Nigeria: Making Micro-insurance Work in Nigeria

Nnamdi Duru writes on the need to entrench micro-insurance, the process of delivering low-cost insurance that covers the lives, health and property of the poor and provides protection against natural disasters in the country

Faced with rising operational and claim costs, insurance operators and professionals in the country have started exploring ways of bringing down their costs to shore up the profitability of insurance business.

Also, having realised the underlying fallacies behind the supremacy of big premium wholesale insurance and government businesses, operators are now looking for different avenues of increasing their profitability without necessarily broadening their revenue base.

The above scenario has propelled a shifted in insurance operators’ focus to retail insurance as a viable alternative and as such they are collaborating with relevant operators with a view to reaching the ultimate consumers with their products and services.
Bancassurance, an arrangement that enables insurance companies make their products available to the grassroots inside banking halls, was the order of the day before the latest reversal of universal banking.

Micro-insurance has now gained ground across the African market in recent times, but in Nigeria, operators are still toying with the idea because of the peculiarities of the Nigerian economy and people.

Some of the challenges in this regard border on wrong definition and interpretation of the word, micro-insurance, product and distribution channels as well as the need for government to support the industry to deliver in this regard.

About Micro-insurance
Team Leader of the International Labour Organisation (ILO) Micro-insurance Innovation Facility, Mr. Craig Churchill, in his article, ‘Going Downmarket: African insurers and the low-income market’ helped to resolve what used to be the greatest challenge facing insurance operators regarding micro-insurance, wrong definition.

“Micro-insurance is not just a scaled down version of regular insurance… the product and processes need to be completely reengineered to meet the characteristics and preferences of the low-income market.

“It is not a specific product or product line. It is also not limited to a specific provider type. Micro-insurance is the provision of cover to a specific market segment, i.e. low income persons”, he said.

He resolved the crisis of operators particularly in Nigeria, believing that the way to go about micro-insurance is to reduce the perils covered and sum insured by any particular product with a view to reducing the cost of insuring to accommodate low income earners.

Distribution Channels
Creating the right channels for distributing micro-insurance products is a major challenge militating against the growth of micro-insurance in Nigeria. As such operators should create new channels to deliver professional risk management services to the poor and low income earners across the continent.

There may have been no formal channels for reaching the target consumers of micro-insurance products, but the operators also need to make good use of GSM network for distributing the products.
Insurance operators across Africa recently resolved as follows: “We realise that distribution, premium collection and administration of micro-insurance products will require cost effectiveness and administration efficiencies. To this end, we shall partner with distribution enablers like mobile phone operators to secure high market penetration.”
Other channels for reaching out to low income earners across the country include churches, mosques, schools, community and trade associations as well as traditional and community government organs.

Product Challenge
Micro-insurance product should be completely reengineered to meet the characteristics and preferences of the low-income market, advised Churchill.
According to him, for operators to excel in this new line of business, they have to completely re-engineer micro-insurance products to meet the characteristics and preferences of the low-income market.

The needs of the low income earners are in many ways dissimilar to that of the rich and affluent in the society. While the latter seek protection of their properties including houses, cars and overseas trips among other things, the former would require cover for their work tools, unemployment protection, sickness cover and burial insurance.

Having this in mind, scaling down perils covered by any existing products or pricing them down to the level of the low income earners would not serve any purpose since they were not originally designed with the target group in mind.
Therefore, operators should fund researches in the country, groups and societies with a view to determining their needs and how best to serve them.

Investors Challenge
Some of the operators identified the investors’ penchant for recovering their investments quickly as one of the challenges that has not encouraged them to invest in growing the micro-insurance channels.

Summing up this challenge, the Deputy Managing Director of Industrial and General Insurance (IGI) Plc, Mr. Rotimi Fashola said “I think micro-insurance is the way to go but we all know that people that invest in companies expect quick returns and going to micro-insurance will not bring that anyway.

“Even though the law of large number is there but to provide the infrastructure requires the company deploying capital and allowing the capital to stay. Of course there are all other pressures here and there to make sure that we are able to bring in something quick to those who have invested,” he added.

