Now that Elumelu Has Ventured into Insurance Sector

Now that Elumelu Has Ventured into Insurance Sector

Obinna Chima writes on the entrance of Heirs Insurance Limited and Heirs Life Assurance Limited’s into Nigeria’s insurance sector

The paradox of the Nigerian insurance market is such that both pessimists and optimists have valid arguments.
The pessimists view the insurance industry as one with a long history of underperformance, an Industry relegated to the background in a financial services sector that has produced more prosperous industries such as banking and pensions.

Optimists on the other hand argue that Nigeria remains a largely underdeveloped insurance market that can become a new frontier for growth, according to a report by Lagos-based pan-African credit rating agency, Agusto & Co.

Interestingly, it noted that both sides of the divide would often refer to Nigeria’s meagre one per cent insurance penetration rate, which indicates that only about three million Nigerians out a population of more than 200 million have any form of insurance whatsoever.

“At the root of these failings are age-old challenges of poor regulatory enforcement, weak corporate governance and risk management framework and general inefficiencies within the Industry.

“The greatest of these inefficiencies would possibly be the dearth of innovation. The level of product innovation in the insurance industry pales in comparison to the banking industry which has adopted several simple technological driven solutions that are being replicated across the globe today, such as SMS based and online transaction notifications as well as USSD based funds transfer mechanisms,” the report added.

That was why cheers greeted the entrance of Heirs Insurance Limited and Heirs Life Assurance Limited’s into Nigeria’s insurance sector as the doors of both companies were last week officially opened for business in Lagos.
The ceremony also saw the unveiling of the Heirs Towers, a new edifice by Heirs Holdings.

The event had in attendance, the Governor of Lagos State, Mr. Babajide Sanwo-Olu; the Commissioner for Insurance, Mr. Sunday Thomas; Chairman of Heirs Holdings and Founder of the Tony Elumelu Foundation, Mr. Tony Elumelu; bank chief executives as well as other business executives.

Heirs Holdings which is promoted by Africa’s entrepreneur and philanthropist, Elumelu, is a family owned investment company spanning the financial services, power, oil and gas, real estate and hospitality and healthcare.

Its operations are rooted in the economic philosophy of Africapitalism which proposes private sector-led long-term investment in Africa by Africans.
In his opening remarks at the unveiling ceremony, Elumelu who is the Chairman of Heirs Insurance, thanked the National Insurance Commission (NAICOM) for granting operating licences to both organisations.
He pledged to deepen insurance penetration in the country as well as change the insurance landscape.

He said: “Let me say that the journey that started seven years ago has finally materialised. It is good when our policymakers, regulators and public sector leaders begin to understand that for us to eradicate poverty, both the private and public sector must work together.”

According to him, by approving the licences for both companies, the regulator has helped to create more jobs in the country and improve the country’s tax revenue.
He stated that over the years, Nigerians have been yearning for insurance companies that will offer excellence and superior services, which would be digitally-driven.

He added: “These are what Heirs Insurance and Heirs Life Assurance would bring to our people. I want to say to you (Thomas) as our regulator, we have a track record of governance, best tradition of compliance and making sure that you (Thomas) looking back even when you retired, you will be very proud that you signed off these licences for these two companies.

“To the general public, we believe that our economy is the biggest in Africa, yet insurance-to-Gross Domestic Product (GDP) is insignificant. We need to work with the regulator and other stakeholders to make sure that insurance-to-GDP improves. In most other economies, insurance companies own banks.

“Finally, I want to say that we are coming with a strong track record, not just on governance, but on business success and business turn around and most importantly, wealth creation for all.

“We believe that prosperity should be democratised; success for us will not only be felt by the shareholders, but would be felt by everybody, including our communities as we strive to eradicate poverty.”
Indeed, Elumelu believes that empowering African entrepreneurs in the continent would be essential for the continent’s development.

He introduced the phrase ‘Africapitalism,’ an approach to business that creates wealth and in which philanthropy can be used to create value.
Africapitalism is also an economic philosophy that embodies the private sector’s commitment to the economic transformation of Africa through investments that generate both economic prosperity and social wealth.

The founder of the TEF argues that Africa’s renaissance lies in the confluence of the right business and political action and insists that job creation for the youth, inclusive growth, and gender diversity are priority areas for Africa’s development agenda as well as to achieve peace and stability in the continent.

He has consistently advocated that Africa’s private sector can and must play a leading role in the continent’s development.

