Strong regulatory policy, adoption of technology can drive insurance penetration in Nigeria, Africa – Insurtech expert

The use of technology innovations to optimize products and process of buying insurance for customers is fast replacing the traditional system. As the new deal, Insurtech has become the new rendition by stakeholders, especially insurance providers who want to up their games. In this interview with BUSINESS A.M’s ZAINAB IWAYEMI, ADEDAMOLA OLOKO, an insurance professional, Insurtech expert and co-host of Insurtech business podcast series with over five years experience in the insurance industry was very engaging in the conversation around innovation, technology, the opportunities and how Insurtech could be capitalized upon to improve the insurance penetration rate in Nigeria and Africa. EXCERPTS:

What drove your penchant for Insurtech?

My interest in Insurtech really started a couple of years ago. I was just looking at a space in the industry and looking at what we can do better and how we can do things better and that drove me to do a lot of research and inquiries on how it is done in other places where the level of penetration is better and where people are buying insurance a lot more.

What I began to see was that, there was a trend around leveraging technology in order to sell insurance and this was not something that was popular in Nigeria or in many parts of Africa.

Looking at countries like South Africa, and Kenya, I saw what technology and mobile technology are capable of doing.

For example, m-PESA in Kenya is a mobile technology driving the way that people and things operate. It was interesting to me and I began to think of how we can take advantage of that in Africa and Nigeria. That was what spurred my interest and I am tech-savvy too. When I saw that technology was being used and insurance was something I was quite passionate about, that was how I developed an interest in the whole conversation around insurance and how we can really help the industry.

But our main focus is Nigeria. The Insurtech business podcast series is a platform where we engage insurance professionals, Insurtech founders, investors, executives, and people like that from within Nigeria and outside of Africa. We engage them on all of these topics around how we can use technology and innovation in the insurance space to grow it.

Do you have a background in insurance

I don’t have a background in insurance. I graduated from Babcock University where I studied Mass Communication and I actually went on to acquire my masters degree as well in mass communications at the University of Lagos, Akoka.

Like quite a lot of people in the industry, I stumbled into insurance in 2015. It has been an interesting journey so far. Starting off in the agency space and learning about what insurance is all about. That was my first experience with insurance. After some time, I just thought I could actually build a career in this. I developed an interest and went on to take professional certifications and now I am an associate of Chartered Insurance Institute of Nigeria.

How can insurance agencies enhance client engagement in a digital world

First of all, agents would always still be relevant. Insurance is such a business that people still want to see someone go into as a business. People still want to have conversations with people.

You can buy one or two things online, but people still want to have conversations with others and insurance is that business that allows you to have conversation with someone about the insurance plans that you can buy in terms of that engagement, because agencies are the intermediary between the customer and the insurance company.

There is need for insurance firms who are engaging agents to invest a lot in training and reskilling these agents especially as firms are looking to go a lot more digital and digitizing a lot of other departments that are in the company.

The question may be, are you taking along the agents/agency space? You have to carry them along because whatever changes you do in X department would definitely trickle down to them. How are you keeping them abreast of all of the information that is going around and giving them the skills that they need to operate in this digital world instead of forms.

How can you give them digital tools that can help them do the same thing and get them done even better? How can you help them along the way to bind customers? How are you able to give data to them so that they can be armed with such when they are going to the customer, they have the data on their phones or a device and then by the time they are having the conversation,  it will be from an informed point of view? By the time you are having a conversation about the kind of product the person should have, the person sees that you are informed and you know what you are there to do.

There is a need for insurance companies to invest in technology and reskilling insurance agents to be more tech-savvy. For the firms themselves, there has to be an intention to be relevant even when things are changing in a digitalized world. They need to learn how to remain relevant so there is a place for agent as well to go out there to make the moves themselves and learn new things and open minds to different things.

What is happening in other places and other countries? How is the agency space run? Think about it, as the new normal on how you can adapt to learn and also bring those ideas that are learned outside, share it with your company because no one knows it all. Be a part of the team that would try and bring it to life. We are in a collaborative environment and everything about today’s world is collaboration. So how can you bring up ideas to the table, collaborate, build something and be a part of the team that would build the future of that company and future of agency generally.

What are the challenges facing Insurtech in Nigeria?

Firstly, what exactly is insurtech? Insurtech basically is technology in insurance and to give a picture, how can we use technology for example to get more people to buy insurance? Because the level of penetration in Nigeria and even in Africa is quite low, how can we use technology to improve our claims processes because that is one area that a lot of people have complained about in Africa and Nigeria especially when they are looking at their experience in Africa.

So how can we use technology to improve the overall customer experience or journey? How can we use technology to communicate the benefits and positives about insurance?

How can we use technology to create new products in other to reach a segment of the population that has been excluded for a while? That’s what technology brings to insurance and that’s the idea around Insurtech.

When you look at the Nigerian perspective, what are the challenges? Definitely, regulation is one of them because it is a concept and it is new to Nigeria. So how can we ensure that we are bringing in this ideas and these processes and see how we can work legally within the regulatory space because the insurance space is very regulated.