Trust Factor
In insurance, trust is very important and as such “utmost good faith” remains one of the pillars of insurance. The operators need to earn and sustain the trust of their target customers and other stakeholders to enable them remain in business.  The question now is how would they do this?
“Make noise about claims payment, it is a big deal,” an expert advised. He reasoned that since what caused distrust for insurance including failure to pay claims spreads from door to door, making noise about each claim settled by the operators would go a long way to reverse the negative image which the industry has earned over time.

Government Support
Sharing the Sudanese experience, the Assistant Managing Director of Underwriting-Sherikan Insurance and Reinsurance Company, Sudan, Mr. Omer Ahmed, said the economy would benefit from the attendant accumulation of huge micro-finance fund and expansion of the micro-finance infrastructure.

He also explained how the above work with the support of Sudanese government, saying it encouraged takaful and micro-insurance in the country by guaranteeing loans and credits to low income earners who were willing to buy insurance.

According to him, with the support of government who serves as guarantor for loans to this critical sector of the economy, finance organisations would be willing to extend credit to them and they would in turn buy insurance to further protect themselves and their wealth against unforeseen occurrences.

The Nigerian government is divesting from businesses and as such it may not start establishing micro-finance banks across the country. However, it could replicate what happens in Sudan by providing guarantees for loans and credit to low income earners.  This is quite unlike subsidy for agricultural insurance.
Such guarantees, using the national identity card system as a proof of identity, would in addition to generating micro-insurance businesses, help the micro-finance sub-sector to grow geometrically.

Need for Micro-finance Institutions
The lesson from the African Insurance Organisation (AIO) conference and general assembly which took place in Sudan two months ago was that the growth of micro-finance institutions is a necessary condition for the growth of micro-insurance business anywhere in the world.

It is only the micro-finance institutions that could provide the small credit to small and medium income earners to grow their income and it also follows that when these people get credit from the finance institutions, micro-insurance service providers would now have to provide covers for such loans, including the lives and health of the creditors.
The micro-finance industry in the country is still not grown, so there is need for government and all stakeholders to help develop this critical sector is poverty is to be alleviated in the economy.

Operators could as well borrow a leave from Mutual Benefits Assurance Plc, a Nigerian composite insurer, which has gone ahead to acquire a Micro-finance outfit through which it serves its micro-insurance customers.
With N2 billion and N3 billion capital, insurance companies could team up and acquire micro-finance banks if setting up new ones would present some challenges and create enough micro-insurance businesses to their grow their portfolios respectively.

They could do this individually or a life insurers team up with a general insurer to acquire one so that every life business that springs from the micro-finance transactions would be insured by the life insurers while general risks of their customers would be underwritten by the general insurer.

The World Bank has also lent its voice in this regard, calling on the Nigerian government to develop the country’s ‘dormant’ insurance industry in order to achieve its Financial System Stability (FSS) 2020 goals.

World Bank’s Lead Economist, Mr. Ismail Radwan, in a report titled, ‘Achieving Nigeria’s Financial System Strategy 2020: Making Finance Work for Nigeria’ stressed the need to strengthen reinsurance business in the country as well as improving transparency and cracking down on fake insurance companies as part of efforts to achieve the vision.

With the support of governments, the industry would be in a better position to deliver risks management services to the poor and down-trodden across the continent.
Micro-insurance service providers need to fashion out ways to handle emerging issues like the inability of the low income earners to complete the necessary documentations including acceptable identification, minimum premium for the cover and not having access to banking services.

For micro life assurance providers, the target customers may not be literate enough to read and understand the policy document, they may not have legal title to their ancestral homes or their next of kin cannot get a death certificate, they may also not be able to access medical facilities within a reasonable time and cost of medical examinations being higher than sum assured.

SOURCE: This Day Live

Nigeria: Anchor insurance develops capacity to drive micro insurance

By Modestus Anaesoronye, Business Day Online

Determined to increase market penetration and reach the uninsured populace in the grassroots, general business underwriter, Anchor Insurance Company Limited is strengthening capacity in product and manpower development.

