Significant changes in the Nigerian insurance industry resulting in growth in premium have been attributed to renewed response to claims payment, as well as improved regulations. Tope Smart, group managing director, CEO, NEM Insurance plc in this interview with Modetus Anaesoronye, shares his thought on developments in the industry and plan by NEM. Excerpts.
How would you describe the insurance industry today and five years ago in terms of operation, manpower etc?
I think the industry has moved from where it was 5-years ago. There are a lot of potentials and opportunities opening up in the industry.
The first issue was that of confidence; you know the level of confidence in the industry is totally different from what it was a few years back. The level of confidence has risen and to that extent, so many people now believe in the industry.
You will agree with me that the industry has improved by way of response; response to some of the big claims which are in billions of naira that happened in the last five years was a clear departure from the past.
And that gives a kind of confidence in the insuring public that of course, they now believe in the industry. Some of the businesses that were taken abroad from Nigeria four¬ five years ago were beginning to come back and this was as a result of increasing confidence over improved response to claims payment.
NEM Insurance has recently rebranded with a new structure. Where are you going from here?
NEM has always been a responsible organisation, reliable and faithful to its client. What NEM symbolizes is excellence by way of our commitment and our response to claims. So, I will say, though we have achieved some milestone, we are not yet there. But NEM is evolving and our focus is to be one of the top three insurance companies in Nigeria and we are working towards that. There is a lot of prospect and the potential is huge. We have reengineered our operations and we will continue to do that and we have tried to differentiate our brand from others through our attitude and through our character, and all these combined together have differentiated us from other brands in the market.
In terms of product, where is your niche market?
Well, I will say NEM plays in every sector of the economy and we are quite at home with almost all of them. Is it motor insurance, is it general accident, fire and if you look at the statistics, you will agree with me that we are doing well in all these products. The area where we are actually looking at putting more efforts now is in the area of oil and gas. We are deploring a lot of resources to get a good proportion that we feel will be in the interest of NEM.
Market watchers say the industry is fragmented and there is need for synergies. Is NEM looking at this direction?
No doubt about that. People have been talking about consolidation, why not, the bigger the industry the better for all of us. NEM too is looking at that direction towards partnering either by way of acquisition or merger. We are looking at it. We believe that it will improve the fortunes of the industry.
A number of foreign companies have come into the market, are you worried by this trend given competitive nature of the market presently?
We are not threatened. As a matter of fact, it is in the interest of the industry because they are bringing capital, they are bringing skills. And will bring good competition because you will then be able to separate the boys from the men. So it’s a welcome development.
Our contribution to GDP has been very insignificant. Having said that, don’t forget that the pension which is part of industry was taken away from the industry. If you look at other market globally, pension is part of the insurance industry and if you add what they are doing now, it would have added to the contribution of the insurance industry. So we would have done more and our contribution to the GDP would have been more significant.
However, there are still so many issues concerning the industry. There is the issue of confidence and level of awareness. We still need to do a lot more in terms of awareness.
Awareness is not about illiteracy. People who are even literate including the professors still don’t know the benefit of insurance. So, we still have a lot to do in that area by trying to let people realize what they can derive from insurance.
For instance, somebody who has spent about 5million to acquire a car will not want to pay N300, 000 or N200, 000 to buy insurance and protect their investment in that car. He will tell you he does not believe in that. He will rather get third party insurance which is the minimum requirement by the law.
Another area is government itself. Government need to believe in the industry and contribute to its development. If you look at what obtains in other parts of the world where there are compulsory insurances and government create an enabling environment where it ensures that people comply.
They enforce the laws. In Nigeria, enforcement is a problem and without enforcement, premiums are lost to fake insurances. Don’t be surprised that a lot of people still carry fake insurance certificates of non-existing companies like Lion of Africa, Victory, ACEN, vigilant insurance, etc. and it is because there is no enforcement and nobody bothers to look at that area.
So, you will discover that a lot of money is being lost and until government comes in to actually enforce these laws, we will continue to lose money. For instance, look at the area of group life. Government has tried to an extent by saying that you must have your group life certificate to do a lot of things as a company. They are enforcing it through PenCom. If government can do same on motor insurance, building under erection and other products, it will bring a lot of income for the industry and the Nigerian economy.
PenCom has been able to do it because of their close relationship with government and they have been able to get the buy in of government. But NIA cannot do it alone because it cannot bite. So, we have taken it up with our regulator and we are hopeful that that there will be a change.
You have recently commissioned your new office, how will this impact on your operations?
We are not just talking about the level of impact this building has had on NEM as a company, but on the industry as a whole. We have to look at it again from the industry angle; it has actually impacted on the insurance industry because since we commissioned the business, we have been receiving several visitors. And many of them were surprised that the insurance industry that many of them have written off, is making progress particularly with this kind of structure in place. So, I will say that NEM has benefitted and the entire industry too has benefitted.
What assurances are you giving to your clients?
My assurance to them is that better days are here. On daily basis, we review our mechanism and our responses are always improved upon. We have a very good structure here and this has given us an opportunity to improve on all aspects of our operation and services and our customers will definitely get better services from us.
Having concluded the first half of the year, how would you access the business environment especially before and after elections?
The first half of the year was largely distorted one way or the other because of electioneering campaigns at that time, and people had adopted the wait and see attitude to see what direction the country was going and then after conclusion of the election which produced a new president, people still waited to see the direction of the new government. So to that extent, there have been distortions here and there but having said that, as a company, we had put all that into consideration in our planning and we were able to record an impressive result over what we did same time last year.