FBN Insurance on Nigeria’s growing insurance sector | Video
World Finance speaks to FBN Insurance about Nigeria's dynamic insurance market
Despite rapid economic growth in Nigeria in the last decade, the insurance sector is still deepening penetration among locals. World Finance speaks to three representatives from FBN Insurance, Adenrele Kehinde, Caleb Yaro and Val Ojumah, to find out how this process is evolving.
World Finance: Now, the growth factors in your country; the most important one in my opinion is the middle class. They have served to really get the economy going, but at the same time we have an insurance sector with only one million people ascribed to it – whereas there is a population of 170 million. Can you explain to me in your own words, why you think this is the case?
Adenrele Kehinde: Insurance is believed to belong to the big industries as well as high net worth individuals: to the extent that small companies and individuals believe that insurance is not necessary, or it’s a waste of money, until the unexpected happens.
We have a peculiarity in the social economic sector: that is that we are very religious in Nigeria, and everybody believes that God has the power to protect you, so you don’t need to take any insurance. God can protect you.
What we are trying to do is try to re-orientate the people on the advantages of insurance, because some people believe that the cost outweighs the benefits, which is not the situation.
World Finance: So how do you as a company begin the process of educating the public, given these disparities?
Caleb Yaro: In the north that is predominantly Muslim, we plan to develop awareness by introducing seminars where we will be inviting speakers from Muslim countries where insurance consciousness is deep.
One of the greatest challenges in retail business is the payment and collection system
Besides religious differences, there are educational differences. Products can be developed and marketed in the south on the web. People are educated enough to go in and see the full details of our products. But in the north, because of educational disparities, you need to approach it differently.
For example, if we are developing products for agriculture, we hire some farm extension service workers and train them to be marketers of a specific product. They will go and sit one by one with farmers, farmer groups; the farmers have confidence in them because they have been working together. When these people sell through that method, things will be quite ok.
World Finance: Can you tell me about how you’ll be able to tap into these potential life insurance purchasers, who work in the informal economy?
Val Ojumah: The real challenge in reaching them really was to find out where they are, go to where they are, and develop products that fit their requirements. What we do is, we don’t develop products as insurers: we develop products as customers. So when we do it we are doing it from your perspective, not from our perspective. So two considerations: easy access, easy payment terms, and low costs.
World Finance: So you’ve been talking about some of your successes, but if you could go in front of government officials right now, what policies would you like to see them improve upon?
Val Ojumah: They have come out with a couple of policies; there is the market development and restructuring initiative, which then prescribes certain compulsory insurances. There is also the implementation of an old leg-up provision called ‘no premium, no cover,’ and there is the national content acts.
They could do a lot more in executing provisions on these policies. But for now I think that they are moving in the right direction.
World Finance: What can you learn from some of the countries that are ahead, such as South Africa for instance?
Val Ojumah: That’s quite interesting, because a major partner in this company is a South African firm. They are called Sanlam, and we have learnt and benefitted a lot from having them as partners. So we have worked with South African actuaries in product development and product pricing, distribution models; a lot of that we’ve learnt.
One of the greatest challenges in retail business is the payment and collection system. In Nigeria that is very much in its infancy, but it’s developing. So you can collect your money via mobile phones right now: you do not need to see face to face. These are things that have been existing in South Africa prior to this time. Now Nigeria is keying into that situation.
World Finance: Who wants to tell me what the insurance industry is going to look like in five or ten years down the road?
Val Ojumah: The government has done a couple of projections: we are talking about NGN 1tr in two years – that’s by 2016! – coming out of the industry. That’s a big jump going from where we are today: we are still under NGN 500m at the moment. So everybody is very optimistic about the industry.
You know that several international operators are coming into the market right now, and that means they are seeing what we are seeing: opportunities. I see that one trillion by 2016 will probably be a small figure.