LIFE ASSURANCE TALKS IN NIGERIA
The success of on going efforts by both government and insurance
industry operators to deepen insurance market especially through retail
insurance has been tied to effective use of mobile telephone on
insurance product distribution.
Insurance managers are therefore urged to see the use of mobile telephones as important marketing tool for their products.
This according to industry observers if combined with agency system
of product distribution will definitely give insurers wide clientele
base like the banks and cover the present gap between Nigerians and
insures. The gap between Nigerians and insurance has been put at 94
percent.
Speaking on the relevance of mobile phones in insurance product
distribution recently, General Manager Micro Ensure Ghana, Mr. Peter
Gross at a breakfast forum held in Lagos recently noted that
underwriters can provide micro insurance to the teeming informal sector
by using the mobile network operators services platform.
In his words “Providing micro insurance through the ubiquitous mobile
telecommunications platform is the only available means of developing
products to insure the critical mass that form the informal sector in
Nigeria and allow the insurance industry to increase the level of
insurance penetration.”
According to him,Since the informal sector forms a significant part
of the Nigerian population, insurers in the country should collaborate
with Mobile Network Operators (MNOs) to sell insurance products to this
large population.
Gross urged insurers in Nigeria to collaborate with MNOs in order to
deliver insurance services to the doorsteps of average Nigerians.
He observed that micro insurance penetration is low in Nigeria
because of a few faulty assumptions within the insurance community.
According to him, these assumptions include such remarks as, “We
don’t believe that 70 per cent of Nigerians can be insured. Insurance is
not in demand or cannot be understood by the target client base. If
insurance for the poor must be low cost, it therefore must be low value.
The poor face more risk, so we have to account for. We can use our
basic policies and strip them down.”
He quipped that faulty assumptions in the insurance community have
ultimately led to faulty products such as low-value credit life
products, heavy conditions and exclusions that erode consumer trust,
insurance processes that do not account for rural realities and
administrative systems that cannot handle millions of clients.
Besides, Gross pointed out that micro insurance penetration is low in
Nigeria on the buying side because most Nigerians think insurance
products are too expensive. “They do not trust the insurers enough.
“They think insurance products are not available and they also feel that no one has explained it to them,” he added.
He however warned insurers that collaborating with mobile operators
to provide micro insurance is not a guarantee for success if the right
approach is not adopted. While listing what he termed success
requirements, Gross said the requirements for successful use of mobile
channel to drive micro insurance should include products that drive
channel’s core business, simplified processes, minimized operation
expenses, commitment to the micro market, capital must be patient and
“insurers should develop the right partners,” he advised.
Also Milliman Actuaries and consultants international, a global
specialist in actuarial and life insurance consultancy will early next
month sponsor a training programme/workshops on the use of Banc
assurance and mobile telephone in the distribution of life insurance
products.
Addressing the media on the programme ,managing director Actuary
consultants middle East ,Africa and South Asia,Mr Debo Ajayi said the
programme which will attract insurers from African countries including
Nigeria is targeted at training insurers on the use of mobile telephone
in insurance product market as well as how to engage banks in the
distribution of insurance products even in the face of the CBN directive
on banks to divest form their non banking subsidiaries. He said the
workshop will train banks to understand insurance and the inherent
benefit for them in the marketing of insurance products.
He said Nigerian banks are not too eager to marketing insurance
products because they felt it is not their core area but maintained that
the workshop will make banks appreciate insurance products and their
role in insurance industry even after divestment from their insurance
subsidiaries. According to Ajayi, through the workshop, bankers will
understand that the CBN in this divestment directive does not mean that
there should be gap between banks and insurance companies.
He said the second part of the training will expose insurance firm
operators on the use of mobile phones in insurance product sales and
marketing adding that it will also expose them in the use of mobile
phones in premium collection, claims settlement and in payment of
commission. He said the workshop will expose even drivers and travelers
on travel insurance as well as teach them how to use mobile phones to
secure insurance policy while on transit.
He said Nigerian insurers who attend the workshop will enjoy the
benefit of using actuarial knowledge obtained to ensure life insurance
penetration in the country. According to him, life insurance is like an
appendage in Nigeria budget and needs to be pushed further to get to the
target audience by building the necessary technical base. The workshop
he said will equip participants on the relevant skills. He said resource
persons who are versatile in actuarial science from different countries
of the world have been carefully selected to handle various topics to
be treated at the workshop.
The management of African Alliance Insurance Company Limited, one of
the oldest life offices in the country, has said that micro-insurance
will remain the backbone of life insurance business in the country now
and in the future.
Managing Director of the company, Mr. Alphonsus Okpor, stated this in
an interview with THISDAY in Lagos. He said that since group life
business is not reliable, adding that the only way for any life company
to survive is to embrace micro-insurance.
“Micro-insurance is what we are doing here, that is individual life
insurance. For me, I look at this area as the back bone of life
insurance business because in that area you will charge adequate premium
and pay your claims as they occur. From experience, we have discovered
that it is even more profitable than the group life insurance. “In the
group, not many states of the federation have bought into it and we are
currently struggling for the Federal Government portion which as we are
talking they have not even paid premium for this year.
So if you want to wait for them to make your money then you will go
hungry and might even die before then,” he said. Okpor also advised
other life insurance companies in the country to take a cue from his
organisation and develop their individual life businesses, saying
micro-insurance is the way out for life offices. “You have to develop
micro-insurance or individual life insurance which comes in trickles but
runs into millions. This is the strength of life business and I will
advise life companies to strengthen individual life business so as to
produce steady income for their companies.
“Group life business will come any time but now that many states are
not even implementing it saying they don’t have money, are we going to
force them? Individual life business is the main thing and it is the
future of life business,” the African Alliance boss stressed.
The management of African Alliance Insurance Company Limited, one of
the oldest life offices in the country, has said that micro-insurance
will remain the backbone of life insurance business in the country now
and in the future.
Managing Director of the company, Mr. Alphonso Okpor, stated this in
an interview with THISDAY in Lagos. He said that since group life
business is not reliable, adding that the only way for any life company
to survive is to embrace micro-insurance.
“Micro-insurance is what we are doing here, that is individual life
insurance. For me, I look at this area as the back bone of life
insurance business because in that area you will charge adequate premium
and pay your claims as they occur. From experience, we have discovered
that it is even more profitable than the group life insurance. “In the
group, not many states of the federation have bought into it and we are
currently struggling for the Federal Government portion which as we are
talking they have not even paid premium for this year.
So if you want to wait for them to make your money then you will go
hungry and might even die before then,” he said. Okpor also advised
other life insurance companies in the country to take a cue from his organization and develop their individual life businesses, saying
micro-insurance is the way out for life offices. “You have to develop
micro-insurance or individual life insurance which comes in trickles but
runs into millions. This is the strength of life business and I will
advise life companies to strengthen individual life business so as to
produce steady income for their companies.
“Group life business will come any time but now that many states are
not even implementing it saying they don’t have money, are we going to
force them? Individual life business is the main thing and it is the
future of life business,” the African Alliance boss stressed.
MICROINSURANCE IN NIGERIA
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