• Thursday, December 07, 2023
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How digital skills can transform Insurance services in Africa’s largest economy


Asides being the most populous country in Africa, another fascinating fact about Nigeria exists in its youth population, described as the largest in the world.

According to United Nations (UN) population projections for 2020, about 43% of the Nigerian population comprised children 14 years and below, 19% fall between ages 15 and 24 years while 62% are younger than 25. By contrast, less than 5% of the nation’s population is 60 years and older. This makes Nigeria a youthful population with a median age of about 18 years – lower than Africa, 20 and the world average put at 29.

According to the Nigerian Communication Commission (NCC), Nigeria has the 7th highest number of mobile phone users in the world; 172 million in 2019. In addition, the country currently has 128 million mobile internet subscriptions.

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Needless to say, this population cluster constitutes a major driver to tech-oriented businesses such as courier services, ride hailing, blogging, content creation, digital banking, and a host of others.

Nigeria’s insurance sector which hangs on frail infrastructural systems is on its way towards reinventing itself in the face of the pandemic. For years, the sector has been guilty of slow digitization thus causing friction between the insurers and the insured. As a result, the youth population-characterized by financial consciousness and tech-savviness is one of the leading considerations for this expansion. Selling the idea of insurance to Nigerian youths is almost like selling snow to Eskimos. The average Nigerian youth is knowledgeable and in need of quick solutions. A typical scenario with a Nigerian youth is one that often plays out with them bombarding you with questions and simultaneously, cross-checking your responses with online search. Nigerian youths are not necessarily interested in too much details or prolonged conversations but how it helps them solve problems with speed and convenience.

Unequivocally, the smartphone is the most valued item for the youth because it has become a tool for self-expression, empowerment, and liberation. The average mobile phone user spends more time with apps than they would likely do with friends and family. Disruptive thinkers in the insurance business can begin to leverage on this behavioral trait to add market value. The insurance business is perceived as slow in most climates, but Nigeria has surprisingly advanced mobile financial service delivery than some of the best economies in Europe. Thinkers in the insurance sector can activate digital solutions such as claims management software that can reduce manual workflow and physical interactions. With this, clients spend less time in applying and processing claims. Claims management software can fast track fraud detection, payment calculations, information exchange between insurance and healthcare provider systems. Other disruptive models include Peer-to-Peer (P2P) insurance which does not require the conventional middleman function of the insurance companies. With an actuarial software, claims can be assessed by group insurers on a risk-sharing platform.

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Across the globe, the introduction of digital concepts to insurance has impacted greatly on economies such as Germany is, rated as one of the largest markets for insurance products. The country has been a hub for insurance technology due to the common knowledge that the Germans love being insured for almost anything. According to Finance Magnates, the average household in Germany has at least six insurance plans. The insurance market in Germany is worth $205 billion. Some of the factors responsible for this market value is the existence of innovative platform architecture, strong regulatory framework, and public awareness.

Social media engagement is another way of drawing in the youth population in Nigeria to the insurance culture. To do this effectively, insurance companies need to identify potential digital followers and influencers to push its digital agenda. In addition, the insurance companies need to adopt a self-service outlook to make it easy and fast for customers to independently report a claim and manage the policy. With a more aggressive digital marketing, these digital paths to insurance will be made attractive to new customers and inspire trust between customers and insurance providers.

Insurance providers can also invest in digital literacy as part of their corporate social responsibility efforts to help traditional customers scale up on their digital skills. Through training workshops, more customers will learn crucial digital skills such as how to navigate online platforms, access an online agent who takes enquiries, answer questions and collect data. User-friendly websites that prompt feedback from the customers are also very efficient in developing the appropriate business models and strategy to attract and retain the insured.

For the sake of sustainable development for the insurance industry, an updated legal framework will have to tackle issues of cybercrime, low internet penetration and financial inclusion to make the industry safe and more attractive for millennials. Insurers and Brokers need to upgrade their technology savvy by adopting cutting-edge technologies through strategic collaboration with tech companies. In that way, they can avoid losing their market share or even becoming extinct. Technology also has the intrinsic potential to make insurance transparent, flexible, and affordable. Digital solutions can include an on-demand product that allows small businesses to pay premiums on a monthly basis that is, a pay-as-you-go model.

Digital solutions aimed at reforming the insurance culture in Nigeria should include user-friendly sites that offer automatic renewal reminders, integration with leading insurance partners, real-time client advisory provisions on claims and inspection, insurance verification, promotion code integration as well as an automated claims process. Since all the information can be saved on the mobile platform, customers can easily have a back-up when they lose their printed copy of car insurance policy.

With the digital revolution, the Nigerian insurance sector has been able to curb the menace of fake motor certificates and some insurance technology companies are generating accurate data for the National Insurance Commission (NAICOM) because products purchased from the platform are immediately uploaded to the Nigerian Insurance Industry Database (NIID). Surely, deeper insurance penetration will not be just another pipe dream with digitalization.

Alero Ladipo, Marketing & consumer experience executive, Old Mutual Nigeria.