AI Adoption Will Drive Insurance, Pension Penetration In Nigeria- Experts

Experts have emphasized the importance of the adoption of Artificial Intelligence (AI) by underwriters and pension fund operators, saying it will trigger huge leap in insurance and pension penetration in Nigeria.

Artificial Intelligence (AI) is customized software meant to mimic the cognitive functions of the human brain to solve problems and achieve goals. Businesses and organizations are adopting AI, most commonly investing in automation for customer service needs—for example, virtual assistants, chatbots, etc. Other popular reasons for implementing AI include social data mining, human resources automation, enhancing products and services, and translating languages (i.e., Google Translate).

Still relatively new, AI adoption is growing across the world among organizations looking to streamline processes and raise efficiency and production standards. AI adoption is the most popular in telecom, high-tech and financial services industries.

While experts who spoke at the 8th BusinessToday Annual Conference in Victoria Island, Lagos recently on the theme “How Insurance and Pension Sectors Can Explore Opportunities For Market Penetration” applauded operators and regulators of both sectors for achievement recorded in recent times, they felt this is mere scratching the surface compared to what the industry can pool with AI adoption.

The Theme Paper Presenter who is the managing director/CEO of Cowry Asset Limited, Mr. Johnson Chukwu, disclosed that, the uncovered market in both pension and insurance sectors show opportunities, especially, in the mass market where it costs more to cover.

Currently, insurance penetration is at 0.4 per cent while about 10.2 million workers have subscribed to Contributory Pension Scheme(CPS) in a country of over 200million people.

According to him, AI is simulation of human intelligence into a machine format such that the machine can do things that are routine in nature, faster.

Disclosing that the global average of insurance penetration is about 7 per cent, he said, Nigeria is far behind with its 0.4 per cent even as it also shows there is room for growth.

Using Access Bank as a case study, he said, the bank’s Assets and

Profitability far outweighs that of the entire insurance industry last year, believing the industry can get to that level in few years to come with the adoption of artificial intelligence, saying, it remains a compass for organisations to achieve their objectives.

He stressed that, with this technology, the negative reservations that most Nigerians have about insurance and claims payments will be wiped out as it makes insurance policy subscription and claims payments seamless and faster.

The Nigerian Insurance industry, according to Chukwu, will benefit greatly by adopting AI as it will improve their customers’ experience, engender confidence and trust, improve service quality and reduce costs, adding that, AI holds the promise of transforming the traditional insurance landscape by addressing critical challenges, disrupting existing norms, and optimising risk management processes.

On how AI can transform the pension industry, he said, AI can be deployed to support Pension service provision to this mass market given the relative uniformity of their needs, noting that, AI can easily identify unusual patterns and deviations from norm and consequently flag it for management attention.

Saying, it would enhance service efficiency, he stressed that, decrease in cycle would leads to faster execution, improved accuracy, detailed data capture flexibility & scalability, improved productivity and reduced operational costs.

“With AI, you can settle claims within some hours or days on motor insurance. No doubt, AI will help in improving claims settlement. AI can harvest records of the insured in terms of making claims, which will enhance accurate pricing of policy and for the insured,” he said.

For Customer Service, he pointed out that, AI tools such as chatbots, a virtual assistant, can help to improve customer experience, saying, Chatbots are available 24/7 to give basic advice, check billing information, and address common inquiries and transactions, as it can be deployed to recapture customers’ data more effectively, even as it can more effectively analysis investment portfolios and recommend necessary actions such as sell, buy, hold, among others.

Advancement in AI, he noted, is underpinned by the drive for convenience and efficiency, which are the two most important competitive tools in the business World, stating that, businesses and industries that want to remain relevant in the economic ecosystem will therefore need to embrace AI as an integral party of their business DNA

Micro-insurance and micro pension are a mass market. AI will cut cost of selling insurance for underwriters and pension for the Pension Fund Administrators(PFAs) as it will improve customers experience, reduce cost, engender confidence in both industries. It is obvious Nigerian insurance industry needs disruption through AI, he emphasised.

Earlier, the president, Chartered Insurance Institute of Nigeria(CIIN), Mr.Edwin Igbiti, said, growing insurance industry will require that the nation’s economy be derisk, while seeking partnership with government and other stakeholders to deepen insurance penetration.

