Growth sustainability in the insurance industry on the long term would require that operators look beyond oil and gas business by investing in the retail end of the market, analysts have said.
This, they believe, would stem instability in market share positioning, particularly when no one company consistently commanded a 10 percent market share in the last 5 years.
They analysts who spoke at the 2014 Business Outlook organised by the Chartered Insurance Institute of Nigeria (CIIN) said the year looks bright for the industry given the ongoing reforms in the power and agricultural sector, which offers huge insurance potential for the market.
Michael Siyanbola, managing director, Paul Esther Consulting Limited, said with compliance challenges in 2013, operators must become better at managing compliance in order to take advantage of the benefits associated with current regulations.
“Following a 2013 emphasis on compliance and cost management, insurers’ main priority in 2014 is expected to shift to repositioning for growth.”
He further noted that insurers should look beyond customers’ satisfaction and make sure they are vigilant about the entire customer experience, while a multi-distribution initiative will be a critical part of insurers’ strategies to retain customers and keep them loyal—and ultimately grow revenues.
“Multi-distribution enables insurers to expand their pool of potential customers by appealing to a greater number of segments, and catering to a wider range of needs” so insurers will need to understand exactly what resonates with customers; what encourages them to stay or defect,” Siyanbola said.
On investment, he said the outlook in 2014 remains bright; increase in CRR for public sector funds to 75 percent may curtail liquidity and push up interest rate in the short run which will enhance ROI for the insurance industry.
Biodun Adedipe, economist and managing partner, B. Adedipe Associates Limited, said the potential for economic growth is huge, as Nigeria’s prospect for investment is gaining world attention, and everyone that matters in the world of business are strategically positioning for Nigeria.
While urging insurers to look inwards by changing in some of the things they were that no long fits the time, he noted of a tough time for the financial services market. “There is further evidence of the tough times facing the financial institutions in the discount market, with the exit of two discount houses and conversion of another to merchant banking.”
The Capital market still holds very good prospect for investors, but Nigerian banking and finance might begin to struggle again, Adedipe said.
By: Modestus Anaesoronye