This concept, as enunciated by its increasingly expanding literature, includes: emphasising entrepreneurship that will unlock the powers of individuals to create and grow their business ideas into successful companies; long-term investment, and especially in strategic sectors; conducting investments and business activity in a manner that delivers financial returns to shareholders as well as economic and social benefit to stakeholders; and facilitating intra-regional commerce and trade through the development of national and cross-border physical infrastructure, and the harmonisation of policies and practices, among many others.

“Africapitalism means we cannot leave the business of development up to our governments, donor countries and philanthropic organisations alone,” Elumelu said, adding that, “the private sector must be involved in the business of development.”
Africa is one of the fastest-growing continents in the world. The continent growth profile is among other things, driven by its rapidly expanding consumer markets as well as its private sector.

Nevertheless, Africa’s share of world trade remains low with a very small fraction of global foreign direct investment flows.

The promoter of Africapitalism strongly believe that African youths, if given the required support can compete with their peers in the global market.
This is also expected to lift the continent out of its present economic predicament and help reposition the continent after this pandemic.

“I am a bit concerned about the challenges that stare us in the face and we must do something now or it will be very challenging. The major thing is unemployment. It is a major challenge in Africa,” he added.

He also noted that a survey had shown that the continent requires about 200 million jobs, a gap the TEF has been striving to fill.

“So if we succeed in creating the enabling environment, SMEs would do well. If we succeed in providing access to electricity as we are doing, SMEs will do well.
“If we succeed in bridging access to finance to SMEs, they will do well and as they do well, there would be a direct correlation with creating wealth for Africa. So to us, the future is good, but we need to do something about unemployment,” he added.
This thinking is expected to be the guiding principles of the new insurance companies.

Pledging Superior Services
The Acting MD/CEO, Heirs Insurance, Dr. Adaobi Nwakuche, has promised that her organisation would through innovation and technology, change the face of the insurance sector.

She said: “We are delivering insurance that is easy to understand, quick and reliable, simplifying our customers’ lives. Our mission is simple: make insurance accessible.

“Our goal is to transform customer service: cutting waiting time in claims processing and purchase to bare minutes — across all touchpoints, including mobile devices. At Heirs Insurance, we want to give our customers what they have so often lacked – high quality insurance, at an affordable price – and with an insurer that is on their side.”

On his part, the MD/CEO, Heirs Life, Niyi Onifade, said: “Our goal is to integrate life insurance products into people’s daily lives to create financial inclusion and bring quality financial services to the many, not just the few.
“This way, we empower people to live more confidently and achieve their dreams, whilst securing the future of their loved ones. Heirs is all about giving our clients financial security. As people build wealth, we want them to know that they have a partner in Heirs Life, providing financial support throughout their life.”

Expectations
Sanwo-Olu, who commended Elumelu, said coming out of the pandemic, there was need for increased collaboration with the private sector.
He said: “We need to encourage the private sector because they are the real engines of growth; we need to acknowledge that no matter how well the government does, we certainly cannot employ everybody that needs to be employed and the private sector are the ones that can create opportunities for our businesses and they are the ones that can grow the GDP.

“Heirs Insurance and Heirs Life are bringing freshness and new beginning to the sector and they have said to us that they are going to be simple, they are going to use technology to drive insurance and that it is going to be affordable.

“I am convinced that Heirs Life and Heirs Insurance would certainly change the insurance landscape. With the array of men on the board and management team, it is clear to me that you will bring your wealth of experience to drive this company and take this sector to greater heights.”

Thomas, also commended Elumelu over his decision to play in the insurance sector as well as his decision to contribute to building the insurance sector.

“The timing of this launch could not have been more auspicious in view of the fact that NAICOM has been rolling out various developmental initiatives aimed at deepening insurance penetration in the country. With the capitalisation of these companies (Heirs Life and Heirs Insurance), I have no doubt that the Nigerian insurance market is poised to write big ticket risks.

“We want to minimise outflows and conserve foreign exchange for national development. Let me quickly state that the commission expects that the affairs of these companies would be conducted in consonance with extant insurance sector corporate governance guidelines and other directives.

“The independence of the board and its committees, including ensuring adequate disclosures and transparency are required of these companies. Let me state here that the commission is now more determined to ensure professionalism and high ethical standards to protect the integrity of the Nigerian insurance industry,” Thomas added.

Therefore, judging from the antecedents of its Chairman, it is expected that the new insurance companies would contribute towards efforts to deepen insurance penetration in the country. It is believed that opportunities abound for retail insurance penetration in the country which Heirs Life and Heirs Insurance must leverage on the brand strength and network of its promoters to tap into.

The companies must also develop attractive insurance packages for all segment of the society in order to beat competition as well as to find its way to the top of the industry.
In addition, they must embrace discipline, corporate governance and industry best practices so as to maintain the trust of customers and all other stakeholders.

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