Follow Us on Google
By Henry Uche, [email protected]
There are over 50 insurance companies in Nigeria, 13 of which are strictly into Life Insurance, 12 are composite, 15 are into General insurance business, three are into Reinsurance business, four are into General & Family Takaful, with 7 engaged in Microinsurance, among others.
Choosing among these insurance companies to determine which is better to do business with can be a tasking challenge. Though these insurance companies have their unique competitive advantage, however there are salient metrics to factor in, while deciding on which one to bank with.
Foremost, trust and confidence quotient
Individuals and corporate organizations are engaged for business transactions on trust. Trust is a virtue earned over a period of time. When people believe, have faith and rely on you to keep to agreements, they can trust you because you are dependable. This trust metamorphosed into confidence on the person to do what he said he would do. How do you know an insurance company whose trust and confidence quotient is high or low? Real time testimonials can prove this. Thus, a person seeking to engage an insurance company for business must sample the trust and confidence level of different Insurers, among others factors.
Terms and Conditions/ full disclosure
In every business transactions, there are Terms and Conditions (T&Cs). These T&Cs are either expressly stated or implied. The breach of these T&Cs by any party has a penalty that follows. Investigation have revealed that this stage of policyholder engagement process has always been a cause of worry to stakeholders and other interest groups. The reason is not far -fetched. Most companies (not only in the insurance sector) usually conceal some T&Cs from the prospective customers for dubious reasons. Some of these T&Cs are most often printed in a very small font size and type. Mostly sighted on the bottom of the policy documents or attached as a footnote. Because most prospective customers are not patient enough to read through painstakingly, and ask questions where necessary, they end up regretting their inability to see and read through in details every letter words, phrases, and clauses in the documents before they append their signatures. So there should be no room for any form of hanky-panky game.
We must always settle for an insurance company with full disclosure policy. Ensure that you know all the terms and conditions of the policy you are buying and all the dos and don’ts. A good insurance company would be honest and open about its clauses and conditions but some insurance companies wouldn’t and then when you file a claim, they would come up with some clauses and reasons why they cannot pay claims.
Sometimes too, policy holders are guilty of not reading and fully understanding the terms of the contract before appending their signatures and fully agreeing to it. It is important to read the terms, conditions and clauses of each insurance product before entering into a contract and you should also get your lawyer for interpretation as well.
Suitability of products
The type of products the company offers is also worthy of note. Most insurance companies offer general insurance products like property, auto, health and General Liability Insurance policies but the type of insurance your business needs depends on the kind of business you do and the industry you operate in. Find out if the company has products that are peculiar to your business needs.
legal accreditation /licensing
Not every organisation is registered nor recognized by relevant government bodies. In Nigeria, The Corporate Affairs Commission (CAC) is in charge of registration of corporate organizations. As a registered organization, there are regulators that manage and control the affairs of some certain kind of business organizations. For instance, NAICOM is the regulator in charge of all insurance companies re-, insurance companies in Nigeria. Thus, it’s imperative to ascertain if the insurance company you want to transact is duly registered and operates under a regulator, to avoid ‘had I known’.
How do you know if an insurance company is duly registered and under the Control of NAICOM, is very simple, approaching NAICOM for confirmation is the best and safest way to confirm this.
Claims payment/ settlement/ compensation
Since insurance companies are established for other companies to Live on, it’s important to find out if they paid claims to policyholders and when due. This is just one side of it. Another side is to investigate the process and experience of the policyholders if it’s something you can withstand or not. Investigations over the years have shown that some insurance companies would always find reason/s why they should not settle a policyholder in the event of any mishap covered. Any insurance company that is known for prompt claims payment without subjecting the policyholders to undue pains is worthy to bank with.
How do you know Underwriters that pay pronto? The truth would speak for itself. Testimonials from every nooks and crannies are proofs. Some insurance companies even receive awards for prompt payments of claims. Compliance Level to Regulations & Corporate Governance Practice
History has it that some corporate organizations do not comply with the rules, regulations and guidelines of the regulator. NAICOM for instance had warned insurance companies that failure to comply with provisions, rules and regulations as well as guidelines of the Commission would have itself to blame.
