In the face of dwindling revenue of many business organisations that has compelled operators to prune their overhead cost, making insurance bills to top the alternative foregone list; Insurance Managers are now migrating from corporate insurance business to retail business as a way of building stable insurance sector, writes Ebere Nwoji
In their earnest search for ways of expanding their market frontiers and boost annual premium income, insurance operators are now shifting their business focus from corporate line to retail line of business. The operators have adjudged retail business as the sector’s cash cow insisting that it was more profitable and more reliable.
Insurance experts like Dr Akin Ogunbiyi of Mutual Benefit Assurance, Casmir Azubuike of Afriglobal Insurance, Funmi Omo of Enterprise life Assurance and recently Niyi Onifade of Heirs insurance are among insurance technocrats who maintained that to increase insurance density in Nigeria, grow the sector’s premium and enhance its contributions to the Gross Domestic Product of the economy, retail business line is the right way to go.
Retail Insurance, according to insurance experts, means a general insurance product that is provided to or to be provided to an individual or for use in connection with a small business, and could be in form of motor vehicle insurance product, a home building insurance, a home contents insurance product, a sickness and accident insurance product, a Consumer Credit Insurance product, a travel insurance product such as personal and domestic property insurance product among others.
Nigerian insurers now concentrate on designing products along this line including funeral insurance to address the needs of Nigerians.
This is a major shift from the industry’s former business culture in which the operators believing that government is the highest spender in the economy therefore it is the biggest client of the sector; as such, they see no need looking for other insurance buyers.
Indeed, insurance operators held this belief tenaciously over the years neglecting the retail business and firmly concentrating on government and corporate businesses.
Consequences
Analysts said one thing this belief did to the industry was that it plunged operators into very stiff competition that resulted in all manner of unprofessional practices that almost killed the industry.
Before now, price wars and rate cutting were the order of the day within the industry especially as regards negotiating rates for insurance of federal government assets and its workers’ group life insurance.
The brokers in the business then would liaise with insurance desk officers of various government agencies to pay paltry sum as premium for government businesses with the agreement not to pay claims when it occurs.
NAICOM’s Intervention
It was until the industry regulator, the National Insurance Commission (NAICOM) set its eagle eyes on the operators and insisted that for every government business insured, there must be claims payment when risk occurs irrespective of how much the insurance firm charged as premium.
The development made the operators see the government business in particular as less attractive and the need to refocus their interest on retail insurance line of business.
Other sectors’ attitude
The development was worsened by the fact that some corporate business managers like those of oil and aviation sectors looked down on the local insurers due to their low capital base and preferred to insure abroad despite the local content law.
Indeed, Nigerian insurers were once told by officers in charge of NNPC account that the capital of the industry put together cannot conveniently insure one oil rig of the corporation.
Among the aviation sector operators, they alleged that insurance premium rate of local insurers was the highest in the world and some violated the prevailing rules and insured their businesses abroad.
Against this backdrop, insurers took a decisive step towards retail business in place of government and corporate business.
Early adopters of retail insurance
Insurance technocrat like Ogunbiyi of Mutual Benefit Assurance was one of the early operators to realise this and instantly retooled to change the company’s business model.
Mutual Benefit, said it resolved to strengthen its retail insurance market through strategic alliances and partnerships with relevant organisations and sectors that would carry its products to the doorsteps of average Nigerians.
The company organised market men and women in different markets in the country and gave them insurance coverage. It also organised okada riders and artisans and brought them under coverage of different insurance policies.
The company was able to do this through a strong agency system built up.
Also through its periodic retail team training and retraining programme the company sealed partnership deal with some consumer good manufacturing firms such as Heirer Thermacool Health Management Organisation (HMO) like the Life Partners to provide health care services to its clients.
Speaking during one of the training programmes in Lagos, the Managing Director/CEO, Mutual Benefits Assurance, Mr. Ademola Ifagbayi, said Mutual Benefit, in organising the periodic retail team training and retraining programme, wished to create value by designing products that would add value to existing products the company has already pushed to the market.