And if you are coming to that space, how can you ensure that you are working alongside the terms and guidelines that the regulator has put in place. The regulations around insurtech is not where we want it to be but then there is progress even though it is slow; that is part of the reason we are engaging in this conversation and helping people to understand what the conversation is all about.

Also, there are not enough insurtech startups in Nigeria. What we believe is that in the coming years, there will be more players coming into the space. Before now, venture capitalists companies have not put eye on the insurance space, but thanks to the whole conversation about financial inclusion and financial inclusion is not just about bank account or savings account, but also how we can look at people who are unbanked or those who are low income earners.

How do they manage their risk? How can insurance also play a role? Definitely, a lot more insurtech will come into the space while venture capitalists and investors would begin to look at the African continent. For example, PULA got investment of about $6 million recently, LAMI insurance technology got some investment from capitalist fund so there are now so many insurtech companies, We have Curacell; helping insurance to fight fraudulent claims but here in Nigeria, they are not so many but like I said, you will definitely begin to see a lot more players coming to the space because it is getting interesting and we are happy to see that

Another thing that is important is that people don’t understand the concept yet. There is a need for education and again, that is why we are doing what we are doing and to bring these ideas up and say this is how it is being done somewhere else. This is how we can actually get things done better. We have done great so far but we can do a lot better.

If you look at the one percent that is covered, that is quite low. We can definitely do a lot more and this revolves around how we can use technology to improve our processes and also create products that people can buy. The main idea is to get more people the protection that they need when anything negative happen. So in this context,  there is a place for education as well.

Can you highlight the opportunities in co-opting Insurtech into insurance in Nigeria and Africa at large?

The opportunities are enormous. With technology, we are able to create new products that would be able to help us reach new market which is one of the major things that we need to do because whatever we have been doing up until now, when we are looking at it on the large scale, it has not worked.

Yes we have very large insurance companies; about 50 plus, but then we are still hovering around one percent penetration in Nigeria. Looking at Africa, it’s about 3 percent so what we have been doing before looking at the population has not worked so how can we use technology to change that? We are beginning to see a lot of those things in South Africa, in Kenya with the idea around micro insurance, leveraging mobile technology will definitely go a long way.

So, I think that creating new product to reach new market is one of the major ways. It would help us to improve our customer experience which is something that needs to be changed. A lot of people don’t enjoy their experience with insurance so how can we leverage the Omni-channel experience where people have that holistic and seamless experience.

With technology as well, we reach out to that segment of the population that are well versed to insurance; the Gen-Z and the Millennials, how can we speak their language in leveraging technology and innovation because they are used to comfort and seamless experiences. so how can we get on that train as well because they are in a world of social media  and Fintech where all of the things needed are gotten by using the phone without going to the bank or anything; with just a registered SIM or a dialed code.

I think there are opportunities in that space in terms of changing the outlook of insurance to communicating it to the customers differently especially those who have not seen insurance as important even though it is. They are not quick to consider it because of the way insurance is being portrayed and that is how the whole processes and experiences have been previously. So technology as well can help in terms of pricing insurance better.

We can leverage data that is a lot more available now compared to before to see how much data that the lending tier companies have as they engage their customers and give loans in millions every day. How can we leverage some of this data point in other to better price our product and also better access the risk we want to take up?

For the African continent, the major maker for opportunities is the low level of penetration. It means that lots of people need the product, but what is available doesn’t meet their need and so there is a vacuum for a number of insurance companies and Insurtech to fill in terms of product, experience and communicating the way that they want to be communicated with.

Why are we not so close to the millennial and gen-Z? These are our future customers. How are we engaging them? Many of them are on Tik tok, Instagram, are we on these platforms? How many insurance companies are online and how active are they on LinkedIn, Instagram, and twitter to engage meaningfully with customers. These are some of the things technology would help us achieve.

For example, we look at PULA which is an Insurtech helping to provide Agri-Insurance for small holders farmers around the African continent. Nigeria is their largest market. It is interesting to know and understand what they are doing because a lot of these small holder farmers face risk and many of the food that we eat, the journey starts from these farmers who are engaging in their local farms. How are we protecting them so that there is food security and protection for them so that they have the confidence to even go on and do more of what they do.

Those are the things that insurtech can help us achieve. If you look at that in the light of SDGs you will see that a lot of boxes are being ticked and also with insurtech, we are able to diversify our product as well. By diversification, I mean gender diversity that is having the female gender in mind when we are designing products or solution for the market.

Looking at the male and female gender and say what is peculiar to this gender because they are different so how can we design products that meet the risk profile of each of these gender and be able to go to market and even still remain profitable, I think, that is what technology can help us achieve. It can help technology companies to be more nimble, more flexible more agile.

For insurance company who want to step up their games using insurtech, what possible steps and strategies would you recommend

The very first step is a mindset change. You understand that we have been doing things a certain way for a very long time. in a way, you can say it has worked but one reality we have seen as a result of the lockdown is that, we have to develop in terms of being more digital savvy, more technologically-enabled as we engage future customers; the customers will not come to us. We have to go meet them. The customer is advancing technologically, so how can we catch up with the pace and ensure we are more tech-enabled a well.

