Forty years ago, Standard Insurance Consultants Limited birthed for business and has grown to become one of the leading insurance brokerage firms in Nigeria, providing services across the world. Ahmed Olaniyi Salawudeen, president/CEO of the group in this interview with Modestus Anaesoronye shares his experience, success story and future of insurance industry in Nigeria. Excerpt:
SICL is a big name in the nation’s insurance and risks management industry and this you have demonstrated in the last 40 years of existence. What has kept you going?
Well, what has kept me going is like a slogan of a bank: I keep to my word. My ‘A’ is ‘A’ and won’t come back later and say it has changed to B. And because of that when people are coming to me they know that they are going to hear the truth from me. Again, with modesty, my humility and maturity too has helped over the years in this business. So I try to live above board, maintain integrity in whatever you do. I try not to be selfish. With that, things will come to you easily without struggling for it. Finally, if I have the means, I try to help my fellow human beings.
Running a successful business in Nigeria is an arduous task but at Standard Insurance Consultants Limited (SICL), we started 40 years ago on a very sound foundation. The basis of the foundation is as follows: Trust: Trust in business is very important and is a key to success particularly in the Insurance Industry because insurance is an intangible product. Therefore, trust is very essential. As a matter of fact, the foundation of the Insurance business is based on the principle of Utmost Good Faith (Uberrimae Fidei). The second is Integrity: This is also very important because based on your integrity; people will trust you in handling over their Insurance businesses to you. This we have maintained over the last 40 years and it has assisted the Company tremendously.
Now, the third point is selection of underwriter/risk carrier: As a matter of interest, our foundation is also based on this criterion assuring that any risks passed to us to provide Insurance Cover is arranged with a Reputable Insurance Company that in case of an insured event, claims are promptly settled. Therefore, the selection of a financially sound underwriter/risk carrier that will be able to pay claims as at when due is very essential. To this end, SICL pays so much attention in carrying out due diligence on the selection of Risk Carriers/Underwriters from the beginning of our business cultivation.
Finally, is the remittance of premium to risk carriers/underwriter: We also ensure that premiums paid to us by our clients are remitted to the insurance companies as soon as same is collected notwithstanding the 30 days of grace stipulated by the Insurance Act.
With the above criteria, we have been able to run our business effectively, and happily our business retention as of today is about 95 percent.
As a Brokerage Company, let us into your role in the industry and how much brokers have played this role in contributing to the growth of the sector?
Generally, to my assessment, the provision of using insurance brokers as intermediaries by the public in Nigeria is still very far behind. The services being provided by the brokers are still not well known probably because of perception or misinformation. Therefore, I believe that the insurance brokerage fraternity will have to do a lot more with the present awareness of the benefits associated with the usage of professional brokers’ services in the industry.
Simply put, by practice, insurance brokers will not take fees from their clients, rather brokerage commission is paid by the risk carriers/underwriters with whom insurance business is placed. This doctrine has been in practice over centuries and I feel the broker’s fraternity need to make this well known to the generality of the public in Nigeria. We should let them know that the insured is not losing anything by going through the medium of an insurance broker.
In reality, the benefits to be derived by the public in arranging their insurance requirements through a qualified professional insurance broker are enormous. For example, the public will benefit from paying equitable premiums for the risks being carried by underwriters, and not only that, the responsibility of collecting claims from the underwriter’s lies largely with the broker. In the circumstances, I think the Nigerian Council of Registered Insurance Brokers (NCRIB), the umbrella of insurance brokers should continue on a positive note to explain this to the general public, particularly moving forward in the area of life insurance cover which is very important to the economy of Nigeria. The brokers are friends of the insuring public and their role should be seen as a symbiotic relationship between the insured and the intermediary.
The insurance industry is currently going through a recapitalization exercise, how relevant is this project and how can it help the business?
This is a very topical issue in the insurance marketplace and surely anybody in the insurance business must be highly capitalized. Therefore, the idea of recapitalization will help Nigerian insurance industry. As at the moment, some of the insurance companies are not adequately capitalized and in the circumstances, there is a need for many insurance companies to be thinking of mergers. That is to say, all the small-sized companies should come together and form a united front to be highly capitalized. For your information, in the early days of insurance in Nigeria, the insurance companies are at the forefront of investing their insurance funds with the Banks. Simply put, the banks rely so much on the investment being provided by the insurance companies.
First and foremost, the premium being generated on a countrywide need to be invested in one form of investment or the other, and this is done through the banks. The idea is if the fund is provided to the Banks, the Bank will be able to lend the fund at a reasonable interest rate to the public i.e those who are in the communication, housing, industries, and other various infrastructural developments.
Nigeria Government and others have been talking about the “Housing for All” scheme by the year 2000. The idea is that if the insurance companies provide funds to the Bank, the Bank will provide these funds with reasonable interest particularly to the mortgage banks. I remembered there was a special mortgage bank put in place by the Government for this purpose long before the year 2000. However, it appears like any other thing in Nigeria, everything is now history.
Therefore, the recapitalization of insurance companies appears to be very important and in the right direction. It will be beneficial if the insurance companies and the banks play their role as it is being done in other civilized societies around the Globe. Nigerians will be better off if things are done properly.