The company, which recently concluded a training retreat for empowerment of its workforce across the country, is working out plans to deploy more marketing and sales staff to nook and crannies of the country as part of efforts to distribute its micro insurance products.

By the last quarter of this year, the company would be launching the latest product in its stable “Anchor Aspire” which has been designed to meet the needs and purchasing power of the lower class in the society.

Mayowa Adeduro, managing director, Anchor Insurance who spoke on the sideline of the just concluded African Insurance Organisation (AIO) Conference in Khartoum, Sudan stated that developing the micro insurance programme is the way to go in deepening the nation’s insurance industry.

“There is a mass market in the grassroots and our focus is to cash on these opportunities to boost our fortune”

Adeduro said the strategy is coming out with low and affordable products that majority of the low income earners can afford, pointing that while we will continue to service our corporate clients, it is important we reached the mass market, Anchor boss pointed.

“Can you imagine that excitement of people when you present to them insurance cover for their health, accident or small businesses for premium as low as N50.00? The interest will be massive and that is where we are going” Micro Insurance is a financial arrangement to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

Micro Insurance is synonymous to community-based financing arrangements including community health funds, mutual health organisations, rural health insurance, revolving drugs funds and community involvement in user-free management.

Nigeria: NAICOM guideline on takaful insurance ready July

By Modestus Anaesoronye, Business Day Online

The National Insurance Commission (NAICOM) determined to increase insurance penetration through grassroots development, will in July 2012, conclude the guidelines for implementation of Takaful (Islamic) Insurance in the country, BusinessDay has learnt.

This will be followed by the licensing of insurance companies and formation of the necessary framework for full take off, which the Commission said would have been concluded by September 2012.

Takaful is an Islamic insurance concept, which is grounded in Islamic Islamic banking, observing the rules and regulations of Islamic law. This concept has been practised in various forms since 622 CE. Muslim jurists acknowledge that the basis of shared responsibility as practised between muslims of Mecca and Medina laid the foundation of mutual insurance.

Fola Daniel, Commissioner for Insurance, made the disclosure on the sideline of the 2012 African Insurance Organisation (AIO) Conference, taking place in Khartoum, Sudan.

Daniel said the commission was concerned about the low level of insurance penetration in the country, which is put at less than five percent, stating that it has instituted programmes under its Market Development and Restructuring Initiative (MDRI) to increase development of insurance at the grassroots, including Micro Insurance, Takaful Insurance and Agric Insurance.

Daniel said NAICOM was collaborating with international firms, including the United Nations Conference on Trade and Development (UNCTAD), GIZ of Germany and International Labour Organisation (ILO) Department for micro insurance, to do a diagnosis of micro insurance and how it can be implemented in the Nigerian market.

“We have contracted them to do the study and make available the report to us in six months, and from there we take off.

On the Takaful specifically, the commissioner said the commission had understudied the Indian and Malasian markets, pointing out that these were successful Takaful markets whose experience could be replicated in Nigeria. “We are not resting on our oars in pursuing this micro/ Takaful insurance because the insurance gap in our domain is endemic, problematic, and we seem not to have a solution. But we have found a way out and that is Takaful, because it is a mutually beneficial way of sharing risk”.

Though the issue of Takaful Banking generated a lot of controversy when it was raised by the Central Bank of Nigeria(CBN) Adeola observed that it was not religion bound, as it is for everybody, and what is important is the principle, which is sharing risk through a mutually beneficial philosophy.

“Tenets of Takaful will be appealing to both Christians and Muslims because it guarantees mutuality and gives annual returns to contributors.”

It is selling very well in America and South Africa, which have very few muslims, Daniel said.

Sabbir Patal, member of the Sudanese Insurance market, speaking on the topic “Takaful and Poverty Alleviation said that though Takaful was designed based on Islamic principle, the principle had been found to be attractive to even non muslims.

