By Henry Uche
Despite being a vital pillar of financial security and economic stability, Nigeria’s insurance industry has yet to reach its full potential. Burdened by public skepticism, low awareness, economic constraints, and a shortage of skilled professionals such as actuaries, the sector continues to struggle with low penetration and suboptimal growth.
In this exclusive interview, Dr. Duru, the Managing Director and Chief Executive Officer of Universal Insurance Plc, sheds light on the key challenges stifling the industry, from misconceptions about claim settlements to the affordability of insurance products.
He also discusses the role of stakeholders, brokers, underwriters, and loss adjusters, in shaping a more transparent and trustworthy insurance ecosystem.
Dr. Duru also examines pressing issues such as the controversial “tiny prints” in policy contracts, the impact of President Tinubu’s administration on the sector, and the long-awaited passage of the 2024 Consolidated Insurance Bill. Additionally, he addresses Nigeria’s reactive approach to disaster management, particularly in flood-prone areas, and the urgent need for proactive insurance solutions.
What are you bringing to the table? What do you want to be remembered for?
I’m bringing excellent service delivery, dedication to service, extensive experience, and a strong focus on training and development. I also aim to drive business growth. I want Universal Insurance to be one of the top three insurance companies in Nigeria by the time I leave.
Fantastic aspirations you have for the company. Are you aware that we will take stock of your achievements at the end of your tenure?
Yes, I’m aware. I shall give an account of my stewardship at the end of the day. But I’m not alone here. As I said earlier, I have capable personnel, and with God on our side, we shall achieve everything we set out to do. As we move forward, we will conduct self-assessments to ensure we remain on track. We are not afraid—we remain optimistic.
How much is the company eyeing to rake in from the current third-party motor insurance?
Yes, from the current third-party motor insurance, we are looking at raking in N1 billion this year.
So far, in the last few weeks, what has the response been like? What feedback are you getting from the third-party motor insurance enforcement?
The response we are getting from the public shows action, as the implementation has begun. People are now jostling to buy insurance, but expectations have not yet been fully met. This is just the starting point of the implementation. People are becoming more aware of third-party insurance and its implications. I believe that as time goes on, expectations will continue to rise, and we will see increased adoption by the end of the year.
Why is third-party insurance so important? Some motorists believe they don’t get compensation unless they have comprehensive coverage.
The issue is ignorance on the part of the general public. Many do not understand third-party insurance or the benefits it offers. Third-party motor insurance provides three key benefits: Accidental damage to a third-party vehicle – If you accidentally damage another person’s car, the insurance company will cover the repair costs. Personal injury, if you cause injury to a third party, the insurance policy will cover medical expenses and death of a third party, if an accident results in death, the insurance company will cover burial expenses.
The public needs more awareness to understand these benefits. When you cause loss or damage to another person, you can’t simply claim that you don’t have money to cover the liability. Insurance ensures that no one is left stranded after suffering a loss.
On whose shoulders does the responsibility for public enlightenment lie?
The primary responsibility lies with the insurance industry. However, the government should also be involved in raising awareness, as it has a duty to protect lives and property. NAICOM and other stakeholders in the insurance value chain should push for this much-needed awareness campaign.
Penetration is still less than 1%…
Yes, that is a fact, but the industry is working to improve market penetration. The challenges include lack of trust in insurance, public ignorance, and poverty. Many people assume insurance is expensive without even visiting an insurance company to inquire about premium structures.
The industry is working to build public trust by ensuring that all genuine claims are paid and providing flexible payment options such as premium installments—quarterly or semi-annually. This will help more people afford insurance.
How much did the company pay in compensation last year, and what was the overall financial performance?
Last year, we paid claims in the neighborhood of N3 billion. This shows that we are a company committed to settling claims. Our overall performance last year was superb.
Possible merger plans?
We are aware of the recapitalization requirements. I am confident that our Board will soon unveil robust plans to recapitalize the organization well before the deadline.
Apart from the N1 billion expected from third-party vehicle insurance, what are your financial expectations for this year?
Our target for this year is to generate between N25 billion and N30 billion in premium income. Claims settlement will depend on the volume of business we attract.
One thing you want NAICOM to do for the insurance industry?