He said the underwriting firm was partnering a friendly Health Management Organisation; Life Partners to push its two existing life insurance products Term Assurance and Loss of Job cover to the enrollees in the health management organisation’s kitty. According to him, the company, wants to use the two major products time Assurance and loss of job Assurance policies as enabler to penetrate enrollee of HMOS. African Alliance is another insurance that is using its strong agency system to reap bountifully from retail business. The company focused interest in major markets in the country especially big markets in different parts of the country.
It’s ground breaking activities in Onitsha market is clear when at its annual reward for hard working employees it was discovered that Takaful insurance assumed to be for Muslim faithfuls recorded highest sales in Onitsha market.
Niyi Onifade of Heirs insurance told journalists at the recent Africa Insurance Organisation conference in Kenya that retail insurance space was key to increasing insurance industry profitability. According to him, insurance operators can do more in the area of profit if they put in more resources and invest in technology.
He disclose that his company, Heirs Life has invested heavily in technology, because of the belief that it can hardly serve the retail audience without appropriate technology.
According to Onifade, within the last one year of the company’s operation, the bulk of its revenue came from the retail market and this can be attributed to technology.
He added that the bulk revenue achieved by the company has reaffirmed what he has already known over the years “that retail is where the profitability is. Retail is where the market is. Retail is where customer service is. And this one year to us it has been very good,” he confessed.
The life insurance operators seem to be breaking more grounds on retail insurance through modern products that appeal to the needs of Nigerians, which, operators have offered, to the public in addition to the conventional life insurance that matures at death.
Custodian LIfe Insurance Limited was one of such firms as it came up with one of such much desired life policies that offer the insured the opportunity of benefiting from the policy while still alive.
The company, launched a product that will enable the insured conveniently seek for adequate medical treatment at home or abroad without turning himself and his household into public beggars in order to get funds for medical treatment.
The company, tagged the product, “Custodian Critical illness insurance policy (CCIP).” The policy, which is the first of its kind in Nigeria, is for those suffering from critical and terminal illnesses such as stroke, cancer, heart attack and renal failures. The company, which described the product as a standalone policy of its kind in Nigeria said launching the product was informed by the present economic, health difficulties in Nigeria to assist millions of Nigerians who were victims of the above illnesses address their health challenges.
Currently, the trend in Nigeria is to see people affected by these terminal sicknesses write to philanthropists, governments at all levels, civil society and humanitarian organisations through agents or non-governmental organisations for financial assistance to seek for medical attention outside Nigeria.
Also Coronation Insurance Plc, had championed the course of encouraging Nigerians to cultivate good savings culture with its array of smart products targeted at not only giving competitive interest rate to consumers but also offering free life insurance cover to savers. The management of the company, explaining how savings through the company’s various smart products work stated: “So here’s how it works; you want to save towards a short term goal, you choose the plan that works for you depending on your need. An account is then created for you and you save monthly. Now for the period of your plan you have life insurance cover!”
Anchor insurance came up with job loss insurance policy to cushion the effect of job loss on family men and women before they will get another job or think of what else.
As insurers storm market with these innovations Nigerians develop interest in them thereby familiarising themselves with insurance and its values to their lives. But Managing Director Risk guard Africa, Mr. Yemi Soladoye sounded a note of warning in the area of level of trust and credibility on the part of insurers themselves.
According to him, one major problem that must be addressed by the insurance industry in Nigeria is trust and credibility. He said one surprising revelation from the FSS 2020 Project, the MDRI Project and the Country Diagnostic Study of Microinsurance is that there is high level of confidence in the insurance mechanism itself in Nigeria but that there is low trust in the practitioners.
He said another observation from the Country Diagnostic Study of Microinsurance is that the low-income people are still largely neutral in their opinion and perception of insurance and its practitioners.
He said that in order to unlock both retail and microinsurance business in Nigeria, the regulators and the operators must prevent transferred aggression from the commercial line to affect the microinsurance and retail business and embark on the following steps.
Insurance education
He said there must be deliberate insurance education for the low-income people especially at the rural areas. This should be executed through more of radio, less of flyers nil of TV and nil of newspaper adverts.
“Impossible promises must not be made and if possible joint branding and same message by all providers will bring credibility, trust and approval. The difference in the risk profile between the rural and urban low income people must be taken into consideration in packaging the enlightenment materials”, he stated.