According to him, it is capable of addressing the high poverty situation in the continent if all the markets can embrace it to help the vulnerable poor in the society.

Patal noted that the Sudanese insurance market had succeeded with Takaful to such an extent, that it has got no religious boundaries, and so looks at creating value to the lower ebb of the society.

Sudan: Sudanese Insurers Highlight Challenges, Opportunities in Micro-insurance

By Nnamdi Duru, This Day Live

The Sudanese insurance operators have pointed out some of the major challenges they had to surmount in the course of establishing micro-insurance and micro-takaful insurance as a major income earner and means of deepening insurance in the country.

According to operators, the high rate of default by beneficiaries of micro-insurance policies and programmes and lack of efficient risk management tools to eliminate fraud and other risks topped the list of the challenges they had been facing.

The Assistant Managing Director of Underwriting-Sherikan Insurance and Reinsurance Company, Sudan, Mr. Omer Elfarowg Ahmed said this when he shared the Sudanese insurance market experience on micro-insurance and takaful insurance at the ongoing 39th African Insurance Organisation (AIO) Conference and General Assembly in Khartoum, Sudan on Monday.

Sudan is believed to be the most developed micro-insurance and micro-takaful insurance market in Africa, and as such serves as a model for other countries across the continent.

The conference with theme, ‘Challenges and Opportunities of Micro-takaful and Micro-insurance in Africa’ brought together insurance practitioners from Africa, Australia, Europe, Middle East and Asia countries.

Reflecting on “Micro-insurance as Stimulus for Micro-finance: Sudan View”, Ahmed identified default on the part of beneficiaries of the scheme as the greatest threats to the programme.

Another serious challenge to micro-insurance, according to him, had to do with the absence of an effective risk management tool, which can effectively eliminate fraud and other risks in the system.

Ahmed also noted that the absence of reinsurance capacity for micro-insurance and takaful insurance is also a threat just as the absence of credit information in the market and moral hazards pose great danger to the system.

In spite of these challenges, Ahmed said there are so many prospects for micro-insurance and takaful insurance across the continent, adding that the economy would benefit from the attendant accumulation of huge micro-finance fund and expansion of the micro-finance infrastructure.

He also said the job of the market regulator would be made simpler when the micro and takaful insurance market is grown while the micro-finance system and legislations on insurance and insurance generally would improve significantly from the process.

Micro-insurance, according to him, serves as a guarantee for loans for finance providers, while policyholders benefit from loss prevention services put in place by service providers and share in the surpluses recorded at the end of the accounting period.

He also maintained that the system also reduces insurance costs and economic waste, while helping to alleviate poverty in the system, making the industry socially responsible.

Relating how the industry grew micro-insurance and takaful insurance market, Ahmed said the various micro-insurance products were classified into material damage, credit and family insurances.

He explained that the industry provided insurance protection for livestock, fire and burglary, motor, agricultural and two other products and encouraged beneficiaries to form industrial unions and cooperative societies group to be eligible to participate.

On how operators in other climes could surmount some of the identified problems, Ahmed suggested that the Central Bank in such countries should maintain an up-to-date information on beneficiaries with a view to ensuring that anybody who fails to meet past obligations with regard to credits would not get another one from any other operator in the market until he pays up.

He also suggested that government could create worthwhile incentives for those who repay their loans in time to encourage others to follow suit.

The Secretary-General of AIO, Ms. Prisca Soares, had before now confirmed Sudan as having the most developed micro-insurance and takaful insurance market in the continent.

“Sudan is the most developed takaful market in Africa which makes it the ideal place to learn about that aspect of insurance and it is also the first time the conference would be holding in Sudan,” she said.

AIO is a non-governmental organisation recognised by many African governments. Its main objectives are the promotion of inter-African co-operation and development of a healthy insurance and re-insurance industry in Africa.

