The state of Nigeria’s insurance industry has long been a cause for concern for its operators, as well as past and current administrations. In this interview with business a.m.’s ADESOLA AFOLABI, the Executive Secretary and CEO of the Nigerian Council of Registered Insurance Brokers (NCRIB), FATAI ADEGBENRO, assesses the performance of the insurance industry in Nigeria; gives reasons for low penetration of insurance and what NCRIB is doing about it; the much talked about delay in claims settlement by insurers; and what role insurance brokers play in promoting insurance. He is of the view that in the attempt to boost the revival of the African continent’s largest economy, its citizens, leaders and policy makers must begin to prioritise and take its insurance industry more seriously. Excerpts:
How will you assess the parameters used in measuring the performance of Nigeria’s insurance industry, given the country’s peculiarities?
It depends on the person making the comparison, interpreting the figures or analyzing/interpreting the data and what such person intends to achieve. There are many parameters which we can use to measure insurance performance. Some talk about the level of penetration, while majority base their assessment on gross premium income in relation to gross domestic product (GDP).
Insurance business is still evolving in Nigeria- it has not gotten to where it is supposed to be- and I believe strongly that by the time the insurance industry is given its rightful position, the economy will be able to find its feet. This is because in other climes, insurance drives the economy. It is the pillar or the foundation on which the economy thrives. So, I am not surprised that our economy is not doing well because insurance is yet to be embraced by the majority, including the government.
It is when people stop relying on the government for growth and start taking the bull by the horn that growth can be seen. It is supposed to be a collective responsibility, not primarily that of the government. I believe everybody needs to take their own destiny into their own hands. If we continue to compare ourselves with other climes, you will see that those in Europe and America take insurance seriously, individually. Although there are some government that made it compulsory for them to have certain classes, but we as individuals are supposed to embrace insurance and make sure that we are responsible for our responsibilities.
A large number of Nigerians (above 70 percent) have been described as poor, living below the poverty line. With this kind of statistics, how do you think such people can be encouraged to embrace insurance?
You see, I will not agree with you. Like I explained earlier, depending on the intention of the person interpreting the data, perceptions will vary. For instance, what is your parameter or your yard stick for measuring that Nigerians are poor? Are we really poor? Or we assume we are poor? what is your definition of poor? It is relative. Do you have any data to support that, and when you compare your statement with the way we live everyday- go to joints, beer parlors, and people enjoying themselves at weekends? We have parties and the so-called people you are referring to as being poor they are the ones that attend parties every weekend and go to every party.
It is because of our culture and the way some people present themselves that we have wrong perception of the people we tag as poor. They are even richer than most of us that are working. But because of the way they dress or the kind of business they do, we think they are poor. Maybe I would use the experience I gathered from my grand-mom when she was to buy her piece of land at Papa-Ajao. On visiting the vendor, the man was surprised when my grandmother was to pay for the piece of land, the land I think was being sold for 100 pounds per plot and my grandmother wanted two plots. She untied her wrapper and brought out the 200 pounds cash. The man was so surprised. He told her that she would be the first person to pay in full cash, and that all the people coming in their cars to purchase land, pay in instalments. But anybody who would have seen my grandmother would take her to be a poor person. Likewise, those that are into businesses petty/little businesses they are more liquid than us that are on salaries.
How then can the demand for insurance be channelled to aid faster growth for the sector?
It has to do awareness, people are not aware of the values of insurance. What the operators need to do is just to step up the push, sell the idea or stimulate the insuring public on the values that are derivable from insurance. The market is working on that and this is because, when we are able to drive this home, people would start embracing it. By the time we step that up in the market, people will start appreciating the values of insurance and that is the only way they can be drawn to buying it. The knowledge gap is there which we need to work on and the industry has identified this gap and are working seriously on it. People need to know that they need not go cap in hand, when they suffer any loss. The insurance companies will be there to compensate them. Also, people are not aware that the premiums are so cheap.
How can we access the performance of brokers in driving the push on demand for insurance?
The role being played by brokers is so feasible. The brokers have a feasibility project which ensures we patronize ways in which we can sensitise the insuring public. We go on radio programs and what we are doing now i.e. this interview could be one of it. But the challenge we are facing is that the reading culture in the country is so poor even among the lettered. We have wrong assumption that we are busy and base knowledge on the headlines read.
We have issues there, but we are deploying our resources to sensitize the insuring public on the benefits of insurance and the benefit of making use of registered insurance brokers for them to maximise the benefit of insurance.
If one engages a registered insurance broker, such person will be able to get better terms by the broker and whenever any loss occurs, the broker ensures that adequate compensation is meted out. What people don’t know is that, it doesn’t cost anything extra to engage registered insurance brokers. Instead the policy holder gets a better deal which entails paying a smaller amount at a wider cover which cannot be gotten by themselves. So, unless people embrace insurance that is how we can get out of the doldrum we find ourselves.
