Pouring ‘insurance water’ on stone?

Since the turn of the year, there have been at least 40 reported fire incidents. About half of these fires occurred in markets. In fact, by January 4, there were already five reported market fires. The number of fire incidents was such that NTA Good Morning Nigeria featured the topic for the second time in two months. I was a guest on both episodes. During the programme, the anchors and a viewer, who sent a message via twitter, challenged insurance practitioners to go to markets and convince traders to insure their shops and wares against fire. It is something insurance professionals have been doing, but now we probably need to intensify efforts and come up with new techniques to market fire insurance to traders.

Anyway, while preparing for the burial of my father-in-law, I went to Lagos Island to do some shopping. There I saw the devastation of the January fire incidents for the first time this year. I counted at least eight buildings that were affected. Three had been reduced to rubbles, while others were awaiting integrity test, renovation or demolition. You would think that nearby traders, who escaped the fire, will be easy targets to market to insure their wares and shops, but how wrong.   I started by telling the trader I was patronising that they were lucky to escape the inferno because they were not far away. She acknowledged. I then told her many of the affected traders had no insurance; that if they had insurance, the destruction of their wares would not have been an issue because they would have been indemnified (restored to their pre-loss position) by their insurance companies. Again she acknowledged. I asked her if she had fire insurance. She answered in the negative. I told her she needed to take a fire insurance. At this time, she had lost interest in our conversation. It was already past 3pm, I still needed to brand the items I was buying from her, and I was travelling the next day, so I left.

You will think that traders will be rushing to take fire insurance in view of the frequent market fires, but that might not be the case. Insurance practitioners need to be patient with these traders; we need to spend a considerable time to sell fire insurance to traders. Some will buy, but for others, it will be case of pouring water on stone, even if the next shop to theirs got burnt the previous day. Going through their market associations will help. I believe and I have often argued that one of the biggest factors mitigating against insurance penetration in Nigeria is lack of an insurance culture. Insurance penetration in Nigeria currently stands at a miserable 0.3 percent. I do not have the statistics, but I suspect that the six compulsory insurances, especially motor insurance, might just account for 80 per cent of the 0.3 per cent penetration.

Much work needs to be done. A school of thought feels insurance professionals need to think out of the box. I agree. The level of insurance penetration is low and we will continue to scratch the surface if we continue doing things the way we have been doing them. We have always given the following reasons for the low insurance penetration: lack of insurance culture, low level of awareness, distrust by the insuring public, low purchasing power of the citizenry, lack of deployment of technological instruments for mass marketing of insurance products, regulatory bottlenecks, poor enforcement of compulsory insurances, among others.

Perhaps, in these challenges partly lie solutions to the problem. For instance, culture is a way of life and it evolves. Insurance is currently not a way of life for many Nigerians, so all stakeholders need to put heads together to drive the importance of insurance into the hearts of Nigerians so that the insurance culture can evolve. There is nobody who does not like what is good; who turns his back on what will add value to his life. Insurance adds value to life. The industry must come up with the ways to do just that. Again, the industry must come up with ways to create awareness about insurance and raise the awareness level. Such a campaign will go beyond the traditional print and electronic media. We need to segment our audiences and identify the means and media to reach these audiences. For instance, if we want to reach the youths, the messages need to be on their phones. We cannot also reach our illiterate audiences via newspaper. We must package messages to suit each audience and deliver them through the channels of communication where they can be reached.

We need advocacy, but the distrust by the insuring public cannot be eradicated entirely through advocacy. Customer experience is very important. A satisfied customer is one of the insurance industry’s best salesmen, while an unsatisfied customer is our worst nightmare. Everyone – policyholder, insurance broker and the insurance company – feels happy after a claim has been satisfactorily settled, but the feeling is awful, especially for the broker, if a genuine claim is repudiated due to technicalities or breach of policy conditions. The policyholder will go to town demonising insurance and we are not there to tell the third parties what actually happened.

Insurance practitioners must do everything possible to reduce the cases of repudiated claims to the barest. To start with, I advise policy holders again to go through registered insurance brokers. Like a medical doctor, a broker will examine the risk to know exactly the kind of policy you need. He will help to ensure the policy wordings correspond to your needs. He will negotiate good rates and terms for you. He will manage the account for you. If there is a claim, he will also process the claim for you. It is very risky for a policyholder, who does not understand insurance, to purchase a policy directly from an insurance company. Who will explain the clauses to you? That is why some policyholders cannot understand why they should bear a proportion of their claims; that is why a policyholder with a comprehensive motor policy cannot understand why the insurance company will not indemnify him if his driver steals his vehicle.

But insurance professionals also have a share in the blame. There are times when insurance brokers have left gaps in the wordings of the policies of their clients, making it possible for insurance companies to repudiate liability. It is also an open secret that a few insurance companies are currently unable to meet their claims obligations. They have issued discharge vouchers, which is an acceptance of liability, for years without paying the claims. Hopefully, some of these companies will be recapitalised, swallowed up by others or fizzle out after December 2020 when recapitalisation would have been completed. But what happens to the claims obligations of those that will fizzle out. I hope their statutory deposit with the Central Bank will be used to meet their outstanding claims obligations. That is an issue for the National Insurance Commission.

Hopefully after the insurance industry has fulfilled its part of the obligations, we shall know whether Nigeria is truly the unharnessed goldmine some of us think it is, or insurance practitioners are just pouring water on stone in our efforts to increase penetration.