Experts propose micro insurance, others to boost economy

By Nike Popoola, Punch on the Web

Insurance plays a key role in advanced economies, contributing significantly to their Gross Domestic Products. This is, however, not the case in Africa. Experts at the just concluded African Insurance Organisation’s conference, in Victoria Falls, Zimbabwe, suggest how to reposition the continent’s insurance industry for better performance. NIKE POPOOLA, who attended the conference writes.

Worried by the slow growth of the insurance industry in Africa, insurers, at the just concluded African Insurance Organisation conference in Victoria Falls, Zimbabwe, said the low level of insurance penetration must be addressed if the sector must contribute significantly to the growth of the different economies.

According to them, insurance works with the law of large numbers by pooling resources of many together in order to settle the claims of a few who incur losses.

The sector is, therefore, able to promote the savings culture among individuals and corporate bodies in the society through the regular payment of premium to create a large pool of funds.

These funds, especially those from the life insurance policies, provide investment funds for infrastructural development in the country and are also used to pay claims to the few who suffer some forms of losses.

Life insurance is a contract between a policy holder and the insurance company, in which the insurer agrees to pay the policy holder or his dependants, some form of compensation in the event of death or other misfortune, in exchange for a regular payment of premium by the policy holder.

However, despite the fact that Nigeria has the highest population in Africa, the experts say that it has only been playing a very active role in the growth of the African Insurance Organisation, but its insurance sector has had an insignificant contribution to its Gross Domestic Product.

The situation, according to them, is the same for all African countries.

A survey by the AIO and the International Labour Organisation in 2009 revealed that only 2.6 per cent of low-income people in Africa had any form of insurance cover, provided by 227 micro-insurance providers. Interestingly, South Africa has the highest contribution of 56 per cent. The African continent, according to the survey, also earned $25m premiums in 2008.

The AIO and ILO figures showed that the life insurance policies contributed more to the total premium earned.

According to the AIO, while the total global insurance premium contribution to the world’s economy is 7.5 per cent, the contribution to the African region is still less than two per cent.

Experts have continued to stress the need to have a strong and vibrant industry, noting that, in every country, the only institution, which exists mainly to ensure the continuity of the other sectors, is the insurance industry.

Some operators in the African region, who spoke to our correspondent, indentified the challenges confronting the sector and suggested solutions.

The immediate past President, AIO, Mr. Bai-Ndogo Faal, observed that there was capacity problem in the continent, adding that the majority of the entire population were still uninsured.

“We have to build our capital base, so that we will be able to write more business. The higher our capital, the more we can drive business,” he said.

While emphasising the need for African insurers to be more proactive in enforcing their set objectives, he said that there was the need for the AIO to devise the means of increasing the capacity of the industries to underwrite more risks.

He also stressed the need for enhanced awareness in the sector.

The Commissioner for Insurance, Nigeria, Mr. Fola Daniel, canvassed a strong and vibrant regulatory system that could drive the growth of the insurance sector.

He said that, in regulatory operations, there were guides that regulators could put in place for the smooth operation of the insurance market.

He also said that a well-structured regulatory framework should have the capacity to support the insurance industry in contributing to national economic growth.

According to him, insurance plays a prominent role in the development of any economy.

He identified some major contributions of insurance to economic growth to include risk transfer, efficient mobilisation of funds, employment creation, and contribution to the government by way of tax, household savings and investment tool.

He added that insurance played a crucial role in dealing with catastrophe events, complementing efforts by the government to provide for the financial needs of its population and addressing the challenges of poverty through micro insurance.

Micro insurance policies are products that are introduced to meet the particular needs of low income earners in the society.

Daniel noted that a strong regulatory framework in the insurance sector would ensure that the companies were safe and healthy, and would also help the market to operate in an orderly and efficient fashion.

According to the Managing Director, African Reinsurance Corporation, Mr. Bakary Kamara, there is the need for the companies to specialise in their areas of strength.

He observed that many companies preferred running after corporate jobs than focusing on micro insurance business.

While micro insurance provides cover for the low income earners, he noted that it could be a profitable area if well explored.

What many did not know, he explained, was that, in the next few years, this segment of the market could earn the sector about $25m.

