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DOSSIER INSURANCE: Innovation is the best policy

By Charles Idem in Lagos
Posted on Monday, 11 June 2018 10:08

Launched in 2014 by Kola Oyeneyin, AutoGenius is an online platform that allows retail customers in Nigeria to compare prices and buy insurance policies from partner insurers. It was one of the pioneer platforms that leveraged technology to disrupt the traditional brick-and-mortar approach of selling car insurance – a mandatory class of insurance in Nigeria – and was born out of Oyeneyin’s frustration at the difficulty of following up on a claim after a road accident. Since its launch, AutoGenius has facilitated transactions for almost 100,000 customers, according to Oyeneyin. Six months ago, the company, in conjunction with AIICO Insurance, launched a product called Taxify Cover for the taxi-hailing service of the same name. The policy insures drivers and customers alike against the loss of items, or incidents that may occur on trips. “We realised that for consumers in Nigeria, insurance is not necessarily going to be your typical vertical [framework] of home insurance, life insurance, etc., but a lifestyle [platform] that requires special kinds of products to cover them in specific trades or circumstances,” says Oyeneyin. After extensive discussions with existing and prospective customers – which revealed that most would rather take out forms of insurance that they deem relevant to their specific circumstances – the company is poised to rebrand itself as a provider of a range of lifestyle insurance products.


Currently only 1% of Nigeria’s population is insured. It is therefore a huge prospective market. The idea that new models of insurance would attract more takers has long been mooted in industry circles. However, the fact that few insurers develop products that target distinct customer segments shows a lack of commitment to invest in developing the market. Rotimi Okpaise, a partner at business services company EY, notes that the expansion of Nigeria’s insurance industry hinges on the desire of the insurers to invest in stimulating demand. “If we continue as we are now, I don’t think much will change in terms of [the insurance sector’s] production and its contribution to gross domestic product [GDP]. I don’t see much changing,” says Okpaise. Okpaise says he is optimistic that the increasing participation of international insurers in the market could lead to innovation and competition. The low penetration rate in the country offers sufficient incentive for them, Okpaise says. Since 2014, the likes of Axa, Sanlam, Old Mutual and Swiss Re have entered the Nigerian market by acquiring partial or full stakes in indigenous insurers. Last year, the trend continued as two more international giants – Prudential and Allianz – acquired indigenous insurers, Zenith Life Insurance and Ensure Insurance, respectively. These recent acquisitions brings the total number of insurance companies owned or partly controlled by international insurers to 12 out of 56 insurance providers. The industry regulator estimated that insurers collected gross premiums of N326bn ($903m) in 2016. Local industry leaders such as AIICO Insurance and Custodian and Allied Insurance have invested in new products and partnerships over the past few years. Custodian has sought to leverage digital technology to reach an increasingly connected client base, having launched a mobile app in 2014 that customers can use to file claims and access other services. Meanwhile, foreign counterparts such as AXA Mansard and the likes of Leadway Assurance, which is part owned by Swiss Re, have also launched new products and sought to leverage the benefits of technology. Two years ago, AXA Mansard launched Autoflex, a customisable car insurance product that allows customers to choose comprehensive insurance covers to fit their specific needs. It followed this up last year by launching She Drives, a product aimed at women. AXA Mansard also launched an app in January, targeting existing consumers to enable them to access services via their phones. Other international firms, like Prudential, have only just entered the market. Matt Lilley, chief executive of Prudential Africa, notes that Nigeria, and Africa by extension, offers a similar opportunity to that of Asia several decades ago: it has an emerging ­middle class, a young population and families who have more ­money than their parents did.


Lilley says he is convinced the Nigerian market offers an enormous opportunity: “In Nigeria, life insurance is less than 0.1% of GDP. In Kenya, it’s close to 1%, and so there’s no reason why the life-insurance industry in Nigeria couldn’t be 10 times bigger than it is. And even that would just be a start,” Lilley tells The Africa Report. Prudential has a bancassurance partnership with Zenith Bank, the largest Nigerian bank by assets. The recent influx of international insurers, coupled with progressive regulatory policies, such as the ones enacted in April 2017 that permit bancassurance partnerships, show that the market is entering a new phase of development. The National Insurance Commission (NAICOM), the industry regulator, is stepping up efforts to deepen the market. It recently unveiled revised guidelines for the operation of microinsurance policies, setting a minimum capital base of N600m for acquiring a licence to provide microinsurance. NAICOM chairman Mohammed Kari has also advised small insurers who have struggled to pay claims to merge with larger ones, with the expectation that minimum capital requirements could be raised in the short to medium term. Given these developments and the intensification of competition in the industry, what impact will this will have on the market and customers? EY’s Okpaise expects the effects to manifest in a more dynamic approach to serving customers. “The customer experience will change. And that customer experience comprises the selling, the way the products are brought to that person, the way pricing is conducted. There will be much more information available to customers.”

From the March 2018 print edition

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