Better relationship management key to deepening insurance penetration in Nigeria

Practitioners in the nation’s insurance industry may have come to terms with the barrage of criticism of poor service delivery rendered by some insurance companies operating in the industry.

These mushroom firms cut across all the arms of the industry including underwriting companies, brokerage firms, loss adjusters, and agents.

Top insurance technocrats in the market and financial experts in other financial services sectors frown at the poor treatment of consumers particularly in meeting obligations to policyholders which account as major reason insurance business in Nigeria has not grown.

Besides, they point to relationship management of some companies for the fact that an average customer simply wants to be comfortable with the services for his money.

Therefore, financial experts at various virtual fora and reports believe that the standard of services provided in the insurance industry cannot be compared with other financial services sectors and that is the major reason insurance penetration in Nigeria is still below 0.6 per cent.

For instance, PricewaterhouseCoopers, a multinational professional services network of firms stated this in a report titled “Insurance penetration in Nigeria” observed that the Nigerian insurance industry is performing below its risk capacity evident by the low patronage of insurance services in the country.

According to the firm, insurance sector if successful will support development and growth in the economy, encourage savings and investment, aid job creation and growth in capital markets and financial assets.

The insurance stocks on the Nigerian Stock Exchange, NSE, are not performing well as they should, given the apathy of investors who believe that insurance firms are not well managed, thus affecting profitability.

Besides, from the regulatory issues which operators in the industry are grappling with, poor patronage of insurance in Nigeria could be blamed on relationship management by some insurance companies which sometimes is below par because an average customer simply wants to be comfortable.

Such relationship challenges, according to the report, have their basis in weak corporate governance and risk management framework which sometimes make the companies seem unfriendly particularly when there are claims to be made by customers thus creating doubts about how well the insurance companies may be trusted.

“At the heart of this, customers often complain about the lack of flexibility and technology-driven innovation in terms of the kind of insurance policies and packages that meets today’s upwardly mobile audience of contemporary insurance,” the report said.

According to Coopers, the implications of these challenges on the industry are rife. For instance, in 2018, the Enhancing Financial Innovation & Access, EFInA report stated that of the 99.6 million adult population in Nigeria, only 1.6 per cent have insurance covers even though nearly 40 per cent of them have access to financial services.”

According to Coopers, lack of awareness remains a key barrier as a massive 77.2 per cent of the adult population are not aware of insurance. Although largely due to the knowledge gap, the low-income level of the citizens makes it difficult to be convinced of buying insurance on a risk that may not happen, the benefits notwithstanding. Essentially, there is an urgent need to address these issues and grow the insurance industry in Nigeria.” To this development, insurance experts have said that insurance companies in Nigeria must be deliberate and diligent in addressing these issues to curate the lethargy in patronage.

Also, the Principal Investments and Strategy, Leadway Assurance Company Limited, Akinyemi Alebiosu, speaking at the virtual training for insurance journalists hosted by the company in Lagos on “Insurance for the future in 2021”, said that underwriting in the future will be driven seriously by understanding the needs of the customer backed by relevant data.

According to Alebiosu, if companies have proper data, they can predict incidents of loss and properly price it.

He said: “Data is the new oil and underwriting in the future is going to be driven by data and analytics. We are getting to a point where we will be using historical records, using robotics, artificial intelligence in making decisions of pricing, type and extent of risks we take.

“Insurance companies of the future will seek to collect large pools of data, analyse it, try to make meaning of it, prepare or create predictive models, at the end of the day make decisions that will make the product better. For example, in analysing the data, I want to know the pain point of our customers, what is their biggest concern, how am I able to create products that meet these needs at the lowest cost because if I have a proper data I can predict incidents of loss and properly price it and also know what their price point is. So at the end of the day if we use data and analytics correctly in our underwriting process, the customer will be happy, the underwriter will be happy and all the stakeholders will benefit from the insurance ecosystem.”

“For example, if I want to buy insurance, I don’t need to call somebody, I just go to the website, I can find what I need and make a purchase. We need to be able to meet our customers over the social media, because they want to send us messages and get instant answer. Social media is also an avenue for customer education. If we compare the number of Nigerians on social media and the number of Nigerians that have insurance, you will see that we have a very long way to go.”

Another good example of customer excellence is Leadway Pensure PFA Limited, who had emerged as the winner of the Customer Excellence Award at the 2021 edition of the Africa Brands Awards. The prestigious African Brands Awards was created over a decade ago to promote innovation and creativity amongst African brands across different industries.

The emergence of Leadway Pensure as the winner of the Customer Service Excellence award in the pension category reaffirms the brand’s customer-centricity and its commitment over the years to giving its clients amazing experiences beyond the call of duty.

The Managing Director, Leadway Pensure PFA Limited, Mrs. Ronke Adedeji, stated that receiving the award was a testament to how the brand had treated its clients and the positive perception it had been able to create in the larger society.

According to her, “Our clients are at the center of everything we do, hence, we are constantly innovating and finding new ways to better their experiences with us. We continue to blaze the trail in the industry by finding simple and smarter channels to deliver our services; and optimizing our processes.

We are a firm believer that if truly we must assist our clients to get more out of life, we must also continuously explore effective and efficient ways of delivering pension
Mrs. Adedeji hinted that the company invested heavily in digital channels aimed at easing tracking, reporting, and communicating with its clients. “In addition to our long-standing heritage of excellence and competitive returns on investments, we prioritize accessibility for our clients by launching online channels to connect with them.