Insurance brokers tasked to redefine their business model to deepen penetration, remain relevant
As the economic recession in Nigeria bites hard with clear threats on survival of businesses, insurance brokers have been tasked to redefine their business model in other to remain relevant, increase penetration and contribute more to economic growth.
Stakeholders who spoke at the national conference of the Nigerian Council of Registered Insurance Brokers held in Abuja with the theme “The Future Today” said insurance brokers should look beyond their traditional role of facilitating risk transfer to providing additional value added services to consumers.
A former Minister of State for Finance and current Chairman of the Board of Directors of Law Union and Rock Insurance plc, Remi Babalola, said there is an urgent need to expand their role beyond facilitators of risk transfer to helping their clients keep pace with the social, technological, environmental, economic and political developments in the economic space.
“As insurance brokers, you need to expand your role beyond facilitators of risk transfer to helping clients keep pace with the sudden developments influencing changes in the Nigerian society by ensuring their business survive even in the face of economic challenges”, he said.
Babalola while baring his mind on how insurance brokers can stay relevant in the insurance business in Nigeria said “the future is for the insurance brokers who demonstrate analytics, innovation, expertise in risk identification, management and transfer, and who can design and supply bespoke solutions to risks owners”
He bemoaned the 0.43 percent insurance penetration rate, less than $5 insurance density in the country and its less than 1 percent contribution to the GDP. He however affirmed that there are abundant opportunities for growth.
Presenting his paper, Babalola identified information advantage as a game changer for insurance brokers who wish to differentiate themselves in offering cutting-edge solutions in remaining relevant both in the present and the near future.
He also explained that the retail segment of the insurance space is the future of insurance business market in Nigeria given its untapped growth opportunities, hence the need for the insurance brokers to deploy technology to unlock the growth potentials whilst engaging in constant public enlightenment to sensitise the market segment for increased penetration.
While charging members of the Council on the need to place the interest of their clients above all things, he tasked them to apply professionalism, integrity and independence in their business.
Mohammed Kari, commissioner for Insurance said an Insurance Broker is expected to apply his or her professional and in-depth knowledge of risks and the insurance market to secure and arrange suitable insurance policies for his or her clients.
“What we have noticed is that while on one hand, the insurance service providers hardly explain enough what they sell (the contract document), on the other hand, the policyholders neither read nor ask questions about the contract document of what they buy. So the Insurance Broker is well positioned to bridge this gap.”
Kari said the task of the insurance Broker should go beyond the collection of premium, claims’ cheque (where applicable) and forwarding of renewal notices. “Conscious effort should be made by the insurance broker to bridge the information and knowledge gap between the provider and the consumer. The future market will certainly belong to that broker who has worked hard enough to secure the trust and loyalty of the consumer today.”
Beyond that he wants brokers to apply professional ethics, moral standards and discipline in their business as professionals, and that is what we must give to gain that professional respect.
Earlier in his speech, Kayode Okunoren, president, Nigerian Council of Registered Insurance Brokers (NCRIB) said the new Financial Reporting Council code of corporate governance which mandates a Managing Director and Executive Director of companies to leave on the attainment of 10 years in office will create a big vacuum as well as threaten the continual existence of most firms. Okunoren, said proponents of the initiative should note the fact that the insurance industry is still fragile and challenged by insufficient manpower.
“Although we are all aware of the need for strong corporate governance rules in ensuring sanity in business, the application of the rules with regards to the position of CEOs of Insurance Broking firms who have more than eight staff in their companies would do the economy no good.
“We will like to reiterate here that Insurance Broking firms are professional institutions like the law firms, or the accounting firms, where services are personalised or based on the expertise of a few professionals within the organisation. We have instances where there are just two or three core insurance professionals in some broking firms, but with more than 15 support or non-technical staff.”
“Asking the Managing Director or and the Executive Director to leave such companies on the attainment of 10 years in office will create a big vacuum as well as threaten the continual existence of such firms. Moreover, we must come to terms with the fact that the insurance industry is still quite fragile and challenged by insufficient manpower,” he said.
He enjoined the management of the Financial Reporting Council (FRC) to be open to more constructive dialogue that would further make the rules more amenable to change or moderation, in view of the peculiarity of the Nigerian economy.
Modestus Anaesoronye