The “Insurance War” Has Just Began

By Ekerete Ola Gam-Ikon

Sometimes when you live in a clan for too long while the world is changing very quickly, you face internal and external battles that you’ll either confront or be put under pressure from unexpected people, places or things.

For example, the insurance companies in Nigeria having to deal with financial obligations namely claims, statutory payments, employees’ salaries and payments to suppliers. These insurance companies are often unknown to the public because the names are not publicised and YOU are required to find out on your own.

The shape of the “insurance war” is both internal and external, and you may say, what the big deal is; after all, it happens elsewhere. Let’s find the difference.

• Change is Coming

The leardership of the insurance industry in Nigeria is changing in a rather disruptive manner both at the regulatory level due to short time the Commissioner for Insurance has for his tenure to be renewed, and the operational side given the directive of the regulator for their CEOs and EDs who have served the maximum time allowed by the law to leave.

With the deadline of December 31, 2023 for insurance companies to heed to the regulatory directive, we expect to see these changes, before the end of the year, and many are hopeful that this will bring a new order in the industry.

It is therefore important and necessary for YOU to follow the news and developing stories about the insurance industry, so you’re well informed about the status of the licensed insurance companies, because some are going to be sold or taken over by new owners.

Claims, the linchpin of insurance business will remain on the front burner while communication will become the point of impact for expressing customers’ impressions.

What to look out for in successful insurance companies in Nigeria are few but not sufficient. Yes to prompt claims payments depending on the mindset of their leaders. Yes to prompt delivery of documents and yes to reliable renewal system.

However, customers desire to be informed regularly in a manner that keeps them informed about the insurance industry in Nigeria. No insurance company currently does this consistently especially using the social media platforms. Insurance companies are still not appearing where existing and potential policyholders (customers) are, because their leaders feel those platforms are either overburdened by social miscreants or hate messages that do not bring value to the industry.

Join the “insurance war” today by scrutinizing everything that comes to you; ask the hard questions about leadership and future actions especially as they may affect you.

• The dimensions of the “Insurance War”

Today, the small disagreements and battles between the Insurance Companies and the Insurance Brokers have become the crux of the “Insurance War” being watched by customers.

Why should Insurance Brokers be at war with Insurance Companies when they’re playing completely different roles? Why do insurance companies insist on dealing directly with the customers mindless of the insurance brokers?

As a customer, be mindful of the situations expressed here so you are guided. Avoid getting involved with how the Commissions from your business is shared so you’re not compromised while discussing your claims when they happen.

The unending “Price Battle” within the “Insurance War” has remained a very unnecessary and needless happenstance for years.

Insurance companies, especially the financially weak ones, have continued to deceive the insuring public. They give their customers very low rates to win the business but are unable to honour claims obligations when the need arises. Sometimes, it’s interesting to know that these insurance companies only pay the claims of certain customers to remain good looking before them while other clients have been crying for years, in some cases, over 5 years; and this affects individuals, organizations and government agencies. Nobody is left out!

The deep end of the “Insurance War” is the one between the insurance operators and the regulator over the latter’s approach to market development. The strategy of the current administration is hinged on market development, however, too many actions of the regulator emphasize collection of fines from the operators for the slightest missteps and it does not matter if it was related to premium earned, which one percent will go to the regulator.

Such middle of the road regulatory actions only creates a less innovative environment that stifles the initiatives needed to serve customers better. Notwithstanding, all operators are expected to comply fully with the law and punished when they’re found wanting.

As customers, you are entitled to answers over issues that you don’t understand. For example, there are reasons why the Premium Rates for Third Party Motor Insurance and Comprehensive Motor Insurance were increased last January. Rather than simply tell you the regulator set the prices, operators (insurers and brokers) should thoroughly explain the benefits to you.

• The Quiet End of the “Insurance War”

The insurance industry in Nigeria has not fully realized the potentials from its partnerships whether existing or upcoming.

For example, Bancassurance because there has been low fire in the relationship between CBN and NAICOM that has affected the momentum at which business transactions should be.

Only insurance companies that have relationships with banks are doing any form of Bancassurance and what has been generated as premium since 2018 is probably just 10 percent of its available potential. Insurance companies without shared interest with banks that have no holding structure are working to earn the confidence of one another. You should understand this and know that the suggestion by your bank to handle your insurance needs is deliberate and rewarding.

• Taking Advantage of the “Insurance War”

Knowing the war is on or looming is one thing, playing from the position of advantage is another. Let’s consider some points of advantage.

