Insurance value proposition, service delivery redefined for customers

The impact of COVID-19 pandemic in the past year in Africa’s most populous nation has redefined the insurance value proposition, service delivery to customers and operational model for underwriting companies.

A situation that was almost like the end of the world when it started here has created new opportunities for product development and innovation, particularly in health insurance and disruption policies. But most importantly, it has also impacted the way product is distributed to customers.

When the pandemic was first reported on February 27, 2020, the first challenge faced by most insurance companies was how to develop a business continuity plan, as the lockdowns and fear of the pandemic forced offices to operate remotely.

Therefore, the big deal was how to continue without losing contact and relationship with customers.

This development resulted in increase in the desire for digitalisation of services to ensure continuity of product distribution, claims reporting, claims filing and claims payment.

When it became obvious that the insured consumers could no longer be reached one-on-one as it has always been, insurers had no option but to invest in technologies that would enable them to deliver their services uninterrupted, while operating remotely.

Today, it is almost a common practice to see insurance companies comfortably do their business transactions from remote locations, with a larger percentage of their workforce operating from home without much difficulty.

COVID-19, some described as a blessing in disguise, again opened the eyes of insurers to the need for new products that take care of business interruptions for both individuals and corporates.

The lockdown period witnessed a lot of business interruptions, event cancellations, loan failures, contract failures, rising rent debt, failure in credit facilitation and many others, which could be covered under disruption policies insurance.

Sunday Thomas, commissioner for Insurance/CEO, National Insurance Commission (NAICOM), said during an interview that considering that most losses arising from the pandemic were not adequately covered by existing insurance policies during the period, it had become obvious that current insurance product offerings were not adequate to respond to emergent risks and needs of our society.

“There is, therefore, the need for a review of conventional insurance products to upscale the value proposition of the Nigerian insurance industry,” he said.

According to Thomas, the industry cannot continue to ignore the impact of unforeseen events on individuals, businesses, and the insurance industry as a whole.

It is important to also state that the work-from-home trend, which is gradually becoming the norm, heightens the need for digitalisation in the Nigerian insurance industry, he said.

Insurers are now deploying technology for remote working to enable companies expand their mode of delivery of products and services to customers, he noted.

The COVID-19 era also saw insurance companies diversifying into healthcare services including health travel insurance, health management organisations to increase access to healthcare covers for individual and householders.

“There is growing opportunity to provide healthcare for many individual and households who may have been getting healthcare from their employers, but with lots of job loss across sectors many would have to provide for themselves and their families,” according to Tunde Omolade of Premium Insurance Consultants.

“Can you imagine that somebody embarks on travel, and because of COVID-19 and lockdown he could not return at the planned time? The travel plan has been disrupted and insurance will, in turn, take care of some damages and losses incurred,” Omolade said.

Nevertheless, Thomas, emphasising the importance of digitalisation this time around, said the effective deployment of technology to facilitate operations was among the key areas NAICOM would emphasise this year.

“Digitalisation of the insurance business is no longer an option, but an imperative which we and the operators have to work towards its actualisation,” he said.

The regulator is also keen on pushing companies to boost their electronic marketing mechanism to be able to drive the insurance premium.

The Commission had observed that the sector’s premium dipped during the COVID-19 lockdown as many insurance companies could not drive sales electronically, he noted, charging the operators to be innovative. “Also, one of the major challenges for insurers was the inability to market/sell insurance products to consumers which, in turn, reduced the premium income,” he pointed out.

This has necessitated the need for a robust online automated marketing and feedback system to reduce the dependence on in-person sales and marketing, he said, stating that the suddenness of the COVID-19 pandemic imposed immense pressure on all businesses including the insurance business.

Femi Oyetunji, group managing director/CEO, Continental Reinsurance, said digitalisation of insurance was the only way to go to position insurance deliver efficiently to customers.

“We note that uncertainty across the world is affecting businesses everywhere, but as a catalyst for development, this crisis gives us insurers and reinsurers an opportunity to make an impact on our countries and continent,” Oyetunji said.

What is encouraging is that insurers and reinsurers are optimising their operations, propelled by global technological trends and internal preparedness, will be there for their customers, he said.