‘How technology’s redefining insurance industry’

‘How technology’s redefining insurance industry’

By Chiamaka Ajeamo, [email protected]  

In the last three decades, insurance penetration in Nigeria, with a population of over 200 million people, has remained at an abysmal one per cent, owing to a number of factors, among which is the apathy by Nigerians to buy policies.

The non-chalant attitude of Nigerians towards patronising policies greatly dented the face of insurance practice in Nigeria over the years. And since the industry was characterised by poor image, its products were barely embraced by the public.

To address the issues encountering the sector especially, the challenge of image reputation and low penetration, stakeholders who spoke at various industry meetings demanded that greater investment be made in the acquisition and deployment of contemporary technology to address the crisis.

Bemoaning the failure of operators to effectively deploy technological tools to boost patronage of insurance products, industry experts stated that, the future of the underwriting business would be data-driven hence; insurance companies that seek to remain relevant in the nearest future must intentionally create and adopt digital channels that are customer-centric and friendly in order to survive and thrive in the emerging business space.

Speaking at a conference, the Executive Director, Business Development, First City Monument Bank, (FCMB), Bukola Smith, in his paper, entitled: ‘Deploying Technology to Drive Insurance Penetration,’ hinged the problem of low insurance penetration level in Nigeria to the failure of professionals not leveraging on technology to grow the industry.

Discussing global trends in the insurance industry, Smith stated that basic technology is shaping the way insurance companies across the world do business as consumers are looking for companies that will make a shift from paper to digital and are able to enhance insurance purchase and management experience from start to finish.

“Customers want a seamless experience that enables them to complete transactions in a matter of minutes as opposed to the status quo. The traditional model where a broker or agent has to be encountered in person is fast becoming archaic,” she said.

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Also, the Principal Investment and Strategy Officer, Leadway Assurance Limited, Akinyemi Alebiosu, speaking on ‘Insurance for the future’ stated that data have become the new oil and the insurance business in the future is going to be controlled by data and analytics.

Alebiosu explained that when insurers have proper data, it would enable them to adapt to the changing business world as they can predict loss incidents and properly price them.

According to him, the industry is getting to a point where it will be using historical records, robotics, artificial intelligence (AI) in making decisions such as pricing and the extent of risks to be taken by underwriters.

“Insurance companies of the future will seek to collect large pools of data, examine and try to make meaning out of it; and data would help insurers to create predictive models and finally arrive at decisions that will make the products and services better.

“If we use data and analytics correctly in our underwriting process, the customer will be happy and all stakeholders will benefit from the insurance ecosystem,” he said.

Indeed, the benefits of employing digital technologies in driving insurance penetration in Nigeria are unlimited but the adoption rate over the years has been slow. For instance, Artificial Intelligence (AI) when used can transform the archaic method involved in claims settlement thereby, eliminating rigmaroles.

Interestingly, the tides are changing as many insurance firms and even the regulator; the National Insurance Commission (NAICOM), are restructuring and embracing technology to drive their operations to boost insurance adoption in the country. Most companies now have digital channels where transactions are carried out faster and seamlessly.

The Chief Executive Officer of Afriglobal Insurance Brokers Limited, Casmir Azubuike, at a recent conference affirmed that the Nigerian insurance industry has been going through digital transformation, which is boosting its acceptance.

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Azubuike said this in a presentation titled ‘Changing the Face of Insurance Practice’.

According to him, one of the change drivers of the industry practice is technology. He said, “Technology is the key change driver in the practice of insurance. Global Trend analysis 2018 reported that InsurTech has increased insurance deals by over 32 per cent. Technology is changing and in the nearest future, will totally redefine the distribution channels and sales models. The future and younger consumers are tending towards e-channels transactions.

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“The Nigerian insurance industry is evolving from analogue to a digitally-driven industry. Office processes are getting automated, manual registers and records are being phased out, policy and clients’ statistics are now being spooled electronically, policy documents are being generated and transmitted electronically.

“Latest is the development of the mobile app, which makes it possible for you to buy insurance from the start to finish, including claims reporting and processing, on your mobile phone, from the comfort of your bedroom.”

According to him, the insurance industry was in the past reputed for poverty, extreme conservatism, hungry- and haggard-looking workforce, and dishonesty, among others.

“The insurance industry of today has succeeded in reversing this negative image,” Azubuike said.

He added that insurance firms’ offices and brokers now own or occupy magnificent structures located in high-brow areas, while employees are now well-remunerated, with attractive conditions of service.

He, however, noted that the industry was still grappling with challenges.

According to him, the challenges include poor product knowledge, laundering the poor image of the industry, achieving the desired penetration level, reversing the industry’s poor contribution to the GDP, addressing the low underwriting capacity issues, slow adoption of technology, poor leadership giving rise to financial mismanagement, and weak governance and regulatory bottlenecks.

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He said other challenges were inavailability of reliable statistical data, lack of innovative products that addressed clients’ needs, and unprofessional and unethical conduct by practitioners, among others.

He said the face of insurance practice in Nigeria had been over the years characterized with poor image, and very poorly embraced by the public.

However, he added, conscious efforts were being made by practitioners to launder the image.

“Much as some levels of success are being recorded, the greater national challenges of corruption begotten by the very poor standard of living is making it difficult for the efforts to yield as expected,” he said.

According to him, the very low per capita income has relegated insurance to the least in the priority list.

Azubuike said the recent spate of losses caused by the #EndSARS protest and the 21-storey building collapse at Ikoyi appeared to be awakening the consumers’ consciousness to insurance.

“Therefore, from public alienation, the industry is beginning to experience increasing acceptance to total invigoration,” he said.

Commenting on the expected gains of the changing face of the industry, he said “The Nigerian insurance industry is no doubt experiencing transformational changes. The transformation will no doubt redefine the practice of insurance in the years ahead.

“Distribution channels will completely change. Technology will redefine the face of insurance practice. One on one interface with the insured or prospects may be a reserve only for the complex insurance classes. Insurance will surely enjoy the improved image and people will get more risk-conscious.”

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