‘Financial education key to deepening insurance penetration’

Old Mutual Nigeria, one of the newest foreign insurers that recently entered the Nigerian market is excited about the opportunity in the country’s retail space, and it’s projecting to become number one or two insurance company in the country by year 2020. Bayo Adeyeye, sales and distribution director of the Company, in this interview with MODESTUS ANAESORONYE unveils the organisation’s strategy. Excerpts

It’s about a year now since Old Mutual announced its arrival into the Nigerian market. I am sure you had an impression before coming; what is your perception of the market now?

If you want to look at the African market and West Africa in particular, Nigeria is very important. In terms of population, Nigeria has 170 million people and we told ourselves that if we want to play big on the African continent; having got our base in South Africa, then Nigeria is important.

We have come in, we have looked at the market, and I will say one thing, irrespective of what people say about the regulatory authority, NAICOM, they are moving in the right direction in terms of policy directives on bad practices; ‘No Premium No Cover’ which has enhanced premium collection for risks underwritten.

This has created a level playing field for companies to realise their potentials. For us at Old Mutual, we find this a welcome development. We had a lot of encouragement from the regulators in terms of coming in. And from our parent company in UK and sister company in South Africa, we will be willing to offer any assistance to the government. We don’t have any objection doing that because we have been in business for over 169 years, and we are willing to bring some of our good practices to Nigeria.

You have said over time, that you will become number one or number two insurance company in Nigeria, by year 2020. How do you intend to achieve this?

We have said that by 2020, we intend to become number one or number two in Nigeria, and what we intend to do is to pursue organic and inorganic growth, and it has always been our practice to become number one or number two in any country we do business.

First of all, we shall bring some insurance companies into fold to join the group, and that is one of the ways. Secondly, we have what it takes to get the public, and once we can show the public the value we have in terms of exceptional service delivery, and being one of the best companies in terms of service excellence and prompt payment of claims. A lot of Nigerians have this phobia about insurance. So, the way we are going to do it is through financial education. We will enlighten you, we help you understand the need for insurance and to make sure that the misery is watered down. We shall make you understand the benefits of savings and protection for your family when you are not there.

Once people understand all of these, I think they will buy insurance. One other problem here is the low level of penetration. A lot of the insurance companies are chasing the same class of business, which is limited and largely controlled by the brokers. We are very happy to deal with the brokers, we get a lot of business from them, and we have a fantastic relationship with them.

Having said that, there are lots of Nigerians on the street who do not have any form of insurance and we want to concentrate on those people. Out of the population of the country, I am sure we have at least 60 million of them out there who need our services and that of other insurance companies.

So, it’s our duty and part of our social responsibility to discover these people and help them mitigate their risks and empower them. I mean, if you have your risk mitigated by insurance company, you can invest in other things. So, we intend to get to the grassroots to make people realise why they need to be financially secure and put smiles on the faces of people.

Though Nigeria is up there in terms of rating when compared with most other African countries, the challenge here really is about purchasing power. Given the place of insurance on priority list, what do you intend to do?

We have a few interesting products that cater for that class of people with extremely low premium which they can afford, to make sure that when there is a loss we are there to pay. You have a gentleman there who may be selling shoes, you have the vulcaniser, the electrician and we say, come on, if you have a loss we will pay, if you lose a loved one we will pay and so on and so forth.

What we have done is to develop simple basic products they can afford and create accounts through which they can pay their premiums. We also have products for the high net-worth clients and we reach them through bancassurance via our relationship with EcoBank and a few other banks we have relationship with.

What we have done is to take our financial education to large organisations and low income earners and we are beginning to see growth in our clientele base. If you give people what they want when you understand their need, it become easier selling to them.

A lot of emphasis has been put on the potential of compulsory insurance in boosting industry premium. Do you share the same opinion?

Compulsory insurance can work, but what needs to be done is to get enforcement. The problem we have in Nigeria is that we start a lot of things, but don’t enforce them and when you don’t have enforcement it turns out like a jungle justice where people do what they want to do.

Having said that, NAICOM is now self financing and we have seen some improvement in these areas. What we are doing is to speak with other insurance companies to support NAICOM and we can support with advertising to educate and enlighten the public on the need for these compulsory insurances.

Take for instance, it is compulsory that you pay N5,000 to get third party motor insurance cover, meaning that in the event of an accident you have third party liability up to N1 million for assets and unlimited compensation for life. But what you find here is people prostrating along the street and begging for mercy after an accident.

It is something that people are not aware of and what we are doing to help enforcement is education, to make them understand and when they understand the benefit of something it become a lot easier. So, for us as operators, we must compliment enforcement with educating the people. So, the message is education, education, education.

Your coming into Nigeria alongside other foreign players posed as kind o threat to the local market, should that be?

I think it’s good for Nigeria. I am used to best practices given my orientation and where I am coming from. I have spent 27 years in insurance and 20 of it in Europe.

To me, foreign insurers coming in, and employing Nigerians is bringing international experience and best practice to strengthen the local market. People express fear when they are not sure of something, but when you understand what is going on and you know is going to benefit you, you don’t feel threatened. We have got a lot of experienced Nigerians who come to us on daily basis wanting to join Old Mutual because they know that Old Mutual stands for one thing, excellent and credibility, and with the experience they do things the right way.

We have many reputable insurance companies in Nigeria and will continue to partner with them in terms of co-insurance. We don’t see our self as threat, rather we see our self as big brother stretching our hands.

What assurances are you giving to the insuring public and how you intend to create value for them?

We shall continue to educate the Nigerian public on what we are doing and we intend to do. We shall continue to enlighten them on what is happening in terms of financing in the Nigeria market and overseas. Over time, they will begin to see the benefits of insurance. 

Times are hard for people, so, we are looking for creative and different ways of coming up with a lot of products, benefits and also workable process of collection of premium. If all of these are done, we would have gone a long way to achieving penetration of the Nigerian market.