After mobile phone adoption challenges, underwriters break barriers with innovations

After facing teething challenges in selling insurance policies through mobile phones, underwriting companies are now expanding their reach with innovative products and insurtech, NIKE POPOOLA reports

About a decade ago, some insurance companies partnered with mobile telecommunication network companies to enable phone users to subscribe to life insurance policy using their mobile phone devices.

The underwriters saw the digital mobile network phone users as a veritable distribution channel, considering the fact that as of December 2016, no fewer than 154,529,780 subscribers had registered with the mobile telecommunication companies in Nigeria, according to the National Bureau of Statistics.

This was when the insurance regulator, the National Insurance Commission, put the country’s insurance penetration at less than one per cent of over 188 million Nigeria’s population in 2016.

To get life insurance, the subscribers would dial specific codes on their phones to register, after which they would be required to spend a certain amount on credit monthly, or a little amount would be deducted daily from their credit.

Within 20 months, 1.13 million Nigerians had been registered by three insurance companies through this method.

The three underwriting firms are FBN Insurance (now Sanlam) and Cornerstone Insurance Plc that partnered with Airtel, and Mansard Insurance (now AXA Mansard) that partnered with MTN Nigeria.

But the insurance companies soon lost these customers, after the regulatory body, NAICOM, ordered operators in the insurance industry to stop such partnerships, pending issuance of guidelines to regulate their operations.

A former Commissioner for Insurance, Mohammed Kari, had said insurance companies had challenges with adopting the mobile telephone system to sell their products because of regulatory issues encountered from other regulators.

The commissioner, who had earlier encouraged the underwriting firms to deploy technology, met brick walls in this regard.

Kari, who noted that NAICOM granted approval to three insurance companies to adopt the mobile technology, explained that the regulations of the Nigerian Communications Commission and the Central Bank of Nigeria hindered their operations.

He said, “We approached the NCC on how to use technology but the NCC had already introduced its laws which stopped them from providing services through the mobile telecommunications companies. We have, however, been engaging in talks with them on how we can work together to provide insurance services through mobile technology.”

The insurance regulator set out to work with other regulators to ensure that the underwriters could partner with other sectors to sell their products.

Having smoothened rough edges with other regulators, the insurance companies have now gone beyond using only mobile phones to sell insurance; some of them are now embracing the wider reach of insurtech; which entails using technology to sell insurance.

While the mobile phone adoption challenge lasted, it is worth of note that the underwriters were not deterred, but got more innovative with other approaches to expand their reach.

Innovations

Insurance is the cheapest, most valuable and scientific way of indemnifying risks at the individual as well as corporate levels, the Chairman of Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi, says.

His company has received several microinsurance accolades for its achievement in taking insurance to the grassroots.

According to EFInA’s definition, “Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. It typically refers to insurance services offered primarily to clients with low income and limited access to mainstream insurance services and other means of effectively coping with risk.”

Ogunbiyi says that Mutual Benefits launched innovative products, engaged in partnerships, adopted insurtech and agency network to boost its microinsurance products.

According to him, “Mutual Benefits developed new products alongside demographic, trade groups and risks peculiar to each segment. We opened business outlets across Nigeria. We have employed thousands of graduates to sell our products.

“We created a scheme for Abattoir Workers Union, while befitting franchise offices were unveiled to support retired military personnel as well as experienced bankers, businessmen and other professionals. We have also been able to extend our value-adding operations to the northern states through empowerment of members of the National Union of Teachers and Mutual’s unique Third Party Plus Insurance Scheme.”

Through all these partnerships, he says, the associations have continued to patronise the products of the company.

According to industry operators, marketing insurance can be challenging if the underwriter does not deploy the right method to convince an individual to buy.

This is because insurance companies do not sell tangible products that can be seen, or services that can be felt immediately; insurance is about selling the promise of peace of mind.

To attract customers, Nigerian insurance companies have to be innovative to make their products attractive.