He submitted that, AI will increase insurance premium growth, enhances service delivery and ensure insurance sector contributes more to the nation’s Gross Domestic Product(GDP).

The conference chairman who is the chairman of NEM Insurance Plc, Mr.Tope Smart, was unhappy with the level of insurance penetration in Nigeria when benchmarked with the Global penetration, noting that, a lot of factors were responsible for this.

He said, lack or low enforcement is affecting the adoption of compulsory insurances even as the industry is working assiduously to partner agencies responsibly for enforcement so as to increase insurance adoption.

“It is quite saddening that out of a population of 200 million, only about 3 million people are actually insured. Lack of enforcement is a challenge but the industry is working round the clock to increase enforcement through the regulatory and enforcement bodies.

“Consumers apathy due to bad experience they have had in the past, is affecting policy renewals but I can assure Nigerians that there are various complaint avenues for people to lodge complaints. If your legitimate claims are not settled, you can approach NIA and NAICOM, and if your complaints are genuine, they will be definitely resolved,” he assured.

At the panel session, the founder, Hankali Intel, Mr. Mgbame Michael, disclosed that, there are data available in silos across different platforms, thereby, urging insurance and pension operators to harvest these data for the use of the sectors, saying, this will stimulate huge growth in adoption and penetration of insurance and pension products.

On her part, executive director/COO, Heirs Life, Tosin Bayo Yusuf said, the slow rate of penetration was because insurers are relying on manual data that are ineffective and yield low productivity, advocating clean data to stimulate growth.

“Data is key, there is need to have clean data. The data that the two sectors have generated manually over time are still useful. These data can be processed by data experts and thereafter, would be ready for use. For instance, just like in advanced countries, if you have a history of lodging claims, the premium you pay at the next renewal would be higher than others, but they are able to do that with AI. So, with artificial intelligence, risk would be appropriately priced,” she pointed out.

However, Pension Consultant, Idu Okwuosa-Okeahialam, said AI has the ability to limit or mitigate risk occurrence, ehhances insurance and pension penetration and competitiveness, breeds efficiency and cost reduction, disclosing that AI remains the only medium to get the millennials on insurance platform.

The managing director/CEO, Guinea Insurance Plc, Ademola Abidogun, on his part, said, in as much as artificial intelligence is good for promotion of insurance and pension businesses, the challenge lies in data protection.

“AI helps profile customers and assist in carving out product that suits the needs of each customer, relying on their data to know what each customer wants at any point in time.

“Yet, as good as AI is, there is the issues of data protection and privacy. This is critical so that sensitive information about a customer is not abused by data harvesters, thereby, tramping on his or her privacy. There should be regulation on data that can be harvested for use and on some sensitive information, there should be consent before those information can be used. Stakeholders should come together to address this, especially, in the era of cyber crime and attacks,” he stated.

Earlier in his keynote address, the commissioner for Insurance/CEO, National Insurance Commission (NAICOM), Mr. Sunday Olorundare Thomas had said, artificial intelligence is key to the future of insurance business in the country, urging insurance operators to increase adoption in this area as it gives better productivity in terms of profitability while ensuring quick service delivery and claims payment to insurance consumers.

Technology adoption, he said, is part of the 10-year roadmap of the insurance industry, stating that, NAICOM , as a regulator, will continue to evolve policies that will engender the growth of the industry, increases penetration and contribution to nation’s GDP.

Earlier, the managing editor, BusinessToday Communication Limited, Mrs. Nkechi Naeche-Esezobor, while delivering her Welcome Address, noted that, the theme of this year’s Conference, ‘The World Of AI: How Insurance And Pension Sectors Can Explore Opportunities For Market Penetration,’ provided opportunities to deliberate and fashioned out strategies that both the insurance and pension sectors can deploy to enhance  consumer value and  service delivery, as well as  further deepen market penetration.

Stating that Nigeria’s insurance industry hit N1 trillion premium income target last year, which is a milestone, she added that, this feat is expected to rise faster with the right technology, including AI.

AI is transforming insurance industry, especially, in underwriting, customer support, advertising, claims, and fraud prevention, she said.

 In pension industry, she said, just by simply automating various aspects of pension management from data analysis to investment decision-making, AI minimises the need for extensive human intervention, saying, these savings can then be passed on to pension holders, enhancing their overall returns.