from paying equitable premiums for the risks being carried by underwriters, and not only that, the responsibility of collecting claims from the underwriters lies largely with a professional insurance broker. In the circumstances, I think the Nigerian Council of Registered Insurance Brokers (NCRIB), the umbrella of Insurance Brokers Association should continue on a positive note to explain this to the general public, particularly moving forward in the area of life insurance cover which is very important to the economy of Nigeria. The brokers are friends of the insuring public and their role should be seen as a symbiotic relationship between the insured and the intermediary.

How ready are the players in the industry to recapitalise?

This is a very topical issue in the insurance marketplace and surely, all the players in the insurance business in Nigeria must be ready to shore up their capital base. Therefore, the idea of recapitalisation will help the Nigerian Insurance Industry. As at the moment, some of the insurance companies are not adequately capitalised and in the circumstances, there is a need for many insurance companies to be thinking of mergers. That is to say, all the small-sized companies should come together and form a united front to be better capitalised. For your information, in the early days of insurance in Nigeria, the Insurance companies are at the forefront of investing their insurance funds with the banks. Simply put, the banks rely so much on the investment being provided by the insurance companies.

First and foremost, the premium being generated countrywide needs to be invested in one form of investment or the other, and this is done through the banks. The idea is if the fund is provided to the banks, they will be able to lend the fund at a reasonable interest rate to the public i.e. those who are in the communication, housing, industries, and other various infrastructural developments.

Nigeria government and others had been talking about the “housing for all” scheme by the year 2000. The idea is that if the insurance companies provide funds to the banks, they in turn will provide these funds with reasonable interest particularly to the mortgage banks.

Therefore, the recapitalisation of insurance companies appears to be very important and in the right direction. It will be beneficial if the insurance companies and the banks play their role as it is being done in other civilised societies around the globe. Nigerians will be better off if things are done properly.

What’s your plan to recapitalise SICL?

For your information, the brokers’ fraternity provides insurance professional services and they do not require high capital base as brokers are not carrying any risks. What is very important in brokerage business is the employment of qualified professional insurance personnel that will be a good technician in the interpretation of policy terms and conditions. From our Company’s point of view; what we have put in place is adequate professional insurance indemnity (error and omission). This means that we have sufficient insurance cover in place so that in case we provide wrongful advice to our mutual client whereby they suffer losses and they are unable to collect their legitimate claims, we can be sued for professional negligence. But as far as SICL is concerned, we are having over N1billion insurance protection from a very strong, reliable, and highly capitalised financial risk carrier/underwriter. That is all we need as a professional broker

Going by your 40-year experience in the industry, how will you describe the attitude of Nigerians to insurance?

My honest assessment and opinion as an independent gladiator is that there is not much improvement in the acceptability of insurance in Nigeria’s insurance marketplace. The reason is very glaring; the public perception towards the way insurance business is done in Nigeria is such that the people do not have confidence in the system to warrant them taking a cover. The perception of Nigerians (with respect) is that insurance business in this country is a “legalised robbery”. Incidentally, this is not so.

As I said earlier, the insurance business is an intangible product based on trust. Therefore, when a client who has paid his or her legitimate premium, is unable to get compensation when he files a claim, such a person becomes dejected and disgruntled. From my point of view, insurance image generally has not helped matters, especially as it pertains to the development of life insurance policies in Nigeria. From my experience over the last 40 years, the public appears not to trust insurance companies because of the happenings in the insurance marketplace. I believe many are perceptions, and some are real. However, this can be avoided by going through the channel of a professional insurance broker that can read the “small print” of the insurance policies so that it can be interpreted logically in the best interest of the assured.

In addition, if effort is geared to improve the image of Nigeria insurer, I strongly believe that there will be a lot of Nigerians who will agree that insurance is a better solution to the inherent risks that abound everywhere. My advice as always is that all the arms of the insurance industry in the country, starting from the regulator, the risk carrier, the intermediary fraternity, the education sector, and others should come together as a block to put in place a blueprint that will ensure the improvement of insurance Image in Nigeria. I believe the issue of image is very important and critical. Certainly, it is a yardstick for us to move forward in the insurance industry.