Insurance operation commenced in Nigeria more than 100 years ago; yet, its penetration is currently 0.4 per cent, according to the industry regulator, the National Insurance Commission.

Insurtech

Before, insurance companies had to reach the public through their agents before they could sell any policy; many people would not go to the offices of the insurance companies to ask for the policies.

Things are fast changing now as insurance companies are adopting technology to sell their products.

Nigerian insurance companies are expanding their reach through insurtech, the technological innovations designed to make insurance accessibility more efficient.

One of the life underwriters in the country, Enterprise Life, launched its app called, AdvantageConnect, to revolutionise financial planning and insurance accessibility across Nigeria.

The company says AdvantageConnect is designed as a comprehensive digital insurance channel, leveraging geo-location technology to facilitate seamless interactions between customers, agents and the company.

According to the company, the app offers features such as instant cover purchases, policy management, claims handling, and premium payments, all in one convenient platform.

The Chief Executive Officer of Enterprise Life, Funmi Omo, says, “AdvantageConnect is more than just an app; it is a revolutionary platform connecting individuals with nearby life planners, ensuring tailored life insurance solutions specific to their needs. We are affirming our dedication to enhancing financial inclusion and security in Nigeria.”

Also, Heirs General Insurance and Heirs Life Assurance, subsidiaries of Heirs Holdings, launched multiple digital channels to make insurance transactions easier for customers.

The underwriters say the mobile and digital channels include a chatbot named Prince, which instantly resolves customers’ inquiries, and mobile apps for insurance solutions.

Explaining more on the tech, the underwriters say in a joint statement that, “Simple Life by Heirs Life Assurance and Simple Protect by Heirs General Insurance, are both also available on the web.

“Living up to the Group’s ‘Simple Life’ promise, the products demonstrate the companies’ promise of superior value to customers, quick and accessible service, while driving financial inclusion for everyone. These channels directly tackle the challenge of low insurance penetration across Nigeria, opening the industry to new customers, who require protection for their assets and financial security for their loved ones.

“Using mobile and web apps called Simple Life and Simple Protect respectively, customers can open new policies, manage existing policies, file claims, and get instant support, right from their phones at any time of the day, without visiting an office or speaking to an agent.”

According to the statement, with Chatbot Prince, customers get instant, personalised insurance service virtually 24 hours a day.

Prince enables seamless and effortless service for existing and potential customers of Heirs General Insurance and Heirs Life, the underwriters say.

Another underwriter, Universal Insurance Plc, unveiled a mobile application and a network platform to boost insurance penetration.

The company’s Managing Director, Benedict Ujoatuonu, speaks on the potential of technological advancements in driving insurance product sales, and catering to diverse needs while ensuring affordability.

He says, “As a digitally compliant entity, achieving true financial inclusion and broad insurance outreach necessitates making insurance accessible to all. Our goal is to ensure that insurance coverage reaches every corner of the nation at affordable rates.”

The mobile application, he says, granted customers seamless access to policies and facilitates effortless claim filing with a mere touch.

He adds that from insurance policy inquiries to initiating claims and browsing available products, the design ensures simplicity and intuitive interactions.

Whether users need to assess policy particulars or file claims, the app’s effortless navigation empowers users to effectively manage their insurance requirements without complications, he says.

The managing director explains that the second innovation, ‘The Network Marketing Cluster, aims to promote personal insurance products and incentivised customers to refer others.

“As Universal Insurance Plc expands its product offerings, the company envisions introducing additional products over time.”

Products

Underwriters are launching products and services to woo the public, letting them know insurance has a lot to offer.

An underwriting firm, AXA Mansard, launched a motor insurance promo to reward its customers.

The promo tagged ‘Double Double Awoof’ comprising of ‘Awoof extra and comprehensive motor insurance promo’, features different kinds of gift packages.

The packages include cash rewards, phones airtime rewards, and 100 per cent fire coverage to drive insurance penetration in Nigeria.

Chief Customer and Marketing Officer, AXA Mansard, Olajumoke Odunlami, says when an individual buys motor insurance, he also gets insurance cover for his house.

