Insurance Sector: Drawing Lessons From Others

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Friday, July 10, 2020  / 04:10 PM  /By Ekerete Ola Gam-Ikon  / Header Image Credit: Facebook

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Living in a season of multiple crises can be such a difficult time to learn new things, but confronted with an unprecedented issue or challenge means that you necessarily need to look beyond your boundaries for answers and solutions. Quite often, we can easily get into the general discussions of the way out of crisis, as in the case of COVID-19, however we might discover that we missed the great opportunity of using the moment to solve some specific age-long problems, like in the case of the insurance sector in Nigeria.


The insurance sector is probably the bright light that the economy and the policy makers need to follow as we engage in conversations that will keep us standing during and after the pandemic and recession, and the reasons are clear:


1. Insurance is the stabilizer of the sources of revenue, employment and development. It enables businesses to focus on their primary goals and in the event of misfortunes, it compensates those that had policies and ensures they continue to produce, profit and pay their obligations. In 2018, the industry paid over N300b as claims to policyholders, mostly organizations that employed millions of Nigerians thus keeping them in business and paying taxes and salaries. Directly, the insurance sector paid taxes of N36.5b during the same period;

2. The contribution the insurance sector is making today is from just 1.9% (2019) of the Nigerian population having at least one insurance policy and only 19% of the local content policy for the sector of the projected 70% for 2020 being met. Imagine then if you had more Nigerians having insurance, for example, 38m holders of the National Identity Number or some of the 87m registered voters!


Understandably, this bright light called insurance cannot shine if it is covered or kept far away from where it will be seen and appreciated. So far, many Nigerians know insurance for the poor reasons and there is so much that needs to be done in a few different ways to earn insurance its true position.

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Who Will Hold The Bright Light?


Ordinarily, the question should not have been necessary as most of us will say, of course the insurance sector leaders. True, however, in view of my understanding that the spread of insurance will not only bring benefits to the sector players but indeed, all of us, this bright light should be held by those who have the solutions to the challenges of the sector. Otherwise, those in the sector who can imbibe the positives of those that have the solutions could be a better way to go. Here is the very interesting shortlist of those that I think the insurance sector should learn from to overcome some of the critical challenges it faces:


A. Politicians for Mobilization and Communication - Being a business of large numbers, the insurance sector needs as many people as possible to be on board, so it needs to mobilize and communicate constantly like the politicians do! Laughable but interestingly, the politicians succeed at selling "Hope" to the people and win or not, many are left disappointed. Insurance, which even has diverse benefits at the end, has rather struggled with attracting converts simply because of lacking the ability that is common amongst politicians. Besides mobilizing people, the communication style of the politician is active both in content and channel. You may not agree but I strongly think the sector needs to learn how to mobilize and communicate from the politicians;


B. Nollywood for Continuous Improvement - Nigeria's entertainment industry, in my view, earned its place in the world simply on account of "listening and doing" what the audience wanted. Specifically, Nollywood, the film industry named after Hollywood in US and Bollywood in India, has seen improvement in all respect from acting, directing, funding and marketing. The value chain is interestingly integrated that often the end is obvious before the film is made. Currently, and as in the past, existing and potential insurance policyholders are indicating their desires and expectations, which insurance companies cannot afford to repeatedly ignore if the sector wants to see growth in a sustainable manner. To better appreciate this point, place a film produced in 1998 beside the one of 2018 then seek to compare the pictures of the insurance sector within the same time frame. The improvements in quality of the films attributable to the audience is quite huge while the insurance sector may have lost much on account of listening but not doing what the customers request.


C. Banking for Aggressive Outlook and Conservative Core - In what seems like a case of "jealousy in the family", the relationship between the banking and insurance sectors continue to be testy. This is essentially because some see both as professions while others see them as businesses. In other words, people, unknowingly, do business with their enemies and why not, especially if it is food business, which you are unlikely to know the end user. Insurance sector players can decide to kill the imaginary jealousy and seek to copy inexpensive actions the banks take to look exciting to the public. Location, colours and culture are strategies adopted by banks to engage but insurance companies take these things for granted. Importantly, banking remains conservative at the core despite the outlook of aggression seen by all, and this is what insurance needs to emulate, in my view. How many of us have noticed that despite the migration to 10-digit NUBAN account number, the banks had kept the original account numbers given to us before NUBAN came? Conservatism in practice. 


D. Techies for Innovation - As difficult as it seems for insurance companies to justify the huge investments in technology amidst other pressing needs, they will be need to try and fail faster before achieving the needed traction through technology. Today's insurers need to decide to set aside a portion of their budget for testing innovative solutions as techies, and grab the positives for future use from the failures that will occur. The fear of failing can best be handled by working with techies and small firms involved in such exercises; then sometimes, you cannot know by just analyzing the technology but through testing with a focus group. Innovation is a process that you cannot just pay for but undertake and earn the lessons, something techies are familiar with.


E. Fast Moving Consumer Goods for Retailing - Before digital technology, insurtech precisely, became an attractive discourse amongst insurance sector players, retail insurance was the only pronounced future source of premium growth for the insurance sector. Though there were some consideration for technology to be in place for retail insurance to thrive, there are some inexplainable delays today over pushing growth through retail insurance. In my view, the problem is the absence of a true retailing experience that could come from the Fast Moving Consumers Goods sector. A drink retailer can see the connection between its product and that of a telecom service operator in a retailing sense but an insurance service provider might not. Thus, the need to learn from the FMCGs sector is imperative and urgent.

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Let Collaboration Be The Game Changer


Another challenge that needs to be addressed by looking outside but not to copy is the payment solutions, which could enable and ease the process of claims settlement, especially for insurers with a good reputation for payment of claims. Insurance companies really need to create separate units or departments that handle collaborations and partnerships and nothing else to make them happen. Fittingly placed within the Strategy Division, their responsibilities will be seeking and receiving propositions from potential partners in diverse areas not limited to product development, channel distribution and financial technology.


The insurance sector is in a pole position to take the rest of the economy out of the woods but it must be willing and ready to hold that torch which bears the light that brightens the way for us all. Copying, imitating, or whatever we may call it, is allowed under this circumstance and season, so please let us see some movements within the insurance sector to pick those good points from others for some meaningful changes that will enhance the engagement between the sector and the public.


We are looking forward to better days for policyholders, investors in insurance and indeed, all insurance stakeholders!

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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 and mobile +234-806-648-1111

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