When the Lagos Area Committee (LAC) of the Nigerian Council of Registered Insurance Brokers (NCRIB) had its mid-year workshop on Thursday, August 2, last year, the theme was “Insurance Broking: Transitions and Disruptions.” Among factors threatening the survival of insurance brokers in Nigeria, information technology ranked very high during the deliberations.
Subsequently, when the current chairman of the LAC, Mrs. Bukola Ifemade, took over on December 6, 2018, the issue came up again. Speaker after speaker spoke of the need for brokers to embrace information technology in their operations and marketing. Much as many insurance brokers knew the necessity to embrace information technology, the enormous capital needed to acquire this technology was a major stumbling block. Mrs. Ifemade did promise to make market penetration and brokers’ welfare priorities. The LAC reached a milestone last Tuesday when it held its 2019 mid-year workshop. As part of the workshop, an information technology provider and a Microsoft partner unveiled a package insurance brokers can subscribe to at a very affordable rate. The app will help brokers automate their internal operations to enhance service delivery to clients and also enable insurance brokers to do mass marketing via information technology.
One of the major factors that have slowed down the marketing of micro insurance, for instance, is the absence of affordable systems and processes. The app the Microsoft partner is providing will aid insurance brokers to market micro insurance at minimal cost. The implication of the partnership is that what used to cost some insurance brokers hundreds of thousands and millions of naira, and also shut out majority of brokers from automating their operations is now accessible to all brokers courtesy of this new partnership.
The enormity of what happened on Tuesday might not be obvious to the uninitiated.
One, the Nigerian insurance market is a brokers market, that is, about 80 per cent of all insurance placements are through brokers. Increased capacity of individual brokers means more insurance businesses. Two, the LAC members account for about 75 per cent of the insurance brokers in Nigeria, so enhancing their capacity means growing the insurance market. Three, although there are no statistics to back it up, it is suspected that the operations of more than half of the brokers in Lagos are not automated. By this arrangement the operations of all brokers can now be automated. This gives them the ability to do a lot more than they are currently doing. Insurance penetration, which is currently very low, will get a shot in the arm and hopefully grow significantly. Gross premium income in Nigeria, which was about N364 billion (equivalent of $1 billion, while South Africa generated $54 billion within the same period) in 2017 will hopefully double and quadruple in a few years’ time. More Nigerians will hopefully have access to, and embrace, insurance very soon.
This collaboration will not solve all the problems the brokers currently face. We still have the problem of dearth of data due to low research and development mechanisms among industry professionals, low capacity (training and development) in the insurance industry, weak enforcement of compulsory insurances and avalanche of fake insurance products, among others. But the partnership will give more brokers the ICT muscle to get more involved in the insurance retail sector, take full advantage of the government’s local content policy, the emerging markets and the resurgent markets like the textile sector. Insurance brokers do need to build more technical and underwriting capacity though, something the LAC and the umbrella body, NCRIB, are very conscious of and are working to improve through seminars, workshops and other training avenues for brokers.
Before Microsoft Nigeria unveiled the insurance brokers’ app, the Executive Director, Business Development, First City Monument Bank, Mrs. Bukola Smith, had delivered a keynote address on the theme of this year’s mid-year workshop, “Deploying Technology to Drive Insurance Penetration.” She decried the low insurance penetration level in Nigeria, blaming professionals for not leveraging on technology to promote growth in the industry.
“Insurance penetration in Nigeria is less than one per cent. If you compare that to other countries like South Africa, which has the highest penetration in Africa, you will realise we have a long way to go. The opportunities we see are huge. My strong belief is that technology is about to disrupt the status quo in the insurance industry, it is the only way that your penetration can be improved,” she told the gathering of insurance brokers, rubbing salt on our raw wounds.
She went global, stating that basic technology is shaping the way insurance companies across the world do business. “Consumers are looking for companies that will make a shift from paper to digital and are able to enhance insurance purchase and management experience from start to finish. Customers want seamless experience that enables them complete transactions in a matter of minutes as opposed to the status quo. The traditional model where a broker/agent has to be encountered in person is fast becoming archaic,” she said.
While imploring brokers to maximise the use of social media in their operations, she advised insurance brokers and stakeholders in the industry to embrace digital marketing too as it is a significant part of any business today. “With Artificial intelligence, for instance, we can do a lot of business analytics. We can profile and understand our customers a lot better than what we could do before, among other things,” she concluded.
Earlier, in her welcome address Mrs. Ifemade said insurance in Nigeria, which should be a strong member of the financial sector, is at the bottom of the ladder. She added that the partnership with Microsoft Nigeria for the 2019 workshop is among steps being taken to help remedy the situation. “Microsoft Nigeria is happy working with us on this to take the insurance industry to the next level. If there is going to be a change in the insurance industry, it will be brought about by we brokers. We are the critical arm of the industry. As the professional marketing arm of the industry, with our base and equity, we are rightly positioned to bring the much needed change to the insurance industry,” she said.
Encouraging words did come from Femi Aderibigbe, the Chief Information Officer of AXAMANSARD, drawing from his banking background, where he worked as an ICT person, before veering into insurance. He said the banks were like the insurance industry before the banking consolidation. Let us therefore hope that with efforts being made by all stakeholders in the insurance industry – the regulator, the insurers and the brokers – the insurance industry will be ICT-savvy like the banks in a few years from now.