NAICOM is already doing a great job, particularly with the enforcement of third-party motor insurance, working closely with the Nigeria Insurance Association. I expect them to extend this commitment to other compulsory insurance policies, as this will significantly strengthen the industry.
How automated are your operations?
Our operations are fully automated. All our personal line businesses are online. Customers can visit our website or portal to purchase insurance policies. Anyone can verify this.
What is the future of insurance in Nigeria over the next decade?
Over the next decade, I see insurance playing a more significant role in the economy. The industry has not lived up to its full potential, but I believe its performance will improve, and public trust will grow.
Advice to stakeholders to move the industry forward?
Okay, the advice I will give to stakeholders is that everybody should do what they are supposed to do. The brokers should act professionally. The underwriters should live up to their responsibility. The loss adjusters must maintain a high level of integrity in their adjustments. Then, the industry will be good for everyone.
Tell us about the dearth of actuaries in Nigeria
Yes. When you graduate from school as someone who studied Actuarial Science, you are not a qualified actuary until you start writing their professional qualification exams. Yes, when you conclude that, you become a qualified actuary and can be recognized anywhere in the world. So, if 100 of them graduate from the Actuarial Science department nationwide, two or three may qualify in the next three or five years. The exam is tough. So many people don’t venture into it—it involves a lot of calculations.
Way forward
We are not going to continue this. In fact, NAICOM has even started encouraging staff of organizations and employees of organizations to write the actuarial exams. And it is very expensive, and NAICOM is paying for them.
If somebody studied Mathematics or Statistics, for instance, and worked in an insurance company, then wrote an actuarial professional qualifying examination, would such a fellow make it?
Honestly, Mathematics and Statistics have little to add up for you, but you also need to study, go for tutorials, or undergo training to be able to write the exam. Because with the knowledge of Mathematics or Statistics alone, you might not be able to qualify. Yeah, you would need to study the books, go for training or tutorials to be well-equipped to write the exam in advance.
Some policyholders complain that there were certain unprintable phrases, sentences, or statements that insurance companies hide from them at the very point of entering a contract with the underwriter. And they (insurers) don’t make them understand. But when something happens, the insurers now begin to point out those tiny phrases and clauses.
Yeah, I have heard it because they call it tiny prints… You see, those things actually did exist, but the intention wasn’t to prevent people from making claims. Yeah, it’s not to stop them from making claims or to frustrate them. No, that was not the intention. The reason was that it was the ‘print fonts that were designed originally for insurance policies.’ It was just like, you know, insurance policies are legal contracts, so they were drafted by lawyers then. So all those legal jargons are there, and we have our terms, we have our insurance jargons.
So, if you had a policy at that time, at times, it was not reader-friendly. The average person might not understand it because of the legal connotations of the policy document. But it doesn’t stop you from engaging the service of an expert or a lawyer to read and explain it to you, like in other contractual engagements.
But the staff who attended to that prospective policyholder should have explained better.
Yes, if the potential customer or the customer actually requested that the employee help them interpret it. But they have not come up and said, “We don’t understand the policy document,” or “We cannot read it.” We hand over the policy document to you. It is expected that you read it. If you don’t understand, you ask people who do and have them explain it to you.
How is President Tinubu’s administration affecting the industry under review?
Well, I think President Tinubu’s administration and policies are also affecting the industry positively because it is during this administration that we are trying to implement the motor third-party insurance. Also, the new minimum capital requirement for capitalization is being passed by his administration, so it is also impacting the industry positively. So we encourage him to do more to support the industry.
The 2024 Consolidated Insurance Bill…
The bill will be signed, and I’m optimistic that the passage of that bill will help to grow the industry and move it forward. The industry will now have more capacity because they will have more funds to invest. They will also have more capacity to pay claims, retain more premiums, and buy reinsurance.
Government’s reactive response to flooding as we expect the rainy season
You see, flood is a fundamental risk, but we, as proactive humans, are supposed to prepare ahead of time to be able to manage this expectation. Yeah, underwriters offer flood cover extensions in their policies. If you want an insurance policy to cover floods, you pay a little additional premium to buy that flood extension.
Although some policies offer free flood extension as part of the total package, because of the ignorance we are talking about, you know, those farmers and dwellers will not approach insurance companies to seek cover to protect themselves against eventualities. But when a flood comes, they will suffer the consequences. That is what actually happens.