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By Henry Uche, [email protected]
One significant challenge facing Nigeria’s insurance industry on its path to achieving global relevance is the need to reshape and enlighten the perceptions of many Nigerians regarding the insurance business.
For decades, insurance has played a vital role in helping world economies stand firm and remain resilient as a shock absorber in the event of predicted or unexpected misfortune.
In Nigeria, the percentage of people who believe and trust insurance operators is dismally low, despite having a huge population of over 200 million. The reasons for this negative perception of insurance are not far-fetched.
Many individuals carry painful memories of their interactions with various insurance companies, leading them to dismiss any notion of engaging with insurance operators altogether. Conversely, there are those who have never had direct experience with insurance but, influenced by hearsay, hastily condemn insurance offerings even when the potential benefits are evident.
This dual challenge poses a significant dilemma for the Commissioner for Insurance, Mr. Olusegun Ayo Omosehin, who is determined to roll up his sleeves and tackle these misconceptions head-on.
Delivering a keynote address at the Insurance Meets Tech (IMT) conference organised by Modion Communications, Mr. Omosehin said a fundamental question that needed urgent answers was “how the industry could attain its intended goals,” one of which is to boost the image of insurance and break the jinx of low penetration, which is still less than one percent.
The Commissioner emphasized that a key initial step in enhancing the sector’s image is the Commission’s commitment to prioritizing the settlement of legitimate claims, which lies at the heart of the insurance business. He reiterated that one of the Commission’s core responsibilities as a regulator is to safeguard policyholders. To this end, the Commission is dedicated to the prompt resolution of all valid claims, ensuring fair treatment of policyholders, and maintaining the highest standards of transparency. These efforts are essential not only for restoring the insurance industry’s reputation but also for fostering economic growth.
Upon his inauguration on May 29, 2023, President Bola Tinubu outlined his ambitious vision for Nigeria, aiming to transform the nation into a $1 trillion economy by 2030. To realize this goal, collective effort is essential, with the insurance sector playing a pivotal role. Acknowledging this lofty ambition, NAICOM recognized its responsibility as a risk manager, emphasizing the need for thorough preparations to effectively navigate risks and expectations.
However, speaking on the theme: “Revitalising the Insurance Industry to Risk-Manage Nigeria’s One-Trillion-Dollar Economic Aspiration,” Omosehin maintained that to achieve the aforementioned goal, the insurance industry must develop a wide range of new skill sets and orientation, attract and retain talent, diversify its product spectrum, improve its adaptability and agility, enhance transparency and openness, and, importantly, invest in technology as necessary conditions to de-risk the economy.
“It is pertinent to reiterate that the Commission plays a vital role in fostering innovative business solutions that address pressing economic and social issues in Nigeria’s insurance sector. This commitment extends to ensuring prompt settlement of legitimate claims, promoting market growth through innovation, and driving commercial value within the industry.
“In achieving this objective of revitalising the insurance industry, we must necessarily address the fundamental issues of low insurance penetration, lack of public trust, market fragmentation, regulatory reforms, digital transformation, and adaptation plaguing the sector.”
The NAICOM boss added that investing in technology, online platforms, and mobile apps can improve customer experience and accessibility. He noted that revitalizing the Nigerian insurance industry to risk-manage Nigeria’s one-trillion-dollar economy literally speaks to the insurance industry’s readiness and preparedness to de-risk the activities that are projected to galvanize productivity, innovations, economic growth, and development.
“Our dear industry must rise up to the current realities of what is expected of us. Are we where we should be as an industry? And your answers may definitely not be different from mine – No. Then how do we intend to get to where we should be?
“It is worthy to state that the increasing momentum of Insurtech development poses both opportunities and challenges for established industry players. To remain competitive, it is crucial that we proactively incorporate innovative Insurtech solutions that will change our conventional business models, thereby safeguarding our continued relevance in addressing customer needs and market position.”
He revealed that the Commission understood the realities on the ground and issued the Regulatory Sandbox Guidelines to accommodate the testing and refinement of innovative products.
Consequently, it established a Directorate for Innovation and Regulation, having recognized that change requires new approaches. He noted that the insurance regulator has completed a draft Insurtech Operation Guidelines, which shall be released very soon.
“We must imbibe technology in order for us to have a one-stop shop for insurance products and services. Innovation and sustainability are some of the major emerging issues today. The insurance sector must embrace innovation to keep up with the rapid market changes, changes in consumers’ preferences, tastes, and lifestyles.
“We must develop products that meet the demands of our market, as innovation has taken the driving force in the financial services sector. More critical to the theme is the issue of financial soundness and stability of insurance institutions, as a strong financial base is key to our success as an industry.
“Having sufficient capital that is commensurate to the risk of an insurer has become inevitable if the industry is to keep up with the consequential effects of a growing economy, manage a one-trillion-dollar economy, and compete with our counterparts across the globe in risk management.
“It is critical to note that navigating the current macroeconomic realities successfully would be a natural precursor and building blocks for the revitalization of the insurance industry, and this must necessarily prioritize inflation impact; digitalization and adaptation.
“The need to embrace digitalization is critical. Insurers must modernize their processes, enhance customer experiences through digital channels, and invest in technology to streamline operations. Adapting to changing consumer behavior and preferences is equally important. Offering online policy purchases, claims processing, and customer service can attract tech-savvy customers,” he stressed.
