Operators in the Nigerian insurance industry are seeking to deepen penetration, meet expectation of clients at fairly good pricing such that the business remains profitable.
To find solution to this, the Offices Representatives Committee (ORC) of the Chartered Insurance Institute of Nigeria (CIIN) during its 2021 hybrid Workshop brought players and consumers to share their experience and expectations.
Gbenga Elusakin, chairman, ORC in his welcome remark said this year’s workshop is focused on a critical issues which has continued to be discussed in little silos when indeed it should be a matter of robust intellectual conversations and actions.
He said the theme for this year’s workshop: “Insurance Pricing in Nigeria: The Fundamentals, Economics and Consumer Expectations”. And the sub theme: Pricing Right and Penetrating the Market” was carefully chosen having given considerations to the current state of the market in terms of profitability/non-profitability of players, competition, clients’ expectations to derive value whilst minimizing costs.
“There is also worsening economic indicators such as high inflation rate, devaluation of currency, low return on investments, among other issues impacting on growth, he said.
According to him, whilst these factors are raging, insurance penetration continues to hover at less than 1 percent, making one wonder if the basic concept of demand and supply works in the Nigerian insurance sector.
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Elusakin explained further that in a competitive market, it is advantageous to charge a fair premium, if by fairness we mean that each policyholder, as far as possible pays a premium that corresponds to the expected losses transferred to the insurance company.
“The premium pricing process is always a very challenging task in the insurance industry as the actuarial team needs to consider the various characteristics of the insured object, the potential demand from the policyholders, the available information about the competition of the targeted market, company’s wealth and the reserve that must be kept, he said.
Julius Akindele, speaking on ‘Insurance Pricing in Nigeria, Customers’ Expectations’ identified the need for customer oriented pricing, stating that the objective is to maximize the number of customers; encourage cross-selling opportunities, recognize different levels of customers and their ability to pay for products and services.
He said affordability is important because corporates are in business and plan to continue to do so profitably.
“Focus is on cost competitiveness while delivering value of risk hedging.
Akindele said competition allows the customers to engage various insurance companies for the best pricing, terms and condition.
“However, when the regulator fixes minimum rates for certain insurance products like life assurance, then the customers are left with no choice but seek add-ons and additional benefits as well as excellent service delivery while paying a fixed premium rate.”
Other things that customers look out for Akindele noted include discounts, stating that customers will seek reasonable discounts on their premiums. “For example when claims are not reported for at least every 2 years.”
Others are added services, 24 Hours Customers Center, tailor made product, prompt claim settlement, and profit sharing among others.
