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‘Insurance sector on course to achieve 2022 projections despite low penetration’

‘Insurance sector on course to achieve 2022 projections despite low penetration’

OLUMIDE IBIDAPO, managing director/CEO, FBN Insurance Brokers Limited expects that the insurance industry will exceed its projection for the year in view of the growing confidence of consumers and increasing adoption of technology by operators. In this interview with MODESTUS ANAESORONYE, he shares his view on the challenges facing the industry and the company’s growth prospects.

The Nigerian economy in the past year has been challenged by high inflationary trends, affecting the prices of almost everything money can buy. Looking at the business environment, what is your assessment of the insurance industry in the first half of the year?

On the global scene, the insurance market was projected to experience significant growth as global premiums were expected to exceed $7 Trillion by the end of H1, 2022. Despite challenges arising from persistent global inflation and the sustained Russia/Ukraine conflict, the insurance sector is positioned to hit the $7 Trillion mark.

On the Nigerian economic scene, the half year 2022 was also characterised by a high level of inflation, which lead to rising prices of commodities. This is despite real GDP growth of 3.11 percent in the first quarter of 2022.

In spite of the above global and national economic backdrop, the insurance sector in Nigeria has performed considerably well in H1 2022. This performance was influenced by the increased confidence of the public in the promise of insurance and the positioning of the industry by major stakeholders such as NAICOM, NCRIB, NIA, etc. to take advantage of the increasing rate of technology penetration in Nigeria.

The National Bureau of Statistics (NBS) reports that in Q1 2022, the insurance and finance sector witnessed a growth of 23.24 percent higher by 23.70 percent points compared to Q1 2021 and down by 0.90 percent points from the rate recorded in the previous quarter. In real terms, there was a quarter-on-quarter growth of 5.01 percent

In H1 2022, the contribution of Finance and Insurance to real GDP totalled 4.51 percent higher than the contribution of 3.77 percent recorded in the first quarter of 2021 by 0.74 percent points and higher than 3.66 percent recorded in Q4 2021 by 0.84 percent.

This performance shows that the insurance sector is on course to achieve its 2022 projections despite the relatively low penetration rate of approximately 1 percent and other challenges.

However, the inflationary trend is impacting greatly on claims payments profile of many underwriters due to increasing costs of items required to make good reported losses. Equally, the business environment is witnessing a daily rise in operational costs most especially energy-related costs/consumables which could erode whatever gains made by the industry.

FBN Insurance Brokers remains a brand to beat in the nation’s insurance industry, give an overview of your activities that defined your growth in the last year.

In the past year, FBN Insurance Brokers has remained driven by our vision to be the leading provider of insurance brokerage and advisory services in Nigeria.

To this effect, we have completely automated our key processes in order to guarantee a seamless experience for our customers. Further to this, we continue to explore and firm up business partnerships within and outside the country in order to increase the size and quality of our insurance and risk management offerings to both our existing and potential clients. Summarily, in the past year, our focus has been to leverage technology and strategic partnerships to deliver the best value to customers.

What significant achievements did the Company make in the past year to date? Are there new products and partnerships that will position you for competitiveness?

FBN Insurance Brokers has made giant strides in the last year in the areas of customer experience, strategic partnerships as well as digital transformation.

In conjunction with a number of our key underwriting partners, we have been able to create product bundles that give our customers the much-needed cover(s) with a high degree of flexibility, especially in terms of coverage.

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“We are also currently developing a digital solution that would make insurance solutions easily available to the public. This platform, when operational, will improve the customer’s experience end to end from policy purchase to claims management.”

On the international front, we have strengthened our partnership with major entities like Howden One, TRM, and BUPA International. These partnerships have positioned us to provide bespoke insurance solutions to our clients’ emerging risks.

We are also currently developing a digital solution that would make insurance solutions easily available to the public. This platform, when operational, will improve the customer’s experience end to end from policy purchase to claims management.

Read also:NAICOM chairman’s director position in ADSA Insurance Brokers unsettles industry

Expanding the insurance space and deepening penetration remains the biggest problem in this market. Given the population of the country at over 200 million people, why has this not happened with all the noise about growing retail space?

Several factors are responsible for the low insurance uptake rate in Nigeria, especially in the retail segment. The most noticeable factors include Low insurance/risk management/ financial literacy; Low Disposable Income; Perceived difficulty redeeming claims in the event of one; Low adoption of the right technological platform by stakeholders to manage and drive the distribution of the retail products considering the volume/potential population or client base. If these major challenges are addressed, there will be significant insurance adoption growth in the retail segment of the market.

Recently, the Nigerian insurers with their counterparts across Africa were in Nairobi, Kenya for the 2022 African Insurance Organisation (AIO) Conference and General Assembly with the theme ‘A Call For African Insurance Renaissance’. What is the importance of this event in terms of how African insurers could contribute more to the economic development of the continent?

The African Insurance Organisation (AIO) Conference and General Assembly avail African insurance practitioners the unique opportunity to share ideas and collaborate in order to increase insurance literacy, improve the capabilities of African insurance operators and improve the transnational collaboration amongst African insurers. The conference also provides an opportunity to ensure the uniformity of the practice of insurance in Africa in line with Global standards.

This will no doubt impact the contribution of the insurance sector to the economic growth of African countries going by the opportunities that will be presented with the advent of the African Continental Free Trade Area (ACFTA).

What is your growth plan for the next five years?

In order to harness the potentials that lie fallow in the Nigerian insurance industry, FBN Insurance Brokers’ goal is to fully transition into a digital outfit while delivering bespoke risk advisory and management solutions to the retail, corporate, and public sector segments of our economy. This will also positively impact our customer’s experience at all touch points.

We also plan to consolidate our existing network of partners while also striking new partnerships with the aim of providing a comprehensive array of solutions to our customers while also exploring new lines of business.

Finally, we plan to continue to acquire and develop capacities and competencies (human capital development inclusive) that will give us a strong competitive advantage in the insurance brokerage sub-sector. This will enable us to deliver on our promise of top-notch risk advisory services to our esteemed customers.

With the advent and subsequent growth of Fintechs in the financial sector recently, many of the big players in this space are leveraging technology to drive their business. What is FBNIB doing to capitalize on this?

As earlier mentioned, many organisations are looking to seriously compete and win effectively on technology to reach diverse market segments and offer tailor-made products and services.

At FBN Insurance Brokers, we have created a digital roadmap that would see us realize our goal of completely automating our business processes while leveraging the best technology available.

On the customer front, we intend to use a data-driven approach to better understand their needs, preferences, and possible challenges. Doing this will help us in proffering the right insurance solutions while also providing very useful insights to our underwriting partners for product development.