“It looks as if corporate business is what attracts the attention of insurers, but micro insurance is certainly a growing area. And in Africa, there is a potential for the insurers to earn $25m premium from micro insurance in the next few years,” he said.

The Minister of Finance, Zimbabwe, Mr. Tendai Biti, said that the economic challenges, which had hindered the level of development in the continent, were also affecting the insurance industries.

Biti blamed the low economic development on political and macroeconomic instability, low disposable income and natural disasters, which he said were responsible for some major losses in the continent.

He said that there was the need for African insurers to re-strategise on how to revamp the sector for better performance.

To the Social Finance Programme, Employment Sector, ILO, Mr. Craig Churchill, the lack of credit facility, poor distribution channel of insurance products, awareness problem and inadequate innovative products, to a large extent, contribute to the level of insurance development in the continent.

He pointed out the need to address these issues in order to grow the sector.

He said the insurers should build a trusted market that the insuring public would have confidence in, adding that they must pay claims regularly, provide value adding benefits, ensure better customer care and continue with insurance education.

The Managing director, African Reinsurance Broker, Morroco, Mr. Omar Ngadi, added that the number and sizes of the insurance companies existing in the continent was crucial.

He said having a huge number of insurance companies was not what mattered, and advised the firms to merge to form fewer, stronger and more professional bodies.

He said, by so doing, they would be able to strengthen their capacities and compete better with other international firms.

While calling for a more proactive insurance industry, he said, “There is no need to have too many small insurance companies, rather, the companies can come together under merger arrangements and form stronger entities that can underwrite bigger risks.”

Regulators meet in Zimbabwe for micro insurance framework

From Businessday Online

Insurance industry supervisory authorities in Africa will meet in Zimbabwe May 26 for capacity building workshop to fashion out workable framework for regulation of micro insurance in the continent. This is because of the growing importance attached to micro insurance in helping to reduce poverty, which has been a major challenge for the continent’s growth and development. In a statement signed by the secretary general of the African Insurance Organisation (AIO), Prisca Soares, the workshop is jointly organised by the AIO and Access to Insurance Initiative.

The one-day workshop, which coincides with the 2011 conference of the AIO, will examine some salient issues aimed at enhancing the growth of micro insurance including policy, regulatory and supervisory challenges, regulatory objectives and market. Meanwhile, this year’s conference is expected to bring together close to 600 insurance and finance professionals from the different arms of the industry.

Participants at the conference will reflect on the theme “In pursuit of the uninsured Africa,” while issues to be discussed include – Insurance in Africa: Issues and opportunities; Reaching the untapped market; Risk perception in Africa, insurance model, the insurance product and insurance marketing in Africa; Increasing the insurance penetration index in Africa: the case of micro insurance and unlocking growth through strengthening the insurance regulatory framework.

Nigeria: 600 insurance operators set for AIO conference in Zimbabwe

By Sola Alabadan, Daily Independent

More than 600 insurance practitioners and observers across 54 countries around the world are expected to participate at the  38th Conference and Annual General Assembly of the African Insurance Organisation (AIO) holding in Zimbabwe from the May21 to 26, 2011.

The theme of the conference is “In pursuit of the Uninsured African”.

The AIO image maker, Mr. Moki Charles Linonge, confirmed that the host country and the AIO organising committee are already prepared for the number of participants that will attend this year’s AIO.

According to him, “I can confirm that the Local Organising Committee and the AIO Secretariat are making giant strides aimed at making the conference a veritable success. Going by the reports we have from the LOC in Zimbabwe, headed by the Vice President of the AIO, Mr. Solomon Tembo, preparations are going on smoothly with no major hitches this far”.

He added that, “The affluence is quite high and this is already exerting pressure on existing accommodation facilities. Last year in The Gambia, we had 500 delegates. So far, we have close to 600 delegates registered already and from the look of things, this figure may increase because the last-minute-rush is almost becoming traditional”.

