The critical question that swells in the minds of insurance industry stakeholders and analysts has been: "When will the huge untapped potential of the Nigerian population be exploited and the contribution of the insurance sector to the GDP increase?".
In my review of the seasons since the industry's potentials became evident with the announcement of the first major recapitalization exercise in 2005, the one significant action taken towards realising the potentials was the Market Development and Restructuring Initiative (MDRI), which bore the WHEN and HOW Nigeria could deepen insurance penetration. It does seem however that the efforts since 2008 when MDRI was effectively launched have been more on the market development aspects with relatively less efforts on the side of the restructuring initiative of the market.
For example, the role of Insurance Agents have not remarkably changed though they were expected to be more active in onboarding new individual policyholders. Brokers are still fighting the same battles with trying to control the market while insurance companies have sustained efforts at providing direct channels for customers to reach them.
The organization of the insurance industry based on the interests of these stakeholders besides the policyholders would certainly need restructuring. Such restructuring has become urgently desirable to enable the insurance industry receive the help, support and affiliation that would deepen insurance penetration and increase its impact on the lives of Nigerians.
The Real Scenario
An individual that has an insurance policy and desires to renew it or the one who is seeking to get one for the first time is offered the same product (say Motor Insurance) by numerous Agents from virtually all 55 Insurance Companies, indeterminable number of Insurance Brokers and Facilitators and increasing number of Insurance Marketing Executives from, again all 55 Insurance Companies as well as emergent Aggregators through different touch points namely phone calls, text messages, visits, emails, apps, invitations and cold calls.
Can the insurance industry become one marketplace where interested buyers (existing and new) will approach for enquiries, purchases and responses? Can the potentials of the Nigerian market be realised when it remains highly fragmented?
To put these questions differently, can access to insurance in Nigeria be less challenging as the operators (Agents, Brokers and Insurers) offer a common front or single entrance, which would ease entry and exits for customers (policyholders)? Becoming one market in the sight of the customers has become strategically imperative in the efforts towards deepening insurance penetration in Nigeria, in my view.
Can the insurance industry be reoriented, reorganised, restructured and repositioned because of the customers and not be retained as it is for the traditional reasons that continue to promote egotism and underperformance?
Sectors That Can Help
If the insurance industry operators would see what has been expressed here as the critical challenges - how the customers see them and relate with them, then agree to change their positions, help can come from the following sectors and accelerate what needs to be done.
If I posit that poor communication has been the biggest challenge for the insurance industry in Nigeria, simply because the answers provided by operators to the questions by existing and potential policyholders are increasingly unsatisfactory and often confusing, will I be right?
Typically, an effort to explain to a customer why some insurance companies fail to insure certain risks or pay claims promptly or accept the involvement of insurance brokers in the transaction, ends up as a personal story that makes a Customer end up holding an Executive of an insurance company accountable for any future outcome rather than the entity he or she represents.
Raising the bar from the customer believing in an individual to a company, and an entire industry, requires a sustainable industry-wide communication plan that operators will commit to. It is not sufficient that customers believe in certain insurance brands today, they should rather believe in the industry and then choose the brand they will insure with based on uniqueness and preferences.
Currently, older insurance brands are struggling to bounce back or remain relevant and, like the entire insurance sector is experiencing, regaining damaged trust is a herculean task.
However, effective communication through the right persons and the right channels based on scripts developed by a joint team of insurance and communication experts would make the distinction that will create the desired attention and attractions.
Importantly, this will entail describing the situation that needs to be addressed to experts who would create pictures and videos to connect with the public in the areas of their concerns, for example, response to claims by operators.
The incredibly large user base of mobile and internet services in Nigeria is becoming a nightmare to insurance operators in a situation that can be compared to lions that see antelopes but cannot make a meal of them.
Can mobile telephony become a source of premium generation for insurance operators? Of course, yes, one would quickly respond. So, why has this been delayed despite the years of operations of the telecommunications in Nigeria?
Some of us recall that a few insurance companies had partnered with telcos, in the past, to make their products available and accessible but the relationships were suspended and subsequently annulled by regulatory actions. Is anyone afraid of what the insurance sector would achieve from such valuable relationships?
Just imagine 90 million subscribers spending N250 monthly on their personal insurance (Life/Health/Accident)!
It is my hope that recent efforts to bring back the partnerships pay off and more Nigerians are allowed access to insurance and financial inclusion leveraging telecommunications.
While there may have been a widening of the gap between insurance and telecommunications sectors by the introduction of electronic wallets and the likes, I am certain the insurance sector can still catch up with the strategy of embedding insurance in those wallets.
As natural as this may seem, it remains challenging how and where the insurance sector should allow technology enable the business.
Can technology enable the entire insurance value chain? The world of insurance has responded with an unequivocal affirmative position but there are still a number of things to do in the Nigerian market, from regulation to customer care.
One question that has been asked is: Does the insurance sector in Nigeria have a standardized technology software that addresses the experiences of stakeholders in the value chain? It does appear from recent investigations that the arrival of digitization has challenged the existing IT infrastructure of many insurance operators that are now required to decide whether to invest in licensed product or tech startups or even partner with them.
If the overarching objective is to deepen insurance penetration in Nigeria, there will be a need to focus on the technology that can help rebuild trust. Insurance policyholders must begin to feel like users of tech-enabled services which move people from one place to another with minimum stress.
How the insurance sector will receive help from these sectors to deepen insurance penetration in Nigeria begins with rethinking insurance as a business that needs others beyond the law that needs to be complied with.
Value is the name of the game in business and no one is ready to understand your peculiar reasons for not bringing value to any discussions or relationships. Interestingly, the value of insurance is mostly appreciated when claims occur and it is critical for insurance operators to protect that aspect of the insurance value chain.
The best days of the insurance sector in Nigeria are ahead of us and with greater help from elsewhere, we can fulfill the days.