Between Developing and Transforming the Insurance Industry: Who is Responsible?

Wednesday, October 20,
2021 / 11:14 AM /  OpEd
By Ekerete Ola Gam-Ikon / Header Image Credit: iot evolution

 

Global discourse on economic rebounds, especially
during post-crisis periods like we have had with the COVID-19 pandemic, focus
on the efforts of governments to ensure the environment is safe for citizens to
return to work and business and vigorously manage her fiscal policies to
minimize the effect of inflation and other economic factors on our lives. Quite
often, the expectations remain exceedingly high and, sometimes, the governments
are overwhelmed as we have seen in the recent past.

 

Therefore, economic analysts have opined that
governments need to increasingly embrace the approach of collaborating and
partnering with the private sector to rebuild and reopen the economy. However,
there is the persistent challenge of priorities and expected outcomes.

 

What matters to the government should be what matters
to the citizens if we must find the right path to economic recovery and renewed
growth.


Clearly, working on sectoral basis to rebuild the
economy would be one of the ways that governments including the Federal
Government of Nigeria can set achievable milestones. Hence, the attention that
the insurance industry in Nigeria has been getting from the President Muhammadu
Buhari administration should not come as a surprise to anyone.

 

The insurance industry is the silent builder of any
economy and keeping our economy resilient post COVID-19 remains its significant
task.

 

If the Federal Government of Nigeria, over the years,
have created the environment through enabling laws and actions to ensure the
development of the insurance industry in Nigeria, how should they be involved
in its transformation from “a caterpillar to a butterfly”?

 

Arguably, governments make laws to guide and regulate
the behaviour of its citizens and residents but operationalizing the laws
become what constitutes business.  Reading about the calls by insurance
business leaders for the support of government to develop the insurance sector
in Nigeria, in my view, sounds like requesting government to set up and operate
the business of insurance underwriting and customer engagement.

 

Developing anything is a process, indeed a journey,
and in the case of the insurance sector in Nigeria, it has been at the stage
considered ripe for transformation. The big question is WHO SHOULD DRIVE IT?

 

What does the
Transformation Require?

Firstly, before the who, considering the WHAT is
imperative. Transformation, typically, portends a complete change from what it
was, and to what can be described as exciting for the users and producers, in
this case, policyholders and insurers.

 

To be at such stage or path of transformation for the
insurance sector, a critical success factor is the voice of the policyholder
and what that voice is saying. A preliminary independent survey already
indicates that less than an estimated one percent of the one percent of the
Nigerian population that holds one form of insurance can express satisfaction
about the current experience.

 

Examining the suitability of available products, the
means by which people get them and the quality of services before and after
sales would reveal the points that changes are required for there to be real
transformation.

 

Recently, increasing number of people are seeking for
risk solutions that are either not offered yet by insurers or uneasy to obtain
except through special considerations.

 

Technology, a key element for transformation, though
available, has been slow in adoption and high in discussions within the
insurance industry in Nigeria.

 

Insurtech is gaining more attention however the
operating environment seems reluctant in adopting it as the viable alternative
tool for deepening insurance penetration on a national scale.

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Though regulatory actions have been discussed as
relevant for transformation of the type expected in the insurance sector, it
does appear that bold and innovative steps on the part of operators are what
would further push the National Insurance Commission (NAICOM) to expand the
field.

 

For example, incoherent steps taken so far by
operators with regards to microinsurance, where the regulator has expanded the
field by allowing all insurance companies the opportunity to push the strategy
after due clearance, and Takaful, simply shows that they are not quite ready
for the anticipated transformation.

 

Interestingly, NAICOM has made positive efforts to
promote and encourage microinsurance and Takaful through the enlightenment
events in Kano, Abuja and Lagos, whilst the operators that actually need to
attract customers seem to have been bitten by the same bugs that have held the
entire insurance sector down for years.

 

The Responsibility for
Real Transformation

The operators of insurance business and policyholders
(existing and potential), in my view, need the transformation of the insurance
industry in Nigeria far more than the regulator.

 

Businesses are established to have and increase
customers, and the insurance operators are not exempted from such mission, as
any transformation that brings more customers, more revenue and more brand
value will deliver benefits, firstly, to the operators before NAICOM gets some
percentage as annual levy.

 

The operators ought to be so active and visible with
trying to convince more people to take up insurance, of course, using the old
reliable method of sharing evidences of claims payments over certain number of
years.

 

Deliberate actions that produce expected results are
what claims payments represent and they should not be taken for granted or
allowed to pass quietly. Planning to pay claims can only be seen as the
strategic intent of few insurance companies that make reserves.

 

Insurance operators and policyholders know, or rather
agree, that settlement of claims promptly, is the most potent tool for the
transformation of the insurance industry in Nigeria.

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President Buhari averred to this recently when he
called on insurance companies to endeavour to “pay claims in good
time”, as he received the honour of Grand Patron of Insurance from the
Chartered Insurance Institute of Nigeria (CIIN).

 

I can only opine that the emphasis on the prompt
payment of claims by the President reflects the desire of the Federal
Government of Nigeria to see real transformation of the insurance sector.

 

It will therefore be impressive, taking a cue from the
President, to see the leadership of NAICOM follow through and not only address
pending claims complaints but also periodically announce the cases treated and
payments made to the public.

 

NAICOM is the only body that has the full details from
insurance operators (brokers, insurers, loss adjusters) that would be needed to
coordinate an effective communication plan on a consistent basis. Sharing such
information and data may be her primary role towards the real transformation of
the insurance sector.

 

When this happens, another big issue hedging
transformation of the insurance sector, recapitalization, will more easily be
addressed because investors often put their money in the direction they see
people moving into, especially in a richly populated nation like Nigeria.

 

Taking responsibility is the first step to recording
transformational change and, hopefully, insurance operators will no longer
cringe when called out as the President did.

 

About The Author 

Ekerete Olawoye Gam-Ikon, MNIM,
CPP, is a management consultant with a specialization in Strategy and
Insurance. You can contact him via e:mail 
ola[email protected] and mobile +234-806-648-1111 

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