Zimbabwe’s Minister of Finance will enlighten participants on Insurance in Africa: Issues and Opportunities. Other topics to be treated include:  Reaching the untapped markets: Risk perception in Africa, insurance model, the insurance product and insurance marketing in Africa; Increasing the Insurance Penetration Index in Africa: The case for Micro Insurance; Unlocking growth through strengthening the insurance regulatory framework.

The event will also feature series of meetings such as Association of African Insurance Supervisory Authorities (AAISA), Association of African Insurance Brokers (AIBA), African Life Insurers Meeting and networking on business ideas.

AIO is a non-governmental organisation recognised by many African governments, including Cameroon which has signed a headquarters agreement with it and where it has set up its permanent secretariat. The organisation was established in 1972.

AIO is the umbrella under which all the insurance operators in the continent of Africa fall. Its membership is made up of insurers and reinsurers, brokers and all intermediaries, insurance institutions and trade associations, as well as supervisory authorities.

The primary objective of the association was to promote inter-African cooperation and to develop a healthy insurance and reinsurance industry in Africa. To a great extent, the organisation has achieved this through the establishment of specialised association and the setting up of some technical pools and committees.

The AIO was formed on the same basis as that of OAU (Organisation of African Unity now African Union). It was formed by insurance operators in the continent at a time many independent African countries were leaning towards socialism.

African Insurers Tasked On Products For Poor, Low Income Earners

By Sola Alabadan , Daily Independent Online

• Fola Daniel, Commissioner for Insurance

African insurance companies have been charged to develop micro insurance products to cater to the poor and vulnerable people, who constitute the majority of the population of the continent. This formed part of the resolutions adopted at the 37th annual conference and general assembly of the African Insurance Organisation (AIO) in Banjul, The Gambia recently.

Participants at the yearly conference resolved that micro insurance presents a blue ocean of opportunities for the African insurance industry to reach out to the poor and vulnerable who form the majority of our societies. 

The insurance operators were, however, counselled that micro insurance products demand innovativeness in both product design and channels of distribution and premium collection.

It was stressed that a well-managed micro insurance regime would not only result in long-term profitability but would also involve the delivery of corporate social responsibility to the poor and vulnerable segments of  societies and thereby go a long way to enhance their individual corporate and industry image.

The meeting also resolved that some critical factors to the survival, growth and continuous development of the African insurance industry are the effective and efficient management of the human and financial resources.

To this end, insurance companies were advised to take urgent steps to put in place human resource management policies that will ensure the recruitment of the right caliber of personnel and their continuous training and professional development supported by attractive remuneration and other incentive packages that will ensure retention and high level performance and loyalty.

“The human resource development efforts should not be limited to lower and middle level personnel only but must also be extended to senior management and Board members whose corporate governance responsibilities are crucial to the sustainable development and profitability of companies,” it was noted.

It was further pointed out that systems must be put in place for periodic assessment of performance of key staff and Board of Directors preferably by independent external experts /consultants.

The operators were tasked to adhere strictly to good financial management practices since this will ensure companies’ capacity to meet claims obligations, deliver value to all stakeholders and shareholders and ensure that the insurance industry in Africa contributes effectively to the development of our nations and peoples.

The meeting also agreed that the key to good financial management are the effective management of premiums arrears, good and prudent investment decisions in conformity with regulatory guidelines which are usually put in place for the benefit of insureds and insurers.

Besides, the operators were enjoined to pay attention to other equally important factors such as relevant and up to date Information Technology infrastructure and other material resources. 

Smarting from the disastrous effects of the financial crisis, African insurers were implored to rebuild trust and confidence among consumers to ensure the survival of the industry.

Apart from the various things that the operators have to do to improve their internal operational efficiency and effectiveness, they were advised to do all it takes to attract and manage consumer trust and confidence by acting in responsible ways regarding what consumers and other key stakeholders consider fundamental and important to the business.

To enhance professionalism among the operators, the meeting resolved that the various national associations in the continent must take the lead in developing and implementing policies and programmes that will continuously ensure that insurers compete on professionalism, innovation of products and customer service.