“There are 12 million registered vehicles, but only 3.4 million are insured, we hope to close that gap,” she says.

She adds that, “For the awoof extra promo, AXA Mansard customers can purchase premium and redeem gifts using a scratch card, debit card, or through any of the company’s advisors. For more information on how to renew, buy, redeem promo gifts and download your motor insurance using scratch or debit card, visit the website.”

Odunlami says that redeemable gifts for the promo include phones, cash prices ranging from N3,000, N5,000, N10,000 and N100,000, and airtime ranging from N500, N1,000, N2,000, N3,000, N5,000, where customers can win either of the listed.

She adds, “For the comprehensive motor insurance policy and promo, customers get 100 per cent value in fire insurance for their homes. For instance, for every N10m third motor insurance premium purchased, there is a N10m fire insurance coverage for your homes.”

Also, she adds, customers can choose between property coverage or insuring the building itself.

To access the promo, AXA says an individual can renew or buy comprehensive motor insurance policy through the website, company’s advisors or welcome stores nationwide.

“You will be required to fill an accompanying fire insurance form and wait for a response from AXA Mansard advisors who will reach out to process your policies,” she says.

Another company, Noor Takaful Insurance Limited, says it allocated N208.5m as surplus to policyholders who refrained from filing claims for a whole year.

The surplus disbursement was officially unveiled during the two-day African Takaful and Non-Interest Finance conference held recently in Lagos.

The Managing Director, Noor Takaful Insurance Limited, Rilwan Sunmonu, says the distribution comprises N173.99m for Group Family Takaful and N34.5m for General Takaful, totalling N208.5m.

Sunmonu emphasises that the disbursed amounts were net of reserves and Jualah/performance incentives paid to the Takaful operator.

In another development, an insurtech startup, gamp, announced its partnership with Leadway Assurance, to offer after-sales support, and repair services for devices in Nigeria.

The partnership announced by the organisations is aimed at providing device protection for individuals and businesses.

The device protection plan covers the cost of repair of damaged devices for subscribers through any of gamp’s repair centers or Original Equipment Manufacturer accredited partners across Nigeria.

Under this innovative plan, a subscriber can request a repair online from the comfort of his home, where the affected gadget will be picked up, repaired, and delivered by gamp.

Speaking on the partnership, the Head, Partnership and Microinsurance, Leadway Holdings, Umashime Oguzor-Doghro, says, “This partnership is part of efforts by Leadway to expand access to insurance services by embedding them into the customer’s lifestyle.

“With over 130 million devices in Nigeria today, the need to provide an insurance cover to indemnify consumers against the cost of repairs cannot be overemphasised.”

The Chief Executive Officer, gamp, Boluwatife Omotayo, says, “The median age of Nigerians is 18. As the demand for smartphones and computers is growing quickly, the need for reliable and affordable device protection and support is also on the rise. The partnership reinforces gamp’s position as a leading provider of embedded device protection and related services in Africa.”

The device protection plan is priced as low as N3,000 per year with the option to subscribe to the monthly, bi-annual, or 12-month service plan.

The plan covers all types of gadgets, regardless of brand, location of purchase, condition, or model, and can be purchased online or in-store from partner stores.

Perception

According to Mrs Augustina Steve of the National Insurance Commission, lack of trust and confidence in the Nigerian insurance industry resulting from non-settlement of claims constitutes one of the biggest challenges of the industry.

“Non-settlement of claims has negatively impacted confidence in the industry,” she says.

In Nigeria, she notes, the problem of insurance industry is bad image.

This, according to her, has for decades, stood as bane of the industry’s growth.

Steve says, “The bad image problem of the industry dates back to early 19th century when Nigerians took over insurance business from the early British managers.

“The way the then Nigerian managers carried out insurance business transactions especially in the area of claims payment made the public to see insurance as a scam.”

Ability to pay claims is the real test of a solvent insurance company, she notes.

