‘Recapitalisation will improve trust of Nigerians on insurance, increase uptake’
OLUMIDE IBIDAPO is the MD/CEO, FBN Insurance Brokers Limited, a wholly owned subsidiary of FBN Holdings Plc. In this interview with MODESTUS ANAESORONYE, shares the vision of the brokerage firm that is now over 20 years old in business. IBIDAPO looks at the challenges and potentials of the Nigerian insurance industry and how penetration could be improved given the available resources in the country. Excerpt:
FBN Insurance Brokers started operations in the Nigerian insurance industry about 21 years ago, how has it been as a business given the operating environment?
21 years is a long time to be in business. There is no gainsaying that the business environment that we operate in is a very tough one; and to have navigated this tough terrain for more than 20 years is a testament to our resilience and continuous reinvention. We are happy to be making our input in nation development and this will continue and even get better years to come.
A lot of companies that started at the same time with you are no longer around, what have been your survival secrets?
According to data from the Bureau of Labor Statistics, as reported by Funderal, approximately 20 percent of small businesses fail within the first year. By the end of the second year, 30 percent of businesses would have failed. By the end of the fifth year, about half would have failed. And by the end of a decade, only 30 percent of businesses will remain.
At 21, we are proudly in a special league of elite companies from this part of the world. Today, there are over 500 Insurance Brokers listed and registered with NAICOM. That number might keep growing as long as the industry as a whole keeps performing. Surviving new entrants and squaring up to old giants requires a strategy that makes competition irrelevant. In other words, we do not focus on what others do or don’t do; our focus is on how to out-perform ourselves year on year. These days, we are focused on disrupting our business and reinventing ourselves. This has really helped us over the years.
Insurance has been described as the modern means of risk management. This appears to mean different in the Nigeria context particularly with individuals including the elite, what in your opinion are the challenges?
There are many socio-economic factors that pose a challenge to the industry in Nigeria. Issues such as a lack of trust, declining disposable income and low customer education/awareness are all notable. However, things seem to be improving over the last couple of years. There is a lot more that still needs to be done, but surely, better days are ahead for the Nigerian Insurance industry!
When insurance is discussed, the focus is usually the underwriting arm of the business, why has your role as middleman often not been in the picture?
It really boils down to customer education and awareness. There are a lot of misconceptions that some part of the insuring public has towards Insurance Brokers all of which has made us less popular than we ought to. For example, some people think dealing with a broker could increase their insurance cost when on the contrary, Brokers seek to help their clients achieve comprehensive coverage at the best terms and conditions. As Brokers, we act in the best interest of the customer. FBN Insurance Brokers continues to play its part towards educating the public through every means that we have at our disposal. Also worthy of note is the active role the Nigerian Council of Registered Insurance Brokers (NCRIB) is playing in creating awareness about the roles and responsibilities of Insurance Brokers.
As a company, what are you doing to increase acceptance of insurance in the Nigerian environment, and what do you think should be done differently from what is being done at the moment?
As a company, we continue to engage with the public and create as much awareness as we can. Currently, we are paying particular attention towards the financially excluded segment knowing that insurance is a solution everybody needs. We are partnering with other stakeholders towards creating more channels and avenues to reach more people. Furthermore, we at FBN Insurance brokers believe that the future is digital. So we have developed a digital roadmap that entails providing digital solutions for the Nigerian Insurance market. Part of that plan is our highly interactive website that would be relaunched soon. With more Nigerians getting connected digitally, this is one area that must be paid attention to.
Looking at regulation of the industry, have you noticed any gaps that require further reforms to enable operate more effectively?
I really do commend the regulators for the work they have been doing thus far. The growth we have been experiencing would not have been possible without their guidance. As recently as December 2020, NAICOM passed a circular on Micro Insurance window operations which will eventually see low income earners access insurance products tailor made for them. This could be really significant in improving the penetration rate in Nigeria. But like they say, the reward for success is more work. There is still so much that can be done towards improving the state of things in the industry. I think in summary; the improvement we seek is in doing the things we are currently doing, or have started doing, better.
The industry is achieving some growth year in year out, but this still appears like a scratch in the surface looking at the population and enormous resources in this country, is there still hope for the big growth?
The insurance market potential in Nigeria is huge. Comparing our insurance penetration and uptake rate with that of other African countries like South Africa, Kenya and even Ghana, we see that we can definitely do more. But more importantly, comparing our present rate with our own potentials; we see even greater possibilities. Our population is mostly youth and the middle class seems to be growing. With some of the moves and waves that we are currently seeing in the industry, we can expect that the Nigerian Insurance industry will begin to convert more of its potential into reality.
The recent call for recapitalization of the industry was halted midway, what is your view and implications on the future of the business?
The Covid-19 pandemic played a major part in slowing down the regulator’s plan for recapitalization. But it is something i think will eventually come to play; and that will be for the benefit of the entire industry and all the major stakeholders. Ultimately, recapitalization will enable underwriters to play big and have higher capacity to underwrite more local insurance businesses and also meet up with their claims obligations. This will help in improving the trust that Nigerians have in the Insurance industry and consequently increase insurance uptake. I also would to encourage individual companies to not wait on the regulators before they improve their capital base. More capital can be utilized in increasing their capacity to underwrite more businesses and do more in the industry.