The Best Insurance Company in Nigeria

Let’s get facts right!

The title of this article must have piqued your interest and probably left you wondering if there really is any that can be termed “The Best Insurance Company in Nigeria”.

Definitely, the curiosity is stronger considering the following statistics:

• 198million people (estimated population)
• 90.5milllion employable population
• 23% Unemployment rate (i.e. 21million)
• 69.5million Employed population (formal and informal sectors)

And on the insurance side, the statistics of the stakeholders and their pursuit increase the curiosity level:

• 14 Life Insurance Companies
• 28 General Insurance Companies
• 13 Composite Insurance Companies
• 2 Takaful Insurance Companies
• 2 Reinsurance Companies
• 0.5% Penetration Rate (with the promise by NAICOM that 40% is achievable by 2020)

You must be speechless looking at the projected penetration rate seeing that 2020 is just around the corner!

The arithmetic of the market potential

So, how can a country blessed with huge numbers still suffer such a low penetration rate? An analysis of the performance of the industry shows that the total industry gross premium was around N327B in 2016 and probably will be within the range of N350B for 2018, which makes the sector one of the lowest contributors to Nigeria’s Gross Domestic Product (GDP).

The current reality has indeed undermined the growth projection envisaged by the industry players especially the regulator and this has posed a big challenge to the possibility of the sector becoming a significant economy player within the next few years.

However, the numbers (from the population) shows more potential that are probably undiscovered and untapped. For instance, let’s use life insurance as hypothesis by assuming an average monthly insurance premium at N2,000 with the total employable population of 69.5million discounted by 50%. There will be an estimated N834billion annual life premium only (which will definitely increase penetration rate to around 18%!)

The truth is that such estimated annual life premium can be made available for investment within the economy which will stimulate economic activities towards increase in socio-economic growth of Nigeria.

Why is it difficult to achieve such potential?

The difficulty lies in some vital areas that have bundled to become an hindrance to industry growth and the business of insurance in Nigeria. They include:

• Perception: The cultural background and past experiences with insurance business have created a biased perspective about the insurance business generally in Nigeria. As a common language from practitioners, it is said that “it is only in Nigeria that insurance is sold, not bought” meaning people don’t see reason why they need to buy insurance. So, all stakeholders must join hands together in restoring the “trust” that will end up changing the general public perception.
• Awareness: Imagine the rate of collapsed buildings, accidents, fire incidents, thefts and low life span in Nigeria, yet people are still ignorant about the role of insurance in mitigating these risks. Thus, the awareness needs to be holistic with the involvement of all stakeholders including the regulators and Government.
• On-boarding: Have you seen an insurance form before? You wonder if they are actually asking you to sign your death warrant! This was the same experience with the banking industry until recent where even with a phone number, you can open and operate a bank account. Making it easy, convenient and fast can encourage people to patronize insurance services for protection from possible risks.
• Distribution Channels: The effectiveness of efficient, flexible and multiple channel of distribution goes a long way in increasing access to insurance products. There are various silos of distribution channels that their synergy can create an aggregated platform for Nigeria to buy insurance policies. Heard how in 2018, #Alipay sold 1.1 billion insurance policies in one day leveraging its over 500 million users and it's payment solution.
• Agent Management: The agency arrangement has helped in tremendous ways especially with the informal sector. This needs to be enhanced through appropriate compensating model with adequate resources (which include technology) to increase penetration rate for possible increase in patronage and sales!
• Regulations & Compliance: What are the laws in place for industry players that default in their obligations to their clients (i.e. insured)? Has there been an example of any industry player punished over the years or recent? What happens when claims are outstanding for a long time? Guess, there is a lot the general public expect from regulators in order change their current perception about the industry!
• Innovation: The industry players need to be creative in their approach and services. There is need to move further from conventional to tailored-made products and services that can meet the current need of the general public! Everyone is selling the same products, in the same way and at the same cost!

Who wears the crown?

To answer the above question, the crown is available but only those who are ready to take the bull by the horn and dive into the blue ocean can definitely claim the crown.

With the glaring potential of the market, if I had the required capital and the right team, I will definitely not be announcing this vacant post but rather be singing the praise while wearing the crown because “one who wears the crown, bears the crown”!

Oluwaseun Adesanya

+234-803-849-8000

Lagos, Nigeria

(An international Consultant with wealth of experience across several countries with special focus on Financial Inclusion, Insurance, Innovation, Financial Services, Strategy, Social Impact, Business Transformation and Technology. He is currently, the Group Head of Strategy & Innovation for the leading Software company in Africa, SystemSpecs – Owner of HumanManager and Remita)