Firstly, you should put on your investor’s cap and take a study of the opportunities in the insurance industry that can make you the owner or part owner of an insurance company. You may be a tech entrepreneur, a communication mogul or an oil magnate, this is a really good time to add insurance to your range of investments given the benefits you can gain from it.

Secondly, insurance may be about deaths, losses and damages but the wealth that’s transfered from one generation to another or the  investments insurance protects through matured Life policies or compensation for claims are the true values we can get without stress.

Lastly, engage in the knowledge sharing initiatives that are going on to enable you get more information about the insurance industry in Nigeria. You can even become a licensed Insurance Agent that’ll sell insurance to your friends and families and get some extra income with little stress.

The shape of the “Insurance War” as I see it will be won by the customers who are yet to realize they’re in a war because there is little consciousness regarding the customers.

There is presently too much reliance on people we know in the industry, rather than the system that works for all of us, due to the absence of any impressionable channel or point of contact.

Technology, the new competitor to insurance, would be a welcome party to the “Insurance War”, and the time is NOW!

Keep in mind that the war and the discussions around it are not on the table, so the weapons aren’t visible but you know who the parties are, including yourselves.

September 2023 Insurance Advisory: Data Still Needed For Better Insurance Experiences

By Ekerete Ola Gam-Ikon

Undoubtedly, data has become the game changer for our lives, businesses and sectors in measuring the performances of economies. Simple datagraphics say more than words can describe in this digital era when 24hrs in a day seems inadequate for the execution of our plans despite Artificial Intelligence (AI).

Recently, the National Insurance Commission (NAICOM) announced that as at December 31, 2022 the number of insurance policyholders was 3,000,000 based on the population of 200,000,000!

Analysts have since been asking for more breakdown of the data:

• Number of Corporate Policyholders;
• Number of Individual Policyholders;
• Number of Male Policyholders;
• Number of Female Policyholders;
• Number of Young People with Insurance;
• Number of Life Policyholders;
• Number of Vehicles Insured; and more

Certainly, the data available can be provided in the format mentioned above as industry stakeholders begin to understand that sharing data is very valuable in shaping insurance experiences.

Starting from you (the policyholder), the data about you and your assets need to be accurate and reliable. It’s common for policyholders to manage the value (sum assured) of their assets including vehicles and houses cos they want to reduce the premium payable but end up distorting the data especially when claims occur.

Sometimes, between the policyholders and their Insurance Brokers, the data also gets distorted in attempts to manage the premium payable forgetting the impact of their actions on the claims payments later. Imagine reducing the value of one’s vehicle from N80m to N65m today to accommodate certain premium payable only to find out at the time of claims that the value of the vehicle is N90m; and the insurance policy could only pay N60m assuming it was theft claim.

When the policyholder tells the story, many people will blame the insurance company for offering to pay claims far below the market price of the vehicle without having the full story. This has been happening a lot since January when the premium rates for Motor Insurance Comprehensive  (Private) had been set at 5 percent of the value of the vehicle by the regulator, NAICOM.

Thus our pieces of advice for September 2023 are as follows >>>

ADVICE 1: Don’t Use Today To Cheat Tomorrow and Yourself. Especially with insurance, it is easy to assume that you can get what you want regarding terms of purchase but remember that when claims occur, you might be at the losing end. Indeed, know that the Insurance Executive encouraging you to cheat yourself today might be in a different insurance company tomorrow.

ADVICE 2: Attend Events On Insurance And Learn More About The Type of Insurance You Need Or Your Insurers. Most times, we hear policyholders churning out names of insurance companies, which could be General Insurers when they actually need Life Assurers. Ignorance is bad but ignoring where and when you could get knowledge is worse. Ask for data when you don’t need it to prepare/equip yourself for the right season.

ADVICE 3: Share Data With Your Policyholders And Would-be Policyholders. It is easier and cheaper to share information and data today, so insurers should actively do it as their customers need them. Data on your type of products, distribution channels and benefits are more attractive to your customers than your company and executives.

You and your customers probably visit the same sources for data, be mindful and sensitive.

ADVICE 4: Update Your Data Regularly. It is important especially during renewals that the data on your insurance policy is up to date. Do not let it be a disadvantage. Correct data is necessary to have at all times as you never know when claims might knock.

Information is power when used, advices are valuable when heeded; let the data in your records be useable and appreciated.

There are two insurance  enlightenment and education events holding later this month for the benefit of the insuring public, please be a part of it.

To stay aware of the insurance companies operating in Nigeria, the attached Schedule has been reposted for you.