How do you know insurance companies who comply with provisions of the law establishing them, rules and regulations, guidelines and commitment to Corporate governance? It’s very simple. Such companies would never have problem with the regulator nor any government Ministry, Department or Agency. Prospective customers would know all these when they read wide and large books published by regulators and other government MDAs. Most books and documents emanating from such government agencies contains information about the operators in that sector. Following news from accredited media organizations (just as you are reading it now) would help you get this vital information.
Risk Management
Because insurance companies are in the business it managing risk, hazards among others, how well they fare in these core areas should be a matter of concern to any intending policyholder. We have seen occasions where some insurance companies were kicked out of the industry, one of the reasons been inability to manage risks and hazards of themselves and on behalf of other companies under the insurance companies cover. Thus, it’s imperative to get this knowledge. How do we know this? Their financial records and other books and Publications that gives insights on companies performances are helpful.
Books Of Records/ Financial Stability & Solidity
For those interested in the audited financial records of insurance companies especially those quoted in the Nigerian stock market would need to confirm if such records are in line with the latest International Financial Reporting Standard (IFRS) and other standards. The Profit After Tax (PAT), Total Assets Value and Working Capital are hints for decision making in respect to picking insurance policy. Some people are much interested in the books of corporate organizations before deciding on doing business with them or not.
Management Team (why they tick)
Everything rise and fall on leadership. When a business is progressive it is attributed to the management team, likewise when a business is retrogressive, people lash out on the management who are the pioneers, captains/ leaders whose decisions and policies determines the overall performance of the company. Some people believe in the capacity, capabilities and character of certain individuals. When they see or hear that someone is a member of Board or Directors of a Managing Director or Chief Executive Officer of a company, they hesitantly subscribe to such company, either buy shares or do any other business with them. The reverse is the case when a notorious person occupies a key position in a company. So it’s important to find out why some management team ticks while deciding on insurance company to engage.
Public Perception
What people say about you (may) have little or no impact on your progress in Life. Howbeit, it’s important to watch out actions as people are now more informed to dig out and verify anything any piece of information. With the advent of science and technology, information spread like a whirlwind in a sunny dry season.
Testimonials from Policyholders, Shareholders, stakeholders, retirees, others
This is probably one of most useful means to ascertain who insurance company is doing well or not. The truth would always speak for itself. Customers with concrete proofs of being satisfied and happy with a particular insurance company could spur another to subscribe to a company’s products and services. Where this is lacking year in year out, it’s a red flag to watch before you leap.
Visibility/Localization (Online bank as case study)
Some business enterprises though registered with CAC, do not have physical administrative office/structure where people could interface with them one- one -one. Just as we saw in the recent past, some Fintech companies and online finance houses and banks, do not have physical presence. This could be a very dangerous effort to engage them, because you could be transacting with phantom. Recently Nigerians were asking about the physical office of some online financial service providers following the CBN redesign monetary policy. It’s important to know if you are dealing with or about to deal with real humans of humanoids. How do you know? You ask questions and request to see them in their office.
Fair Premium And ROI (Derivable comfort).
It’s important to know how much you are to invest in dawn and how much you expect by dusk. Would you be comfortable with the amount of premium on daily, weekly, monthly, quarterly basis? The premium would determine your comfortability, convenience and peace of mind. So think twice on this matter. How do you know this? It’s when you approach or engage with an honest and registered insurance agency you would know.
Company’s History/Prospect
The history and prospect of the company are signposts for one to follow or back out. How do you know this? There are a lot of books to read on this, there are ways of getting them.
Other benefits not mentioned here can endeared anybody to choosing a particular organization to do business with, depending on individual preferences.
While it may not be entirely possible to see an insurance company having all these qualifications, getting an insurer with a two third of them, is worth doing business with.
End
