Improving Public Perception of Insurance

One of the major challenges faced by insurance sector regulator and operators is how to  improve Nigerians’ perception of insurance as a service that has positive returns,  writes Ebere Nwoji

Insurance sector operators and the National Insurance Commission( NAICOM), said they would leave no stone unturned in their efforts to change the sector’s narratives in terms of good image creation to  achieve popularity among Nigerians  and stand out competitively in the global market.

To this effect, the industry operators said their starting point  was  migration from their  old order of business operation which has been the bane of their growth and development to a new order that is in tune with what their counterparts in other climes. Their target is to win mass patronage and guard against foreign insurers taking over  businesses from their environment.

Their effort started  way back in 2009 under the administration of Mr Fola Daniel as the commissioner for insurance when the regulator introduced  a major developmental and restructuring initiatives tagged Market Development and Restructuring Initiative( MDRI) , a medium term plan of the industry targeted at driving insurance penetration in Nigeria.

Shortly after this, the industry seemed to have perceived the need for total disruption of its old oder of business conduct  to introduce new order embedded on technological usage in driving the market.

To achieve this, the operators at one of their annual insurance mega conferences  held in Abuja,  centered the theme of the conference on market disruption through the use of modern technology .

At a plenary session at the conference, the discussants unanimously agreed that for the insurance sector to achieve its growth and development dream, there was need for both the regulator and the operators to  disrupt and discard the existing business model in use to embrace a novelty model anchored on use of modern technology.

Since then, industry observers affirmed that there had been a wild fire of innovations which emphasis is on technology usage burning from the regulator down to  operators even insurance agents.

The regulator had given a stern warning to operators that will be tempted to maintain status quo in their operations.

At the insurance directors’ conference shortly after the COVID-19 pandemic, The Commissioner for Insurance Sunday Thomas had warned the directors saying “ The rapid changes brought about by the COVID-19 pandemic have drastically opened doors of opportunities for many positive thinking minds and created serious set back for many who are not able to cope with the speed at which some of these changes appeared. An obvious example is the technological advancement in the insurance industry which has been accelerated by the COVID-19 pandemic compelling many of us to shift from the traditional ways of conducting  business to more sophisticated and technology driven mechanism.”

Analysts’ Assessment

Sector analysts said  the initiatives were yielding positive results in the area of easy and ready availability of insurance services to Nigerians even at the grassroots to the extent that the industry is today talking about  partnership with insure-tech firms in circulating insurance products.

Operators said they were not stopping at that but would  continue to use IT gadgets and online platforms to disseminate information on insurance to achieve drastic change in insurance perception by Nigerians and enhance the contributions of the sector to the economy.

Nigerians’ perception of insurance sector 

Before now, the insurance sector when judged by an average Nigerian  is one of the sectors  that made very minimal contribution to the national economy.

The industry portrayed the image  of a  sub sector of the finance services industry with the least contributions to Nigeria’s GDP. Until in recent years,  the insurance sector was tagged poor cousin of the banking sector. The government, the people and even foreign and local investors  over the years viewed the industry from this perspective until recently,  when activities in the sector were  driven by new generation investors and operators who  have to a large extent changed the narratives transforming people’s perception of the industry.

claims payment 

A critical examination of the sector shows that aside disruption of the old business model; one other way the investors and operators  tried to change public perception of the industry was total overhaul of their claims payment behaviour with a good number of operating firms determining to give  new face to the business through change  of negative  attitude towards  claims payment.

Indeed, claims payment in the industry has in recent times improved.

Operators also through research are frequently coming up with modern insurance products that appeal to the interest of the masses, addressing their needs and adding value to their economic lives.

Recognition by government

With these, the insurance industry is today winning government recognition and acceptance by Nigerians with both foreign and local investors taking positions in the industry by way of staking their funds in the shares of many insurance firms including weak firms which they have breathed  life into through injection of funds.

The overall result is that  the insurance sector has won higher recognition from government, the people and Nigerian neighbors.

For instance, industry watchers noted that in the past 10 years, there have been foreign take overs of many operating firms and fund injections in the existing shares of operating firms in the industry.

