Afrigather Olumide Ibidapo is the managing director/CEO, of FBN Insurance coverage Brokers Restricted, a subsidiary of FBN Holdings Plc on this interview with Modestus Anaesoronye appears to be like on the Nigerian insurance coverage business, progress alternatives, challenges, and the way forward for the market.
How do you see the Nigerian insurance coverage business evolving within the subsequent 5 years?
The Nigerian insurance coverage business has undergone important modifications in recent times and is predicted to proceed to evolve within the subsequent 5 years. A number of components will drive the expansion of the business, whereas there are additionally challenges that will hinder its progress.
One of many key drivers of the expansion of the Nigerian insurance coverage business is the growing consciousness and adoption of insurance coverage merchandise by the Nigerian populace. Because the Nigerian inhabitants continues to develop and turn out to be extra conscious of the significance of insurance coverage, the demand for insurance coverage merchandise is predicted to extend.
One other issue that can drive the expansion of insurance coverage is the growing use of expertise within the business. Expertise is turning into extra prevalent within the insurance coverage business, and it will assist to extend effectivity and enhance buyer expertise. Insurance coverage corporations are more and more utilizing digital platforms to offer companies to their prospects, and this pattern is predicted to proceed within the subsequent 5 years.
The Nigerian authorities has additionally been taking steps to advertise the expansion of the insurance coverage business within the nation. The Nationwide Insurance coverage Fee (NAICOM) has been implementing reforms applications and laws aimed toward bettering the regulatory setting for insurance coverage corporations in Nigeria.
Nonetheless, there are additionally challenges that will hinder the expansion of the Nigerian insurance coverage business. One of many main challenges is the low insurance coverage penetration in Nigeria. Regardless of the efforts of the federal government and the insurance coverage business, insurance coverage penetration in Nigeria which is 0.5 p.c continues to be decrease than anticipated, and this may occasionally restrict the expansion potential of the business. Low insurance coverage literacy can be a problem in Nigeria, as many Nigerians will not be conversant in insurance coverage merchandise and don’t perceive how they work.
What do you assume are the most important challenges going through the Nigerian insurance coverage business at present?
Along with the penetration and literacy challenges talked about earlier, another main challenges embody a scarcity of belief. Belief is an important issue within the insurance coverage business, and sadly, there’s a lack of belief between insurance coverage corporations and prospects in Nigeria. This lack of belief is because of the notion that insurance coverage corporations will not be clear and that they don’t pay claims promptly. However this isn’t all the time true. In 2022 the business paid N318.2 billion in claims to its prospects. This reveals that the important thing gamers within the insurance coverage business are devoted to delivering on the promise of insurance coverage.
Moreover, it is vitally essential to have interaction the companies of an insurance coverage dealer to be able to have a seamless insurance coverage expertise whether or not as an individual or as a company entity.
The insurance coverage distribution channels in Nigeria are additionally underdeveloped. Nearly all of insurance coverage gross sales are nonetheless accomplished by way of brokers, and the usage of expertise and different distribution channels, resembling bancassurance and cellular insurance coverage, continues to be low.
What alternatives do you see for progress within the Nigerian insurance coverage business?
The Nigerian insurance coverage business presents important progress alternatives, and there are a number of areas the place the business can broaden and thrive. Microinsurance is an space that presents important alternatives for progress within the Nigerian insurance coverage business. In keeping with a report by Enhancing Monetary Innovation and Entry (EFInA), there are over 100 million underserved and unserved people in Nigeria who may benefit from microinsurance. In 2019, the Nigerian insurance coverage business’s microinsurance market was valued at N4.4 billion, with a progress price of 36.1 p.c from the earlier 12 months.
Agriculture insurance coverage is one other progress alternative as a result of Nigeria is an agricultural-based economic system, and agriculture insurance coverage presents important alternatives for progress within the business. In keeping with the Nigerian Insurers Affiliation (NIA), solely 0.5 p.c of Nigerian farmers have agricultural insurance coverage. With over 35 million smallholder farmers within the nation, agriculture insurance coverage represents an enormous untapped market. In 2019, the Nigerian insurance coverage business’s agriculture insurance coverage market was valued at N5.6 billion.
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Medical insurance is one other space with important progress potential within the Nigerian insurance coverage business. In keeping with the National Health Insurance Scheme (NHIS), solely 5 p.c of Nigerians have medical insurance protection. The low stage of medical insurance protection presents a possibility for insurance coverage corporations to supply extra medical insurance merchandise to satisfy the rising demand. In keeping with a report by Fitch Options, healthcare expenditure in Nigeria is predicted to achieve N5,762.061 billion by 2021 rising at a compounded annual progress price of 8.35 p.c Y.O.Y
Oil and gasoline insurance coverage: The Nigerian oil and gasoline business is a significant contributor to the nation’s economic system, and insurance coverage merchandise for this sector current important progress alternatives. In keeping with a report by PwC, the Nigerian oil and gasoline insurance coverage market is projected to develop at a compound annual progress price (CAGR) of 5.2 p.c between 2021 and 2025. In 2019, the Nigerian insurance coverage business’s oil and gasoline insurance coverage market was valued at N26.5 billion.
