Finance minister says poor payment of claims undermining insurance penetration
The Minister of Finance Budget and National Planning, Zainab Ahmed at the weekend decried the slow payment of insurance claims which, according to her is eroding confidence and undermining efforts at deepening insurance penetration in the country.
Ahmed raised these concerns as she commissioned the new National Insurance Commission (NAICOM) portal, a bold initiative which would help the regulator leverage technology and data to transform its processes; drive regulatory and supervisory functions, increase operational efficiency and improve corporate outcomes.
“I believe with the commissioning of the NAICOM Portal today, the long overdue digital transformation of the insurance industry has begun with the attendant effect of increased penetration, reduction in the numbers of fake insurances, efficient service delivery and improving public trust in Insurance,” the finance minister stressed.
While Ahmed commended the insurance regulator for this feat, she emphasised that the unsatisfactory response to settlement of claims by underwriters has largely contributed to the present poor public perception and lack of trust and confidence in the insurance Industry.
“Indeed, prompt claims payment is the best advertisement for the industry, therefore all genuine claims that have been duly verified and due process followed, should be paid promptly,” she stated.
“The Commission must put in place mechanisms to ensure Insurance companies meet their obligations to policyholders by paying claims promptly as that is the major reason they exist in the first place. Claims payment determines the valuable structure of the industry in the economy.”
Nigeria’s current Insurance Penetration, which measures the contribution of Insurance to the Gross Domestic Product (GDP) of 0.88 percent for 2021 is very low, and indicates how poor the Insurance sector contributes to the National Economy.
Ahmed noted that this also shows that there are abounding opportunities for growth in the market, as she saw the need to develop new innovative products based on data and customer preferences, and also the introduction of new channels of distribution beyond what currently exists to reach new segments of the market.
According to her, there is also a need for cooperation with other agencies of government to enforce compulsory insurances in the country.
Stakeholders in the industry must consciously and intentionally spread the reach of insurance from the major cities and few states to other regions of the country especially the rural areas, she urged also, pointing to the fact that low penetration in the retail end of the market must also be addressed through vigorous drive of inclusive Insurance like micro insurance and takaful.
She added that deliberate attention must be given to the low insurance literacy and education in the country, and that strategies must be put in place for insurance education, awareness and enlightenment.
She also tasked NAICOM and other insurance stakeholders on massive sensitization in both traditional and new media on the benefits of Insurance and adviced on the introduction of insurance education the education curriculum from Primary to Tertiary Schools.
She was of the view that the commissioning of the portal should serve as a springboard for industry wide adoption of technology and innovation for efficient and effective service delivery, ease of transacting business and customer experience and satisfaction.
The industry should provide quick turnaround time on their services, grant access to information when required without any inhibitions and maintain effective real-time communication with its customers.
Dwindling Government revenue profile demands that the Commission must look into ways of increasing its revenue through the use of technology and the Portal in particular.
Ahmed therefore urged the Commission to ensure the Portal is connected to other government databases like the National Identity Management Commission (NIMC) NIN Database, Nigeria Immigration Service (NIS) Passport Database, Nigeria Integrated Customs Information system, FRSC’s National Vehicle Identification System, the National Vehicle Registry, State Licensing Databases among others in order to provide value added services to all Insurance Industry stakeholders and enhance revenue generation.
In addition, the NAICOM Portal must also serve as the central database and sole repository of all Insurance Data connected to government databases in the country.
She encouraged the industry to adopt new and disruptive technologies like mobile technology, cloud computing, Artificial intelligence, Blockchain, Data Analytics and Internet of things in driving and supporting its business.
“On this premise, I commend the Commission for being in the forefront of this and for incepting initiatives in this direction including Guidelines for Web Aggregators and Regulatory Sandbox, introduction of BIMA Lab Insurtech Accelerator Program,” she stated, believing that there is a need for Regulatory framework for Insurtech companies to guide and supervise their operation without inhibiting their innovation.
“The Commission should look into this,” she urged.
In his welcome address, Sunday Thomas, Commissioner for Insurance said the portal is one of the initiatives being pursued by NAICOM to deepen the insurance market and increase the penetration to the level that is consistent with the nations economy.
The Portal which is funded directly by Africa-Re Foundation is presently made up of four systems: Policy, Licensing, Complaints Management, as well as Regulatory Returns and Financial Analysis.
Thomas recalled that the Commission had, in July 2009, embarked on a comprehensive computerization effort tagged project e-regulation meant to transform its operational procedures and the conduct of its regulatory responsibilities by providing a robust, world class ICT Infrastructure to help implement an automated business processes internally and for industry wide supervision via an integrated platform.
But prior to this, the processing of applications required that applicants physically drop off their applications at the Commission with the attendant challenges of delays in processing times, wasted manpower hours due to back-and-forth in application processing as well as ineffective application tracking system.
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The insurance Chief assured that the completion of the portal, would drive process efficiency and faster processing time as applications and supporting documents are submitted online, applicant’s account is updated with the status of the application as it progresses and there is effective Real-time communication between NAICOM and the applicant
The Portal also provides a Platform for interconnectivity by all industry stakeholders to support real-time aggregation of data on policies at the time of underwriting and policy issuance.
Each policy will be issued with a unique policy ID which would be associated with it for its life time, he further explained.
“It is expected that thechallenges of poor insurance penetration, public trust and confidence in insurance, and inadequate real time statistical data of the insurance industry will be resolved through the efficient deployment of the portal,” Thomas assured.
“Also the direct interface with the Industryprovided by the portal will ensure greater accountability and transparency,” he stressed, adding that the digital Platform will provide a single point of Contact between NAICOM and the Insurance Industry.