Does this same recapitalization affect brokers, and what is your company doing about this?
For your information, brokers provide insurance professional services and they do not require high capitalization as they do carry any Risks. What is very important in brokerage business is the employment of qualified professional insurance personnel that will be a good technician in the interpretation of policy terms and conditions. From our Company’s point of view; what we have put in place is adequate Professional Insurance Indemnity (Error and Omission). This means that we have sufficient insurance cover in place so that in case we provide wrongful advice to our mutual client whereby they suffer losses and they are unable to collect their legitimate claims, we can be sued for professional negligence. As far as SICL is concerned, we are having over a billion naira insurance protection from a very strong, reliable, and highly capitalized financial risk carrier/underwriter. That is all we need as a professional brokers.
What would you say about the attitude of Nigerians towards insurance in the last 40 years?
This question is very important judging by the attitude of the insuring public over the last 40 years that we have been involved in insurance placements. My honest assessment and opinion as an independent gladiator is that there is not much improvement in the acceptability of insurance in the country’s insurance marketplace. The reason is very glaring. The public perception towards the way insurance business is being conducted in Nigeria is such that Nigerians do not have confidence in taking an insurance cover. The perception of Nigerians (with respect) is that insurance business in this Country is a “Legalized Robbery”. incidentally, this is not so.
As I said earlier, insurance business is an intangible product based on trust. Therefore, when a client who has paid his or her legitimate premium and is unable to be compensated claims wise, such a person will be dejected and disgruntled. From my point of view, insurance image generally has not helped matters in the development of Insurance particularly with the life Insurance policies. From my experience over the last 40 years, the public appears not to trust insurance companies because of the happenings in the marketplace. I believe many are perceptions, and some are real. However, this can be avoided by going through the channel of a professional insurance broker that can read the “small print” of the insurance policies so that it can be interpreted logically in the best interest of the assured.
In addition, if effort is geared to improve the image of Nigeria insurer, I strongly believe that there will be a lot of Nigerians who will agree that insurance is a better solution to the inherent risks that abound everywhere. My advice as always is that all the arms of the insurance industry in the country; starting from the Regulator, the Risk Carrier, the Intermediary fraternity, the Education Sector, and others should come together as a block to put in place a blueprint that will ensure the improvement of insurance image in Nigeria. I believe the issue of image is very important and critical. Certainly, it is a yardstick for us to move forward in the insurance industry.
What would you say is the effect of COVID 19 on insurance business in Nigeria?
Unfortunately, the emergence of COVID-19 has affected all insurance businesses dramatically around the Globe, including Nigeria to which you referred. The COVID-19 epidemic has opened a lot of pandora boxes that are going to affect the insurance businesses generally not only in Nigeria but Globally.
However, with what is in place at the moment, the insurance industry needs to be proactive and take decisive actions to ensure that financially, insurance cover is provided for those affected or will be affected by Corona Virus. For example, insurance companies are known to provide medical checkups for their teeming clients when they are taking life insurance cover or some other contingencies. By these tests, it is apparent that the Virus can be detected to save the lives of billions of people in the World.
Again, the insurance cover can be provided either for an individual, Group, Professional basis, or otherwise, and if this could be done proactively, it means a lot of business generation for the insurance industry as a whole. The most important thing is to be proactive, think positively, and determine how this will be done to ensure that lives are protected and that financial benefits are provided in time for those who have taken the insurance to cover death, burial, medical expenses, and others. By providing adequate insurance cover, technology has assisted in no small measure. Insurance business transactions can be done online, through video conferencing and others. Therefore business-wise, I believe the insurance industry will not be affected seriously because Insurance cover needs to be provided on a worldwide basis. For every stage of our life, we need insurance.
Post COVID-19, what is the future of insurance business?
The way I see it, the future of insurance business Post-COVID-19 in Nigeria and globally looks brighter. The issue at stake is that the insurance companies are providing insurance cover for the contingencies known and unknown and for the future. Therefore, with COVID-19 now, a lot of insurance covers are being developed to cater for Coronavirus and other viruses unknown to ensure that adequate insurance cover is provided. For example, if there is an insurance cover in place against COVID 19 and the breadwinner of a family dies due to Coronavirus, if the deceased is having an insurance cover in place, the insurance company will be able to provide financial backing to the family left behind to ensure that the family will not disintegrate even though the breadwinner of the family is no more.
Another example of this can be drawn from Mortgage Protection Insurance Cover, i.e insurance protection can be arranged for an individual or group of people through a Bank, called mortgage organization, or from his employer for building or purchasing a private dwelling by using the medium of a loan from these sources. In case of his/her untimely death, the Mortgage Protection Insurance Cover will be made available to liquidate the loan so that the family is not put in a precarious situation. Therefore, for insurance Companies providing cover, they are getting more businesses. Also, insurance is basic whether we like it or not. Insurance cover will continue to be offered to all assets, liabilities, traveling, etc. With or without COVID-19, insurance businesses continues. Therefore as I said earlier, the future of the Insurance Industry is still brighter post-COVID 19. The most important thing is for the Insurance Industry to be proactive and let the public put TRUST in the business.