Is it possible to ascertain the rate of claims settlement facilitated by brokers in the industry?
One of the shortcomings we have in our side of the world is that we don’t have adequate data or that we have conflicting data. So, we rely mostly on what the regulator- NAICOM makes available because it oversees all the arms. It registers and oversees all the activities of the operators and one can to a reasonable extent rely on that
We see conflicting information where some say brokers contribute 50, 50, 70 or even 80 percent of the market, all I can say is that a larger percentage of the market in terms of premium income is being provided by brokers. This claim is yet to be controverted because majority of the multinationals still make use of brokers, and they pay heavily in foreign current. Also, when we consider the transactions in aviation, oil and gas industries which passes through brokers, you will see that brokers contribute a larger chunk of the market.
With the big tickets of aviation and oil and gas being firmly handled, how then can brokers facilitate the agenda of getting more of the public inside the insuring net?
There is a little challenge, we have big, small and medium brokers. There are some brokers that concentrate on individuals. Part of these individuals are what you refer to as micro depending on the size of assets and the class of insurance they are asking for, then we have the medium, the SMEs as well as the multinationals. But to penetrate the retail consumers, the focus now is to see how we can get more individuals on the conveyor belt because less than 10 percent (less than 18 million) of Nigerians have insurance covers. That’s why you see people running to the government whenever they suffer loss or losses, whenever there is a flood damage or fire damage. When you have your insurance coverage you don’t need to go cap in hand to the government. The government also needs to encourage the citizens and take the burden off their shoulders so that they can deploy the scarce and limited resources to other developmental purposes. This is what happens in other climes, if you lose your vehicle or your shops or whatever, you don’t go to the government, you go to your insurance companies, your insurance company compensate you and they go back to their businesses.
There are incidences of unsettled cases/claims that have run for years at companies with valid licences of NAICOM eroding the confidence of the public in the insurance industry. How can this be remedied?
The issue of unsettled cases or decline in claims payment all boils down to ignorance. If you probe most of the cases where claims are not paid, you will discover that either the person in question has no adequate insurance or has a lower insurance that cannot pay for losses incurred. For instance if you have third party motor insurance, when a Danfo (local parlance for transport buses) brushes your car you cannot got to the insurance companies to lay claims, because what you purchased is insurance for third party. This is why I will continue telling people that of you want to enjoy the benefit of insurance make use of registered insurance brokers. The brokers will be able to advise on insurance needs, and get better terms for the person. There are procedures and technicalities to be followed. So, insurance firms pay claims but they don’t publish names because of the peculiarities of our society/environment, to prevent unsolicited demand for help.
What form of policy advocacy will you recommend to facilitate better adoption of insurance?
Because government is the highest spender, I personally will love the government to make sure that their assets are protected and encourage the citizens to embrace insurance. While it is the primary responsibility of the operators to drive this, we still need the support and collaboration of the government. In Nigeria, except the government drives or mandates the adoption of such policies, it is very difficult to achieve.
The challenge now is those who you believe should know are the ones who are ignorant of certain things. Like someone said, there are a lot of miseducated people in the society. Even though some of them studied abroad and while they were there they had all their insurances, however once they were given the opportunity to lead the nation or lead some department, they now feel insurance is not important and whenever they suffer any loss that’s when they would still start looking for the scarce resources to repair or replace what has been damaged instead of relying on insurance so that scare resources would have been deployed for other developmental purposes.
Some people are also not aware, you cannot imagine it for one million naira fire cover, you pay only N2500. This means if u want to insure your property worth say N1 million against fire you pay a premium of N2500 monthly, that means you need forty hundred years before you can accumulate that amount and you can imagine what people spend on recharge cards, beer, pepper soup and you cannot use N2500 to secure the wares in you shop is that not misplacement of priorities that comes out of ignorance? Others have this fake news mentality that insurance companies do not pay claims so they don’t have any need for insurance. But I can tell you categorically that insurance companies pay claims, they just hardly publicise it.
Lastly, how are brokers taking advantage of Insurance Technology commonly known as InsurTech?
We are collaborating with the Nigeria Insurers Association (NIA) on that. We believe that by the time we are through with the deliberations, there will be an opportunity given to would-be buyers for the selection of a broker when he or she wants to purchase a form of insurance. There is no way we can grow this market if the two arms are not in agreement. They have to collaborate, because whatever business a broker gets goes to the underwriters, and the commissions paid to the broker are embedded in the premium. So, there is really no need for the competition. There is collaboration among the banks that is why they are outperforming us (the insurance industry). These issues are being critically looked at because it is also giving the government some concerns and they are beginning to wonder why insurance is being left behind in the financial sector. We the operators are not happy with it and we are coming in tune with reality that we have to do something about it.