In order to be able to deal effectively with unethical behaviour, the participants resolved that it is necessary to formulate a unified code of conduct agreeable to all practitioners as a tool for the regulation the industry and have appropriate sanctions to deal with those who are in breach of the codes.

African insurers take firm stance against unethical practices

Modestus Anaesoronye, Businessday Online –

Express readiness to harness opportunities in micro insurance

Determined to move the insurance industry forward, stakeholders in the African market have resolved to deal decisively with unethical practices they noted remained the major drawback of the industry in its quest to build capacity.

Such practices as rate undercutting, premium purchase, undermining of each other, according to them, have plagued the industry over the years and have contributed to low capacity, low profitability, poor claims settlement and generally low image for the industry in the continent.

Rising from the recent 37th annual meeting and general assembly of the African Insurance Organisation (AIO) held in Banjul, The Gambia, stakeholders involving insurers, reinsurers, brokers, loss adjusters and the regulators in a communiqué decried the impact of the ugly trend on the growth of the industry.

They said to be able to tackle the problem they must formulate a unified code of conduct agreeable to all practitioners as a tool for the regulation of the industry and have appropriate sanctions to deal with those who were in breach of the codes.

Besides, the industry must recognise the role of other stakeholders such as the judiciary, governments, customers and the general public in the enforcement of the code of ethics and work in concert with all to ensure adherence to ethical and highly professional standards.

Meanwhile, the market is also looking at increasing its penetration, and the stakeholders have therefore agreed that micro insurance presents opportunities for the African insurance industry to reach out to the poor and vulnerable who form the majority of our societies. “Micro insurance products demand innovativeness in both product design and channels of distribution and premium collection,” they noted.

According to the players, a well managed micro insurance regime will not only result in long-term profitability but will also involve the delivery of corporate social responsibility to the poor and vulnerable segments of our societies, and thereby go a long way at enhancing their individual corporate and industry image. Though, while the stakeholders agree that Africa present a big market for its growth, they noted that some critical factors to the survival, growth and continuous development of the industry were the effective and efficient management of the human and financial resources.

To this end, insurance companies must take urgent steps to put in place human resource management policies that will ensure the recruitment of the right calibre of personnel and their continuous training, and professional development supported by attractive remuneration and other incentive packages that will ensure retention and high level performance and loyalty.

That human resource development efforts should not be limited to lower and middle level personnel only, but must also be extended to senior management and board members whose corporate governance responsibilities are crucial to the sustainable development and profitability of companies, the communiqué stated. “That, systems must be put in place for periodic assessment of performance of staff and board of directors preferably by independent external performance auditors”.

Top Nigerian delegates at the conference include Fola Daniel, commissioner for insurance; Joe Irukwu, doyen of the insurance industry; Justus Uranta, managing director, Niger Insurance plc; Eddie Efekoha, managing director, Consolidated Hallmark Insurance plc; Val Ojuma, managing director, FBN Insurance Brokers; Tope Smart, managing director, NEM Insurance plc; Wale Onolapo, managing director, Sovereign Trust Insurance plc; David Shobanjo, managing director, AIICO Insurance plc; Larry Ademeso, managing director, Royal Exchange Prudential Life plc, etc. Other resolution as contained in the communiqué includes:

• That the survival of the insurance industry in Africa, especially after the disastrous effects of the financial crisis, hinges on the rebuilding of trust and confidence among consumers and no effort should be spared to achieve this.

• That aside from the various things that we have to do to improve our internal operational efficiency and effectiveness, we must do all it takes to attract and manage consumer trust and confidence by acting in responsible ways regarding what consumers and our other key stakeholders consider fundamental and important to our business.

• That our various national associations must take the lead in developing and implementing policies and programmes that will continuously enhance our professionalism, ensuring that we compete on professionalism, innovation of products and customer service.

• Finally, that we must actively engage and continuously seek healthy collaboration and cooperation with regulators to ensure a conducive regulatory framework that will promote and encourage a vibrant and viable industry in Africa.