She says that the quality of claims administration can make or mar an insurance company.

The NAICOM staff says, “Ideally, insurance business is all about claims payment, since claim is the main reason a policyholder takes up an insurance policy.

“Without claims being paid by insurance companies, people are not likely to take up insurance policies, and insurance company will not maximise profits, thus claims payment in insurance contract serves as spice that attracts potential policyholders to insurance patronage.”

She observers that experience has shown that some policyholders are dissatisfied with how they are treated by the insurers when loss occurs.

Some of the complaints by claimants about insurance claims management, she notes, are insurance companies’ request for too much evidence and documentations to prove a loss; some claims are not settled because the insurer refuses to admit liability; when claims are settled, they are not paid in full.

Other complaints, she says include that some claims are rejected on purely technical grounds; claims are generally unduly delayed; the insurer argues that the claims are fraudulent, among others.

Claims

Prompt claims payment is the best advertisement insurance companies can give to customers, according to stakeholders.

That is why the underwriters are ensuring that they reduce the time used to settle claims.

A customer of Sanlam General Insurance, a subsidiary of Sanlam Life Insurance and member of the Sanlam Pan African group, John Ebitom, from Benin City, Edo State, explains his claims experience.

After lodging his complaints and all necessary documentations were done, he says, his claim was paid faster than he expected.

“It took me less than one hour to access my claim, as I speak, the money is resting in my account,” he says.

The Managing Director, Sanlam General Insurance Limited, Bode Opadokun, says the firm planned to make history in the Nigerian insurance industry by settling the fastest claim, which was done in less than one hour, using its code of confidence *1056#, USSD enabled device.

According to the underwriting firm, with the USSD code, motor insurance policyholders can get claims paid within three hours that an incident occurs.

He says that depending on the extent of the damage, if it is less than N200,000, the claim can be settled within three hours.

Digital drive

The Chief Executive Officer of aYo Nigeria, Kayode Odetola, a subsidiary of aYo Holdings, Africa’s emerging microinsurance fintech, says that collaboration is critical to deepening financial inclusion in Nigeria.

He said this during a panel session on ‘Nigerian fintech so far: Assessing trends, opportunities and obstacles’, at the second edition of the Nigeria Fintech Forum, themed ‘Reimagining the future of financial inclusion in Nigeria: examining the role of banks, telcos and fintechs’.

Odetola emphasises the significance of leveraging technology to empower marginalised communities and bridge the insurance gap in Nigeria.

The Chartered Institute of Insurance of Nigeria also says it is empowering the next generation of insurance leaders to drive penetration of the industry in Africa.

It organised a mentorship programme tagged, ‘The millennial-insurance leader in a digital economy’, in Ogun State.

Speaking at the event, the President/Chairman of Council, CIIN, Mr Edwin Igbiti, while delivering his welcome address, said, digitalisation has become a force that is driving massive changes in the insurance sector.

He says grooming young insurers who are technologically savvy will aid the fast transitioning of the insurance industry in this digital economy.

Igbiti says, “This year’s boot camp with the theme ‘The millennial insurance leader in a digital economy’, sought to train young insurance professionals with the aim to generate enthusiasm in them as technology natives, key into CIIN strategic long-term goals of breeding and retaining empowered professionals, create social bonding through lifestyle conversations, team bonding activities to generate renewed vigour; in the end that young professionals will continue to pursue insurance as a career and a platform to create ideas and suggestions that would be pillars for the furtherance of new generation of insurance professionals in the industry.”

Speaking to The PUNCH, Igbiti says despite the industry’s performance as one of the lowest penetration in Africa at 0.5 per cent, the core action is that awareness has been on top gear by introducing insurance to young people.

Underwriters

The number of insurance companies licensed to operate in Nigeria is 67, according to latest figures obtained from the National Insurance Commission.

Figures obtained by The PUNCH from NAICOM on the insurance companies in the industry, reveal that the companies rose from 54 to 67 in its latest report.