How has expertise impacted the business, and what modifications do you anticipate sooner or later?
Expertise has performed a major position in remodeling the Nigerian insurance coverage business in recent times. The introduction of expertise has improved operational effectivity, enhanced buyer expertise, and elevated market penetration. The digitalization of insurance coverage merchandise has made it simpler for purchasers to entry and buy insurance coverage merchandise. Clients can now purchase insurance coverage insurance policies on-line and by way of cellular gadgets, and insurance coverage corporations can use digital channels to distribute and handle their merchandise. This has resulted in elevated market penetration and buyer engagement. In 2019, on-line insurance coverage gross sales in Nigeria had been valued at N1.9 billion, a 31 p.c improve from the earlier 12 months.
One other is knowledge analytics. Insurance coverage corporations in Nigeria are utilizing knowledge analytics to achieve insights into buyer habits, preferences, and dangers. This has helped insurers to develop focused insurance coverage merchandise and enhance underwriting accuracy.
Trying to the long run, we are able to anticipate that expertise will proceed to remodel the Nigerian insurance coverage business. A number of the modifications we are able to count on embody:
Telematics: Telematics can be utilized within the Nigerian insurance coverage business to watch driver habits and provide personalised auto insurance coverage merchandise. Telematics-enabled insurance coverage merchandise use sensors and GPS to watch driver habits, resembling pace, braking, and acceleration. This enables insurance coverage corporations to supply personalised insurance coverage merchandise primarily based on driver habits and reward secure drivers.
Elevated use of digital platforms to supply personalised insurance coverage merchandise.
In conclusion, expertise has had a major influence on the Nigerian insurance coverage business, with the introduction of digitalization, AI, knowledge analytics, and telematics. These technological developments have improved operational effectivity, enhanced buyer expertise, and elevated market penetration. Trying to the long run, we are able to count on continued innovation and transformation within the business as expertise continues to evolve.
How can the business higher serve the wants of the underserved inhabitants, resembling these in rural areas?
The Nigerian insurance coverage business has a major alternative to serve the wants of the underserved inhabitants, significantly these in rural areas. With a big inhabitants, huge geographical space, and restricted entry to conventional banking and monetary companies, rural communities in Nigeria are sometimes underserved and neglected by the insurance coverage business. Nonetheless, with the introduction of revolutionary and inclusive insurance coverage merchandise, the business can higher serve the wants of those populations.
The Nigerian insurance coverage business has a major alternative to raised serve the underserved inhabitants, significantly these in rural areas. By introducing revolutionary and inclusive insurance coverage merchandise, collaborating with NGOs and authorities businesses, growing training and consciousness, and leveraging digitalization, insurance coverage corporations can bridge the hole between the underserved inhabitants and the insurance coverage business. By doing so, they’ll broaden their buyer base, improve market penetration, and contribute to the financial improvement of the nation.
What are the topical must-have insurance coverage merchandise for people and corporates this season?
The insurance coverage business is continually evolving, and the wants of people and corporates are all the time altering. Nonetheless, there are specific insurance coverage merchandise which might be all the time in demand, whatever the season. Beneath are a number of the topical must-have insurance coverage merchandise for people and corporates this season:
Well being Insurance coverage, Motor Insurance coverage, Property Insurance coverage, and Journey Insurance coverage. The above insurance coverage merchandise are a number of the topical must-have insurance coverage merchandise for people and corporates this season.
Whereas the wants of people and corporates might fluctuate, these insurance coverage merchandise are all the time in demand and may also help present safety towards unexpected dangers. It is very important seek the advice of with insurance coverage consultants to find out the particular insurance coverage merchandise that finest fit your wants.
What are your ideas on microinsurance and its potential to broaden insurance coverage protection in Nigeria?
Microinsurance is a sort of insurance coverage that’s designed to offer insurance coverage protection to low-income people and households and SMEs who can’t afford conventional insurance coverage insurance policies. In Nigeria, the place a big portion of the inhabitants lives beneath the poverty line, microinsurance has the potential to broaden insurance coverage protection and supply monetary safety to those that want it essentially the most.
One of many important benefits of microinsurance is that it’s reasonably priced and accessible to low-income people. It’s designed to supply fundamental insurance coverage protection at a low price, making it accessible to those that might not have the ability to afford conventional insurance coverage insurance policies. This may be significantly useful in rural areas of Nigeria, the place entry to monetary companies is proscribed.
One other benefit of microinsurance is that it may assist scale back the monetary burden of sudden occasions, resembling diseases or accidents. For low-income people, these occasions might be catastrophic and will lead to important monetary hardship. Microinsurance may also help present a security web and defend towards monetary losses, making certain that people and households can proceed to offer for his or her fundamental wants.
Microinsurance has the potential to broaden insurance coverage protection in Nigeria and supply monetary safety to low-income people and households. Nonetheless, there are challenges that should be addressed to make sure that microinsurance is accessible, reasonably priced, and efficient. With the precise regulatory frameworks, infrastructure, and education schemes, microinsurance may also help bridge the insurance coverage hole and supply monetary safety to those that want it essentially the most.
