The insurance landscape in Nigeria has tremendously evolved and this growth can be attributed to certain policies introduced to the industry.
Contributions from the government and governing bodies, which were positively welcomed by the masses, have turned out to be impressive over the years.
Commendably, the rising rate of response of Nigerians to insurance and insurance policies is responsible for the increased level of awareness of insurance, especially in the corporate world. Many institutions now realise the need for insurance cover on their assets and personnel, as well as motor insurance and group life policies.
In a recent interview, Anselem Igbo, Chief Executive, Stanbic IBTC Insurance Brokers Limited, noted that the implementation of compulsory insurance by the National Insurance Commission (NAICOM) is a crucial driver for increased insurance acceptance in the country.
He said: “First, the regulator is part of the Federal Government. Looking back at the last two decades, insurance has gained more acceptance, as the efforts of NAICOM and other industry players have yielded some results. The industry is now able to attract professionals from all fields of life. Individuals of different professions like medical doctors, lawyers, engineers, accountants, among others, have become a part of the industry and they all contribute their different ideas on how to move the industry forward.”
Igbo noted that the industry had achieved much, with the prompt payment of genuine claims by insurance companies, which has led to increased trust in insurance products.
He said: “Even in this pandemic, and despite the lockdown, most insurance companies have performed creditably well by paying the genuine claims, once they are fully documented. However, there is a continuous need to grow the market to attract the younger generation. With current digitalisation, the purchase of personal lines insurance will become seamless and more attractive to the younger, active and working population.”
When asked about digitalisation, Igbo stated that it had positively impacted the insurance landscape.
He said: “Insurance companies now have their motor insurance automated for third party motor insurance cover. For comprehensive protection, there are still some processes before full confirmation of cover can be granted. It is certain that in the no-distant future, some class of motor insurance claims will be fully automated and claims paid seamlessly. Also, frontline insurance companies are putting in efforts towards digitalisation. They have launched one form of App or the other, to deepen digitalisation in the industry. Technology is expensive, no doubt, but if the sector can pool resources together and have shared services where necessary, the cost of digitalisation will reduce significantly.”
According to Igbo, the industry players can take charge to propel the industry by delivering efficient services and investing in technology to drive the business, without aimlessly waiting for the government to change the narrative.
“All that is needed from the government and the regulator will only be an enabling environment to amend the laws and give necessary approval for digitalisation. The COVID-19 experience has proven that innovation is greatly needed in the insurance industry,” Igbo affirmed.
At these uncertain times, the insurance industry, as well as many others, have faced a bit of downtime for operations that excluded digitalisation.
The COVID-19 pandemic was unprecedented and minimal preparation was made for it. Sadly, it has in one way or the other affected several businesses and industries, insurance inclusive.
One limitation was that the level of insurance transactions slowed down for most insurance companies while working remotely. Although little impact was felt on the generation of policy documents, the significant fall in service was in the delivery of hard copy documents. This is because the insurance service is mostly reliant on courier services, which were partially grounded during the lockdown, except for essential deliveries.
For significant risks that involve coinsurance from multiple companies, all of the coinsurers’ signatures on policy documents and endorsements are needed. However, this has been very difficult to effect during this period, as the social distancing guidelines did not encourage bringing multiple insurers together.
During the total lockdown, a few insurers announced a possible ‘give-back’ for Personal Motor Insurance, although this was limited to the Comprehensive Insurance only. The give back could be as much as a one-month premium rebate to the policyholders who were constrained to ground their vehicles in strict compliance with the lockdown order.
The insurance industry has immensely contributed positively to the Nigerian economy, even in these difficult times. Unfortunately, there is currently no known ‘pandemic insurance’ sold in Nigeria. It is certainly not common, although there have been sufficient events in the past that should have warned businesses that the day of COVID-19, and its likes, could come.
The foremost insurance brokers Chief Executive suggested that the pandemic insurance, along with a business interruption insurance, may help cushion the effects of a pandemic.
In his words: “An insurer interested in transacting this product only needs to show evidence of an adequate reinsurance arrangement and the satisfaction of other conditions as may be required from time to time. Considering the increase in fraudulent activities and event cancellations as a result of the pandemic, insurance brokers should encourage their clients to take up cybercrime and event cancellation policies.”
Every challenge presents its opportunities. The Covid-19 pandemic is no different. Recently, the industry regulator – NAICOM – examined the impact of the pandemic on insurance companies and came up with new guidelines on the recapitalisation for the industry.
This includes a more reduced recapitalisation limit to be met by 31 December 2020, which was the initially advised date. However, the companies will still be required to achieve full recapitalisation, but at a later date in Q3, 2021.
The Commissioner, NAICOM, Mr Sunday Thomas, also said that there would be a change in regulation post-COVID-19.
According to him, the Commission will also make the consolidation initiative focus on designing products that are more suitable for such unexpected events.
In NAICOM’s views, the pandemic has thrown up challenges which, if embraced by the operators, would reposition the industry for better growth and development. There is also a waiver on the deadlines for some regulatory reports, with NAICOM giving some months of extension.
In the area of distribution, direct marketing staff and some insurance brokerage firms who rely heavily on physical contact for selling of insurance were deeply impacted by the pandemic.
This mode of marketing is not allowed by some insurance brokers and clients who do not encourage visits.
There is every possibility of repurposing some business development staff who rely on physical contact marketing. Another impact of COVID-19 is that there is an increased uptake in life insurance policies for both corporate and personal lines.
Igbo concluded that the speedy growth of the insurance landscape in Nigeria is largely dependent on the expansion of technology.
Digitalisation must be embraced to build better and faster solutions that will attract and cater to the insurance needs of the masses.