Daily Independent Online.
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Wednesday, July 21, 2004.
Life assurance: Another re-awakening
call to insurers
Going by insurers’ dismal results in life business,
it may well be assumed that insurance operators have merely paid lip service to
the much-touted plans to infuse life in this sector that enjoys prominence in
nations where insurance is well established. Insurance Correspondent, Bethel
Obioma, in
this piece, urges the nation’s risk bearers to seize the opportunity that
is steadily foisting the need for insurance on the public.
The insurance recapitalisation exercise,
concluded in March this year, has opened a vista of opportunities for the local
insurance market. The phrase: “re-positioning for a greater competitive
edge in all classes of insurance,” has become a celebrated feature in
grandiose speeches of most insurance chief executives. However, this
repositioning is still skewed in favour of non-life insurance business,
particularly marine, engineering and oil and gas, among others. Life assurance
still wallows in the backwater of insurers’ neglect.
With an estimated population of 120 million
people, insurers would certainly be talking about a premium income that would
stand out in the continent. For now, Nigeria still manages to keep its disappointing
seventh position among nine surveyed African nations with a premium income of
less than N10 billion for the year ended December 31, 2003.
Meanwhile, insurance operators have
continued to blame the woes of life assurance on the poor state of the economy
and low insurance awareness level. While the nation’s prostrate economy
could be a tenable excuse -as it affects the availability of disposable income-
what would one say of the lingering low awareness level and uncharitable public
perception? Insurers are certainly yet to unveil a formidable and ongoing
campaign that would “rebrand” the industry and reposition it as a
professional, responsive and service- driven industry. After all, the banking
sector, after the failed banks saga of the 1990s, has managed to put the sector
on a sound footing again.
It remains a sad reality that after decades
of the practice of insurance in Nigeria, insurers have not been able to
convince the insuring public why they must part with their hard-earned meager
income for paying insurance premium, except for insurances that have been made
compulsory.
Owing to the lack of adequate insurance
awareness campaigns, the industry’s futuristic nature is yet to appeal to
members of the public, who have for long, held the notion that life assurance
is for the elderly, terminally ill people, or those hounded by the premonition
of danger. Life assurance business serves as major earners in economies where
insurance is well entrenched and competes favourably with non-life businesses,
such as motor, fire, money insurance, fidelity guarantee, oil and gas and
sundry industrial risks.
The image problem of the industry in terms
of complaints in the areas of repudiation of genuine claims, delay in claim
settlement and couching of insurance policies in technical jargons has also
limited patronage of insurance services generally.
Currently, Nigeria covers less than one per
cent of its insurable population, making it one of the countries with the
lowest insurance coverage in the world. In Africa, South Africa remains the
biggest player in both life and non-life businesses. South Africa posted a
premium income of N2.8 trillion for the financial year ended December 31, 2003.
Other countries that performed better than Nigeria in the life sector for the same
period under review include Morocco, 47.8 billion, Zimbabwe, N37.4 billion,
Egypt, N24.1 billion, Mauritius, 19.7 billion, and Kenya, N14.4 billion.
The premium in percentage of Gross Domestic
Product (GDP) in life insurance penetration is poor compared to other African
countries. In fact, the low insurance awareness is demonstrated by the low
patronage of life insurance business that represents only 10 per cent of the
industry’s premium income. In light of the vital role of life insurance
business in mobilising long term funds for accelerated economic growth and
diversification of the economy, the need for fast paced development of this
sector should be paramount to insurance operators.
According to the former deputy chairman,
Chartered Insurance Institute of Nigeria (CIIN), Mr. Bola Temowo, the negative
attitude of the public to insurance is a major setback to the development of
insurance business in Nigeria. Meanwhile, the lack of public goodwill has
remained an unrelenting hurdle before insurance operators.
Temowo said the situation differed markedly
from what obtains in the UK, Europe, US and other developed countries where
insurance had since been a widely accepted way of life. In these countries, he
explained, the average insurance companies and sales agents are not exposed to
public distrust and hostility unlike their Nigerian counterparts.
“If there is one thing we as insurers
must not take for granted, that thing is the public. No insurer in Nigeria can
pretend about the existence of skepticism about insurance held by most members
of the public,” he said. Director-General, Nigerian Insurers Association
(NIA), Mr. Ezekiel Chiejina, also underscored the need for industry-wide
ongoing campaigns to address the credibility stigma that has dogged the industry.
Besides the obvious problems posed by the
credibility problem, hovering over the industry, it has been suggested that the
insuring pubic might have problems with the type of products available, a
feature of the business for decades. There have also been some complaints,
concerning premium rates for certain life products and the benefits offered.
The first step for insurers is to work
towards removing the impression of the insuring public that makes people view
life insurance as a secondary need, or something they can do without.
Already, the growing spate of disasters has
made a strong case for the need for individuals and corporate organisations to
embrace insurance. The hitherto long held “it cannot happen to me”
notion has paved way for a national awareness that disasters can and do
happen-to anyone for that matter! Insurers need to cash in on this and paint a
vivid picture to the public of how they can be restored to their original state
before the loss suffered by ensuring adequate insurance for lives and property.
The industry needs to do much more with its
growing resolve to intensify image laundering, insurance awareness campaigns
and designing of new life products, as measures of expanding their life
portfolios. The insuring public needs to know more about the business of
insurance. It needs to know that most insurance companies are adopting new
changes in their policies by way of simplified, legible prints, thereby
addressing accusations from clients of misleading clauses that are believed to
minimise the insurers’ liability in the event of claims. Insurance
principle of utmost good faith must be transparently manifest in the
insurers’ operations and service delivery structure.
Insurers should vehemently pursue the
inclusion of more investment-linked incentives like interest on premium paid,
specially packaged tuition/education policies, flexible pension plans and
pay-as-you go health policies to reflect global trends, as well as present
economic realities.
Above all, the industry should sustain its
improving claims profile and put paid to the clients’ endless complaints
in respect of non-payment of claims.
Deputy Charman, NIA, Dr. Femi
Oyetunji, maintained that
the industry has entered a new dispensation that would witness marked
improvements in all sectors of insurance.
“There is a conscious effort by insurance operators to
portray the industry again as one that is responsible, responsive and capable
of meeting all its contractual obligations,” asserted Oyetunji, who is
also the managing director, Crusader Insurance Plc. Oyetunji said insurers are
putting much more efforts into diverting some attention to developing life
business through well-funded ongoing research and development of a wide array
of life policies.
The above is exactly the problem. The
efforts do not appear to be industry-wide. The industry still lacks adequate
market opportunity analysis, target market selection and market strategy,
factors that would help insurers assess possible market share, growth estimates
and potential of life businesses.
Clearly, the lack of long-and-short range
goals is evident in the practice in the industry, as insurers jostle for
businesses unadvisedly in the pursuit of big accounts.
Insurance operators should strive to obtain
feedback from their customers, as regards their assessment of their product and
services at the point of sale, through questionnaires, phone discussions and
focus groups. Life assurance now offers a goldmine to insurers that are willing
to go the extra mile of investing now to start reaping the gains in a
not-too-distant future. Also, there would be returns for those willing to know
their customers’ problems, goals, aspirations and market opportunities to
be able to package customised products for their clients.
Insurers also have to embrace the
re-positioning strategy that involves the enhancement of the position of
current product lines by changing and extending their image through mass
advertising or personal selling. Let the people know exactly what they stand to
gain from buying life assurance policies. It is time to give life to speeches.
Huge returns await insurers that are willing to invest more funds and come up
with policies that connect with the clients’ problems.