What are the effects of the COVID-19 pandemic on Nigeria’s insurance business?

Unfortunately, the emergence of COVID-19 has affected all insurance businesses dramatically around the globe, including Nigeria to which you referred. The COVID-19 epidemic has opened a lot of Pandora boxes that are going to affect the insurance businesses generally not only in Nigeria but globally.

However, with what is in place at the moment, the insurance Industry needs to be proactive and take decisive actions to ensure that financially, insurance cover is provided for those affected or will be affected by Coronavirus. For example, insurance companies are known to provide medical checkups for their teeming clients when they are taking life insurance cover or some other contingencies. By these tests, it is apparent that the virus can be detected to save the lives of billions of people in the world.

Again, insurance cover can be provided either for an individual, group, professional bodies, or otherwise, and if this could be done proactively, it means a lot of business generation for the insurance industry as a whole. The most important thing is to be proactive, think positively, and determine how this will be done to ensure that lives are protected and that financial benefits are provided in time for those who have taken the insurance to cover death, burial, medical expenses, and others. Finally, technology has assisted in no small measure. Insurance business transactions can be done online, through video conferencing and others. Therefore business-wise, I believe the insurance industry will not be affected seriously because insurance cover needs to be provided on a worldwide basis. For every stage of our life, we need insurance.

What’s the future of insurance business post-COVID-19?

The way I see it, the future of insurance business post-COVID-19 in Nigeria and globally, looks bright. The issue at stake is that the insurance companies are providing insurance cover for the contingencies known and unknown and for the future. Therefore, with COVID-19 now, a lot of insurance covers are being developed to cater for Coronavirus and other viruses unknown to ensure that adequate insurance cover is provided. For example, if there is an insurance cover in place against COVID-19. If the breadwinner of a family dies due to Coronavirus, and the deceased is having an insurance cover in place, the insurance company will be able to provide financial backing to the family left behind to ensure that the family will not disintegrate even though the breadwinner of the family is no more.

Another example of this can be drawn from mortgage protection insurance cover; i.e. insurance protection can be arranged for an individual or group of people through a bank, a mortgage organisation, or from his employer for building or purchasing a private dwelling by using the medium of a loan from these sources. In case of his/her untimely death, the mortgage protection insurance cover will be made available to liquidate the loan so that the family is not put in a precarious situation. Therefore, for insurance companies providing cover, they are getting more businesses. Also, insurance is basic whether we like it or not. Insurance cover will continue to be offered to all assets, liabilities, traveling, etc. With or without COVID-19, insurance businesses continue

Therefore as I said earlier, the future of the insurance industry is still bright post-COVID-19. The most important thing is for the insurance industry to be proactive and let the public put trust in the business.

Will you share your experience in the last 40 years in this industry?

From the above, I have been able to portray my experience in the last 40 years. The good experience I have had and which is very important is for organising insurance programme for individuals, corporate bodies, etc. and that claims are paid as and when due. This is very good and I am so happy about this that Standard Insurance Consultants Limited ab-initio has made this as a foundation and we pay attention to the administration of claims settlement from time to time. This aspect of honouring our obligations has been very good and productive and I am happy about that.

This is where SICL is different from her competitors.

The bad and ugly side of it is the issue of the image of the insurance industry, which as of now is on low ebb. I believe with proactive actions within the arms of the players, this image will be improved as we go along.

Where do you see SICL in the next 40 years?

Insha’Allah, the future of SICL in the next 40 years appears to be excellent. This is because our foundation of business conduct is based on trust, integrity, honest of purpose, and we strongly believe in teamwork. We are disciplined professionals who follow the ethics and practice of insurance business to the core and we rely majorly on our clients as well as the risk carriers/underwriters. We hope to continue based on this foundation and this will take us to the next level over the next 40 years to which you referred.