How foreign players are changing the insurance industry

The growing influx of foreign investors into the Nigerian insurance industry is fast changing the landscape, strengthening competition and stifling weak and poorly capitalised firms.
The new investments, which have brought with them fresh capital, skills, innovation and new technologies, are positioning local firms for better service delivery, good corporate governance, ethical practice and better returns for shareholders.
Analysts who commented on the development, said there is no doubt that firms which partnered foreign investors have better funding and capacity, which tends to give them a competitive edge and better prospect for growth.
Analysis of compliance returns of the insurance companies at the end of 2015 and 2016 show that those with foreign participation have higher compliance outlook, while those that remained very traditional in their approach tend to wobble.
Analysts however noted that key expectations, including awareness creation, market deepening and rebranding which should redefine the market very fast, were yet to gain traction.
At the last count, global insurance companies that have taken position in the local market including the likes Old Mutual of South Africa, which bought over Oceanic Insurance; Metropolitan Life of South Africa, buying into UBA Metroploitan; Sanlam Emerging Markets in South Africa, buying into FBNInsurance; GreenOaks, buying off Union Assurance and changing to Ensure Insurance Plc; NSIA, a company from Abidjan, Cote d’Ivoire, participating in ADIC Insurance,; Saham of Morocco buying over Unitrust; Axa, a France-based insurance group, buying into Mansard Insurance and transforming to Axa mansard; SwissRe, buying into Leadway Assurance, while Unic Insurance was recently acquired by Liberty Holding of South Africa, among others. Prudential Insurance is also on the corner, wanting to enter the Nigerian market.
Analysts at FBN Capital said global underwriters are trooping to Nigeria because of the positive demographics and rising household incomes across Africa, attributed to the emergence of the middle class.
Owolabi Salami, chief responsibility officer, Ensure Insurance Plc said “we have not yet begun to feel the impact of the foreign investment in many areas. For example, with their deep pockets, most have not invested in marketing and brand campaigns; none has brought innovation to products distribution.

“However, there’s a huge improvement in the corporate governance structure and practice in those companies in which there’s foreign investment.”
Salami further observed that financial reporting has also improved because they subject themselves to very high standards. Ethical levels are also quite high and the rest of the industry is being influenced by this and adopting same standards.”
He further noted that the landscape has changed significantly for the better. “Only those in denial have refused to take note.”
Mayowa Adeduro, managing director/CEO, Anchor Insurance Limited, said foreign direct investment in the insurance industry in Nigeria, has begun to increase right from the past commissioner of insurer’s tenure.
Adeduro observed that apparently the confidence of international investors in the industry was enhanced with the holistic regulatory overhaul after the 2007 recapitalisation exercise.
He however noted that “quite a number of major players today had benefited from FDI, stating that the landscape is already changing, a new wave of recapitalisation is closing to the shore, and technology is redefining our business processes and more awareness.”
Nigeria is endowed with huge population in excess of 180 million, high rate of urban population and emerging middle-class, which the sector continues to explore; these, among others, analysts say, have made the sector remain the toast of investors, especially high portfolio global insurers.
Following the recapitalisation exercise of the insurance industry in 2007, life insurance companies operate with a minimum statutory capital of N2 billion, while general business operates with N3 billion. Composite insurance companies operate with N5 billion whereas Reinsurance companies operate with N10 billion.

 

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