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Building a Data-Driven Insurance System in Nigeria

Insurance	3284 VIEWS
Insurance
3284 VIEWS

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Saturday, January 22, 2022 / 09:47 PM / by Ekerete Ola Gam-Ikon / Header Image Credit: The Digital Insurer

At an insurance industry event last year, I asked:

"How many policyholders do we have in Nigeria?";
"How many women have insurance policies?"; and
"How many people between the ages of 18 and 30 are policyholders?"

In response, I got loud murmurings and laughter's in the room and we could not appropriately address the questions, because we all knew no one currently pays attention to the data and information in such manner.

Typically, the marketing executives of insurance companies hit the roads daily in search of premiums to take back to their companies. This is because premium is what the insurer presumably requires to meet expectations of investors, shareholders, employees, policyholders, regulators and other statutory authorities.

Everyone is focused on the premiums that are generated to represent annual growth and, hopefully, increase contribution of insurance to Nigeria's Gross Domestic Product (GDP). This has been the same struggle year on year.

Interestingly, the gamechanger for the insurance sector in Nigeria lies in the form, shape, colour or context of the population of Nigerians that have or do not have insurance policies.

Data and Digitization

In an unfolding era of digitization, it would seem unbelievable and untenable that insurance companies and regulators are not driving the growth of the sector through data, which have become readily available and accessible in digital form.

A couple of insurers that have began adopting the use of artificial intelligence, which pre-empts one's next step, are enjoying the predictive solutions that enable them to address aging issues of poor client information; so it is expected that with digitization, more can be done to use available data towards achieving speedy growth of the sector in many respects.

The existing sources of reliable data that the insurance companies can work with are several and massive when compared to where the sector currently stands. According to the insurance regulator, National Insurance Commission (NAICOM), as at December 2020 there were 1.03m individual policyholders and 891,218 corporate policyholders in Nigeria.

Juxtaposing this against the following data sources, you will have a better understanding of the objective of this article:

1. National Identity Management Commission (NIMC)

71,000,000 Nigerians have been captured on the database of NIMC as at December 2021 according to the Honourable Minister of Communication and Digital Economy, Dr. Isa Pantami.

2. Independent National Electoral Commission (INEC)

84,004,084 persons registered to vote as at February 2019 though 72,775,585 collected their Permanent Voters Cards (PVCs) according to INEC.

The Commission expects that the population of registered voters might increase to 100,000,000 towards the 2023 general elections.

3. Central Bank of Nigeria (CBN)

About 51,190,000 Bank Accounts (as at November 2021) out of about 111,540,000 active bank accounts (as at May 2020) in Nigeria have their Bank Verification Numbers (BVN) according to the Nigerian Interbank Settlement Systems (NIBSS).

CBN is targeting to have 100,000,000 active bank accounts enrolled into the BVN network by 2024.

4. Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

41,400,000 Microenterprises and 73,081 Small and Medium Enterprises exist in the official database of SMEDAN according to the report released by the Agency whilst marking the 2021 World MSME Day.

5. Others: National Communications Commission (NCC), Federal Roads Safety Commission (FRSC), Nigerian Immigration Service (NIS), Nigerians in Diaspora Commission (NIDCOM)

Hundreds of millions of Nigerians have Mobile Lines and Internet Access provided by telecom operators guided by NCC, Driver's Licences from FRSC, International Passports from NIS and are captured in the database of NIDCOM, which can be accessed for the purpose of offering insurance solutions.

Making Insurance Work for Nigerians

Given the available data from the aforementioned reliable sources, promoting and marketing insurance products in a data-driven approach will require new and innovative ways by insurance companies.

For example, offering existing 24-hour Personal Accident Insurance and Individual Life Assurance to registered voters with their PVCs and licensed drivers through a deliberate campaign in liaison with INEC and FRSC respectively could change the response of Nigerians to insurance. The pains to families every time accidents occur or lives are lost during general elections could be cushioned by the compensations from insurance companies to policyholders or their beneficiaries.

Something needs to change about the way insurance companies promote and sell their products in this digital era.

Understandably, any time holders of any form of these identities lose any of their cards, which have become linked to their private records, financial and otherwise, panic takes over even as the means of blocking access to the criminals are known and readily applied. There are expectations that there are ways insurance companies can help provide the much-needed peace of mind at times like these but are the insurers thinking about these concerns people have?

Given Nigeria's estimated population of 206,140,000 as at January 2022, it can be inferred that over 205,000,000 Nigerians need to have one form if insurance policy. This is the gap!

A few questions that follow this naked fact are:

Can the current structure of insurance regulation and supervision in Nigeria handle this challenging gap?
Are the current number of insurance companies capable of handling the demands and expectations of one hundredth of this unserved population if Nigerians were compelled to take up insurance as the industry players have kept agitating for?
What will make Nigerians begin to trust that their information and data with insurance companies will not be used against them in a bid to delay or deny payment of their claims?

To make insurance work in Nigeria and for Nigerians, insurance companies must be as close to Nigerians as the issues that bother them daily.

Insurance can indeed keep more Nigerians away from poverty but to reach the huge population, there is need to promote and sell insurance in different innovative ways including the use of Pidgin English and other local languages.

Also, microinsurance should be allowed to express its true name and become available in micro form both in terms of coverage and premium payments as well as claims payments.

New Direction: More Individual Policyholders

With the increased focus of all economic stakeholders on data and digitization, emphasis regarding growth opportunities has moved to the huge population Nigeria has. More businesses are using digital solutions to attract more people to their platforms and communities.

On this basis, the insurance industry should be poised to participate especially through partnerships and collaboration.

Traditional insurers and regulators will continue to discuss the issue of recapitalization, which has become a hardball but new and innovative players will rely on affordable and accessible channels to increase their customer bases working with the available sources of reliable data listed above.

Indeed, the end result of the performance of the insurance sector in Nigeria by December 2022 will reveal how much the players depended on data-driven marketing rather than the traditional approach, which has kept the contribution of insurance to Nigeria's GDP at 0.3 percent over the last 14 years.

The time to change the game is now. Let's go with data!

Proshare Nigeria Pvt. Ltd.

About The Author

Ekerete Olawoye Gam-Ikon, MNIM, CPP, is a management consultant with a specialization in Strategy and Insurance. You can contact him via e:mail olagamola@gmail.com and mobile +234-806-648-1111