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