Do we need more start-ups in insurance?

By Ekerete Olawoye Gam-Ikon, MNIM, CPP

Quite often, an industry or sector gets more attention because of the announcement of new things that happen there or new people that emerge from it. The more we hear and see such developments, the better we become in our relationships with the stakeholders in that industry or sector.

In my opinion, one of the ways the insurance industry in Nigeria can win and retain the attractions of investors and customers would be the emergence of start-ups. With the wave of breaking news in the payment solutions and digital banking activities, one can understand why the banking industry seems to be sustaining public interests. These start-ups are solving our problems.

Does this mean there are no problems for the insurance industry to solve? Or maybe the question should simply be, “Where are the start-ups in the insurance industry to solve our problems in Nigeria?” It may help to clarify that it is those insurance companies licensed by the National Insurance Commission (NAICOM) and promoted by young founders and co-founders that form the focus of this write-up.

The last time we had such start-ups in the insurance industry in Nigeria was over two decades ago and interestingly the companies have become market leaders today, in their own rights. I will be referring to them shortly.

Some have argued that with the capital level required to obtain an operational licence from NAICOM, you cannot look for a start-up in that space and I have opined that we are rather entering a new era for insurance in Nigeria and only a start-up in the semblance of a digital insurer can record the change and difference we desire for existing and potential insurance policyholders.

Permit me to tell you the story of two insurance start-ups as I have known: Custodian and Allied Insurance and Mutual Benefits Assurance, both now market leaders and quoted on the Nigerian Stock Exchange. Like typical stories of insurance professionals in Nigeria, the founders went from being employees of insurance companies to launching their insurance brokerage firms and then insurance entrepreneurs due to how they chose to address the problems they saw. There were many before them but we will focus on these two since we can more easily relate with them today; thankfully, they are both alive and forging ahead. They simply decided to be changemakers unlike quite a good number of professionals who remain as insurance brokers and never retire, until called to glory, a distinctive characteristic of the insurance profession.

These gentlemen who have now gone beyond the insurance profession to become leading economic stakeholders in Nigeria and Africa are Mr. Wole Oshin, Chairman of Custodian Investment Plc and Dr. Akin Ogunbiyi, Chairman of Mutual Benefits Plc.

Wole Oshin, an ex-Crusader Insurance employee, affirmed his undying interest in the investment side of insurance when he recently led his company to acquire majority interests in UPDC, a leading property and real estate company in Nigeria. Many who know him were not surprised by this move as it was not the first time he will venture boldly into uncharted areas. Custodian Insurance was in the forefront of insurers that attracted private equity funds before most players knew what it meant and applying the funds in other investment opportunities like pension fund administration and other prime sectors was well expected. The distinctive manner Wole pursued his dream is best expressed in the quality of persons he has attracted to the Boards of the respective companies under the group, and sometimes it is difficult to see a top executive of Custodian attending a job interview somewhere. An accomplished insurance professional who has contributed immensely to the development of insurance in Nigeria through the works he has done with different Committees of the Federal Government of Nigeria, Wole might not have achieved this without the start-up mindset!

Custodian and Allied Insurance gave birth to Custodian Life and subsequently Custodian Investment Plc with each of the companies leading in their categories. This is a truly Nigerian brand that may not be considered a unicorn because Wole was more interested in solving the problems he saw than bearing the tag.

On his part, Akin Ogunbiyi left National Insurance Corporation of Nigeria (NICON) with hot energy to cause a change with the opportunities he had identified particularly in the Oil and Gas space. After a stint in consultancy, he started an insurance brokerage firm that focused on the oil sector, initiating and delivering unique services but undaunted, he founded Mutual Benefits Assurance, one of the two fresh licences that had been issued by NAICOM over decades before the last round of new licences given out last December.

An unforgettable encounter with Akin in 1995 revealed the start-up spirit in him, when in response to the question of why he chose to call his company Mutual Benefits seeing that two other companies had Mutual in their names, he said “Don’t worry, only one Mutual will remain and that will be Mutual Benefits!” He went on to build his start-up into an enviable insurance brand that has been solving the problems of Nigerians in the active low income bracket through innovative insurance products. Similar to a cooperative model, Akin saw Mutual transit from a high risk bearer to the leader in retail insurance and having, at some point, the largest insurance agency force in Nigeria.

Akin has been in the forefront of calls for the government at all levels to support the insurance industry while pursuing the recapitalization agenda which, according to him, is allowing foreign insurance brands to pick and acquire local insurance companies cheaply. He must know what he is talking about considering that he has put the footprints of Mutual Benefits in other African countries including Liberia, Sierra Leone, Cameroon, Niger Republic to mention a few.

Interesting as their stories may be, both Wole and Akin have not achieved these feats without the harsh and painful memories that go with doing business in Nigeria. The ease of doing business in Nigeria seems not to have visited the insurance industry as customers’ complaints grow but these Nigerian insurance brands have succeeded in exciting their clientele when the occasions arise.

Nigeria certainly needs start-ups like this from the insurance industry but how long will it take to see another one may depend on the mindset of today’s insurance professionals who seem driven more by what they will get than the problem they will solve.

What would be interesting to see is Nigeria’s first digital insurer founded or co-founded by a young insurance professional or professionals who decide to be like Wole Oshin and Akin Ogunbiyi. The Nigerian market deserves this especially from the microinsurance perspective.

The trillions of Naira worth of businesses transacted by Small and Medium Enterprises (SMEs) would require insurance executives with start-up or entrepreneurial mindset to solve the problems that risks pose for our farmers, transporters, suppliers, traders and artists in the post COVID-19 environment.

Will we see one soon? Hopefully.

Sometimes, with current high levels of insecurity, damages and losses are more likely to occur and probably, only insurance can help replace and restore things to the former position, except for lives lost. Our pains can be subdued if we choose the right insurance.