Developing the retail insurance business to take care of the mass population in the rural communities and making it available at low prices such that it becomes affordable to many, is what is needed to bring growth and profitability to the Nigerian insurance sector, analysts have said.
They believe this is where the growth potential is, and where Nigeria must develop to achieve deeper insurance penetration and expected growth in volume and profitability.
Akin Ogunbiyi, group managing director, Mutual Benefits Group, who spoke on the role of the insurance industry and why the industry penetration remains low, said the challenges facing the industry is not about attitude; it’s not about government, it’s not about bad policy, but it’s about the right products and accessibility.
Ogunbiyi, who spoke at the sideline of Mutual Benefits Annual thanksgiving in Lagos, stated that unless the practitioners take the right decision in making the insurance industry create economic value by taking it to the mass population in the grassroots, and concentrate less on corporate employees and those in the cities, insurance penetration target would not be realised.
He said that the insurance industry has reached the limit of growth that could come from corporate businesses, and so must expand beyond the cities to remote areas for insurance to have meaning to the Nigerians.
“If it will require that we empower them we empower them; if it will require that we educate them we educate them, but the basic fact is that the rural people must have access to insurance through the right products that meet their needs. And that is where insurance growth will come from,” Ogunbiyi said.
Ogunbiyi, who noted that Mutual Benefits had long realised the potential in grassroots insurance, said it is paying off for the Company and the impact on growth will become more visible in the near new future.
“In Mutual Benefits, we asked that if insurance is serving just one percent of the population, what happens to the remaining 99 percent. And of the truth, we discovered is that everyone needs insurance including the ‘boli’ woman on the street”.
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“Let’s have a paradigm shift in our market, the corporate world is saturated. We have thousands of people selling ten-ten kobo insurance and we are happier for it,” Ogunbiyi observed.
Mutual Benefits last year alone established 42 new branches mostly in the rural areas because we want to reach out. Name one big insurance company in Nigeria that has branches in the rural areas,” Ogunbiyi demanded, adding: “They are either in Abuja, Lagos, Port Harcourt, and Kano and so how do we develop the mass market?
“We opened a branch in ‘Iwo’ in September with just N120,000 for two years rent and furnishing, and in September it generated N465,000; in November it generated N450,000 and in December it generated N640,000. In terms of profitability, if ‘Iwo’ gives me such money, tell me if I am not wiser. After all, those monies would have gone to touts because the people do not have access to genuine insurance, and that is what all of us in the industry must begin to look at,” Ogunbiyi advised.
Segun Omosehin, managing director, Mutual Benefits Assurance plc, the arm in charge of general business, said Mutual Benefits in 2014 made some inroads in certain areas it believes is in the interest of the insurance industry, which hitherto was not thought of at all.
“We are opening to new outlets and agency network in remote areas outside the cities, because we found it effective towards our target of deepening insurance penetration.
“You will be shocked to know that there are lots of potentials in the remote areas with very minimal cost of operation, compared to the urban branches, and these are areas we think the industry should follow suit to grow the sector, and we are committed to it, Omosehin stated.
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