Impact of insurance to economy

Investment experts said currently the  sector is making great impact in the economy in the area of attracting foreign direct investment into the country, creating jobs for finance technocrats,  agents and young school leavers, playing the role of intermediation between economy operators and business environment  as well as working to achieve success in new frontiers of growth and development.

Thomas saw these in 2022 at a media retreat organised by the commission for journalists when he exclaimed, “the future of insurance sector is on a shifting land scape the landscape of Nigerian insurance sector has  shifted and is still shifting a lot has changed in insurance business environment and is still changing, one of the changes being the financial inclusion strategy and what it means in insurance industry.

“In banking sector, financial inclusion takes place at the lower level of the pyramid but in insurance sector, it is not exactly like that in insurance sector, only the middle class buy insurance the lower level citizens feel they don’t have money to purchase insurance; the upper class feel they don’t need insurance, while only the middle level citizens think it wise to protect what they have through insurance. This being the case, the commission is using various initiatives to upscale insurance industry to global standard. “he said.

At the 2023 media retreat with the theme “Improving Stakeholders’ Perception 2023 and beyond,” Thomas said NAICOM  was on its journey towards totally achieving global standard operational model having  instituted  several initiatives since 2020 his administration came into office.

He said the commission had completed some of these initiatives while some are on the verge of completion.

He cited example of brokers renewal of operating  certificates from their office without visiting the commission’s office saying it was  due to improvement in technology usage by the commission.

“GP1 was about N450 billion when we came in but now  it’s about N723 billion. Several initiatives started in 2020; some are completed some are ongoing. We have to overcome some teething problems. The commission is not just giving to the industry but is being a partaker of the great initiatives. Two staff of the commission that we sent on training are today certified actuarists, we have approved many new products some of which the commission initiated the idea for the market the strategy plan for the industry signed to by every arm of the industry will be launched in October this year, ”he stated.

On challenges of low exchange rate of Naira to dollar and inflation which is currently affecting every sector of the economy, the NAICOM boss stated, “Of course, the fact is that where there is inflation, life insurance is worst hit because the value of your claim will be badly affected.

“But you see what we are going through as a nation, I believe that it is temporary. Two things had happened, the issue of subsidy removal and the issue of consolidation of the exchange rate. All these are at the point of policy change and there are bound to be push back. So, what we are experiencing now are all push back, push back is bound to affect every sector of the economy.

“But if you look at what is happening now, the exchange rate is adjusting itself downwards. However, there are things still being done and by the time, the entire initiatives materialises, definitely it will find its level.”

Thomas was optimistic that the sector would do better during Tinubu’s regime recalling that Lagos state government from which the industry gets highest patronage started its friendship with insurance sector during Tinubu’s tenure as the governor of the state.

Presenting a paper on  ‘Insurance  Sector  and the Nigerian Economy: Impact, Challenges and the New Frontiers’, at the retreat, NAICOM’s Assistant Director  Corporate Strategy, Dr Usman Jankara, said insurance sector in every economy plays the role of indemnification, intermediation, peace of mind, entrepreneurship, substitute for government social security, financial stability among other roles.

He said Nigerian insurance sector provides both life and non life services adding that the sector could be measured by indices such as assets base, claims ratio, capitalisation and retention ratio.

He said in terms of performance the sector had in the past eight years grown its Gross Premium Income(GPI) by 15 percent from N282.9 billion in 2015,  to N726 billion in 2022, showing 15 per cent growth.

He said total  assets of the  industry within the same period grew  from N917.3 billion in 2015  to over N2.382 trillion  in 2022,  showing 60.5 percent growth.

According to him the industry also experienced significant growth in other indices such as claims ratio, capitalisation, retention capacity  insurance penetration which stood  at 0.4 percent and insurance density which is at 1.5 percent.

Jankara said all these indices overlook the wider intangible but very important contribution of insurance to the Nigerian economy.

He said the industry  paid the lowest claims of N99.1 billion in 2014 and highest claims figure of N318.1billion in 2021, adding that within the period under review the sector remained profitable while loss ratios maintained tolerable perimeters.

He said within this period the sector had also made positive impact in the economy in the area of savings,investment and wealth creation,facilitation of trade and commerce, providing social security by reducing ad- – hoc support as well as giving peace of mind to economy operators.