NAICOM states in the report that the insurance companies comprise of 13 life underwriters; 27 general companies; 12 composite companies, making a total of 52. There are also three reinsurance companies, four Takaful, and eight microinsurance firms; These bring the total companies to 67.

NAICOM

According to Mr Ibrahim Ngaski of the Information Technology Department, National Insurance Commission, the insurance industry is currently lagging behind and needs to reassess its business model, re-evaluate its strategy and make the digital agenda a high priority.

He says the adoption of technologies will help in providing digital solutions for increased insurance penetration.

According to him, the term ‘Insurtech’ is coined from the combination of two words ‘Insurance’ and ‘technology’. Insurtech is the use of technological innovations designed to make the current Insurance model more efficient.

He explains that people in modern society want to be able to buy travel insurance, life insurance, health insurance, property insurance, and other products with the tap of a finger on their devices, rather than having to sift through stacks of forms.

Insurtech start-ups are aware of this and have developed a method, for people to obtain easily accessible and ultra-customised insurance policies, he says.

According to him, NAICOM recently partnered with FSD Africa 2022 to launch the BimaLab Insurtech initiative in Nigeria, which will allow for the implementation of ideas for improving insurance in the country.

BimaLab Nigeria aims to close insurance market gaps by educating, nurturing, and promoting innovations and Insurtech start-ups.

He says the innovators were selected to participate in a 10-week programme that provides them with the expertise, resources and support to develop and scale market-ready solutions that bring social and or commercial value to Nigeria’s insurance sector by bringing creative ideas to the table.

According to him, “To drive scale, insurers have begun to use a wide range of alternative distribution channels, often coupled with or facilitated by the adoption of technological innovations.

“As a result, the sector has achieved significant growth over the last decade, and a number of models have been quite successful. Technological advances, particularly the rapid proliferation of Internet and mobile network availability, have born new ways to facilitate and improve client access (e.g., enrolment, premium collection, renewal, claims handling, and client communication).

“Web portals, online applications, smart cards, and mobile money are examples of tools that allow for cost reduction. Also, in the context of innovative distribution setups, the alternative channels include the utilisation of retail outlets, mobile insurance, and the so-called Meso-level insurance that covers clients associated with an aggregator and often through group insurance plans.”

Web aggregators

Ngaski says in January 2022, NAICOM issued insurance Web Aggregators operational guidelines. A web aggregator is defined in the guidelines as a company registered under the Companies and Allied Matters Act No 3 of 2020 approved by NAICOM, he explains.

According to him, the aggregators maintain a website and avail information about competitive insurance products, prices, feature comparisons, and direct leads to the insurers.

He says, “They provide information to prospective insurance consumers through a website that compares various products, prices, and coverage. They generally do not provide any consultative role, product endorsements, or ratings of insurance products.”

Expectations

The Commissioner for Insurance, Mr Sunday Thomas, said at the insurance director’s conference in Lagos recently that the industry launched a strategic roadmap to revolutionise the insurance sector with a well coordinated implementation approach.

He said, “Insurance penetration is expected to move from the current rate of 0.4 per cent to 2.1 per cent by the year 2033 and which will substantially improve the rating of the Nigerian insurance market in the global insurance map.

“With respect to the performance and potential of the insurance sector, the sector has over the years experienced an average steady year on year growth of 15.1 per cent in premium income, however this is far below the opportunities provided by the Nigeria economy.”

According to a report by Agusto & Co. there was a modest performance by the insurance industry in 2023, supported by the rising yield environment. Initiatives such as the bancassurance model which will enable insurance operators to partner with the banking industry to deepen their reach in the retail market will also bolster the industry, it adds.

The report says, “The rate hikes for third-party motor insurance and the bullish growth track for microinsurance, Takaful insurance and some new entrants in the conventional insurance landscape are also growth drivers for the industry.

“Furthermore, the intensified marketing campaigns, awareness programmes and adoption of digital channels would continue to support penetration, albeit strong broker relationships would remain vital in bolstering performance.”

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