• Saturday, July 20, 2024
businessday logo

BusinessDay

Claims processing time critical to microinsurance success, stakeholders say

businessday-icon

For effective take-off and maximisation of microinsurance opportunity in Nigeria following the release of operational guidelines by the National Insurance Commission (NAICOM), operators must work on claims processing time for the project to succeed.

This is important in building trust and confidence among consumers, whose level of patience, knowledge is low, but vulnerability given their unique characteristics.

The stakeholders who gathered at a Half-Day presentation on “Microinsurance Learning and Knowledge (MILK)” project organised by the Nigerian Insurers Association (NIA) in collaboration with Microinsurance Centre identified the importance of ‘timely response’ to needs of consumers particularly in the area of claims.

For instance, funeral insurance policy requires that the claims are made immediately the insured is confirmed dead so that the family would utilise the money to plan for burial and other emerging expenses, instead of asking for death certificate, police report or other unnecessary processes when somebody has been confirmed dead, a participant argued.

Another participant also asked that in the case of hospitalisation of the insured, what will be the essence of process documentation and doctor’s report when the hospital is asking for money to continue treatment of the sick person or payment for medical bill.

For the stakeholders who used to the forum to look at value creation for consumers and business cases in other successful markets, mentality of operators must change and there must be strategic programme of education and awareness to carry the larger populace along.

Michael J. McCord, president, MicroInsurance Centre, and project director, MILK Project said microinsurance must be affordable and deliver on its promise, while understanding consumer need is necessary before a product is designed.

An operator must know what influences demand, particularly perceived risk and need for protection before going into product design. Besides, clients are price sensitive and trust sensitive even when they perceive value, McCord stated.

Richard Koven, consultant, Microinsurance Centre and business case manager, MILK Project, who emphasised the need for would-be microinsurance operators to understudy operational models in other markets like India, Kenya, Philippines and Columbia, said profitability is key if one must invest in microinsurance.

“Irrespective of the model you want to adopt, the business must be profitable to make economic sense, so emphasis must be on achieving scale to be able to make profit.

According to Koven, operators must again look at key measurement indices to that would determine profitability, and these are market potential, distribution effectiveness, and enrolment method and premium collection.

Modestus  Anaesoronye