How are we changing our processes not just saying we will send you a form you can fill and can it back to us, the processes has to be digital. These are areas we need to have mindset change and after that, we can now say how do we change. I won’t advice going all in, but how insurance firms methodologically change little by little matters.

Identifying areas that you need to digitize and start from underwriting, marketing, claims. It cannot happen in a twinkle of an eye. It has to be a long period of time, maybe years,but then there has to be progress that will help take advantage of what tech can bring. There is a lot of conversation around building your own infrastructure in-house or getting your own outside.

There are pros and cons for each approach but when you are looking to build in-house, you don’t have the time because you have to be profitable and you are going to be investing a lot in tech so building in-house, do you have the time and the patience to build and make errors, changes, learn from mistakes.

A good approach is to look at the market and say what are the solutions we can leverage on to improve our claims processes, take all of these solutions and see how we can adapt it to your process and how to make it work better

Finally, I want to encourage that insurance be more open, and look to collaborate. No one knows it all and everyone needs to improve. It comes from engagement. Engage the market, engage the industry for examples we organize programs where we just want to engage the market and say what is the challenge, what can we improve. Put yourself out there and learn and then adapt.

Putting into consideration the current status of insurance industry in Nigeria, how would you describe the future of insurtech in Nigeria

It is very promising. One of the major points is the fact that, the level of communication is low. It means that there are opportunities if you have the right product, and solution the market will come after you. I think it’s very huge on the insurtech startup side, it’s very huge. On the infrastructure side, it very huge because there are lots of things that the insurance companies would be looking to change and improve upon.

So how are you creating solutions as an insurtech and say; we have this white label product you can use it to improve your processes, we have this solution, you can use it to get your customers claims in the next two or one hour. And how are you able to tick all the boxes in terms of their concerns about fraudulent claims, filing accurately when you are looking at the regulation act that you should provide.

How do you create solutions in that space? Definitely, there are opportunities and it’s very huge. To paraphrase, Akin John, the co-founder of Ella app, he said that 3 percent of population have some form of insurance in Africa; Insurance is a place to be.

Recent reports have shown that cyber risk is fast-rising globally, how can Nigerian insurance providers leverage on this to maximize opportunities

Cyber risk is a growing space and recently a number of insurance companies have signaled interest in entering that space. It is not an easy market so that’s why even around the world, not so many insurance firms cover that area but then cyber risk is a risk that has emerged in recent times and this has been blown up with the move to many people working from home.

There is risk even in that so how can we provide protection for companies and individuals who are working remotely. There is a lot of opportunity for insurance as more people are working from home. It means they are more susceptible to virus, hackers and ransom ware.

However, insurance providers who would come into play here need to be tech savvy because you are running protection in a tech space. You yourself need to be tech savvy because you are going to be plugged into these platforms and even monitor these platforms yourself from your own end and say maybe parameters that you set out but still the risk still crystalize.

There is a space for insurance companies also who are going to be entering into this space to be a lot more tech savvy, leverage a lot of collaboration. Yes you have the expertise in terms of risk when you want to enter into this space how are we partnering in terms of getting technology solutions that can help you to access this risk, to manage this risk. It is a huge space with lots of opportunities that definitely can come out of that. Recently, Allianz Nigeria announced that they are willing to venture into that space.

For insurtech to hold firmly, adequate data storage is required. Do you think Nigeria is yet ready for the task

Data protection, data sovereignty, data management, everything concerning data privacy is a huge topic around the world. You see a lot of Google, Facebook in the court here and there because of data privacy issues. As we get into a more digitize world, a lot of lines that were drawn before begins to get blurred and so there is a need for us as an industry to be conscious of that.

Data protection law is quite strong in Nigeria. And insurance companies have been mandated to stick and live by those rules. When you look at technology, I think that they would also fall in line because even with technology, you will be able to monitor protection of data and make sure that everything is still in check but then, there is no perfect system so what is important is for all parties; insurance, insurtech even the regulator to be on top of it technology-wise to improve their processes and see how it can be more tech-savvy as well to monitor all of these things and ensure that the customers data is not made available against their will and as a result contravening the data protection law that have been put in place. We might not have so much issue,  but what is important is that all parties come to the understanding of what data protection is so that everyone is on the same page

What is your take on NAICOM’s recapitalization mandate for insurance firms?

Recapitalization is a fantastic thing. It is all about ensuring we have stronger insurance companies who are capable of underwriting risk to enable a lot more insurance companies in stronger positions to retain some of the risks that are usually sent out of Nigeria. It means that a lot more money will be retained in Nigeria and the industry will grow and that will also equate to better contribution to the GDP of Nigeria.

It’s a good thing but in terms of the experience in Nigeria, it’s not being so palatable in and out, back and forth it can be quite frustrating but I feel like it is important that we get what we want right and just go for it. Changes definitely has to be made. That is one truth but in terms of what those changes are, all parties need to come to the table and say this is how we should do, this is what the future looks like, this is a road map to achieving that. That is the stage that we are and we are done with that stage, it is action and that is one thing that must be carried out.