Our focus is to grow the market through retails – Opadokun
Bode Opadokun recently assumed office as the Managing Director/CEO of FBN General Insurance, bringing on board over 25-years working experience as an insurance professional, having held top management positions in different areas of the business. In this interview with MODESTUS ANAESORONYE, he shared his vision for the company and efforts to contribute to the development of the insurance industry. Excerpts:
Having been appointed the MD/CEO, what are you bringing on board to further position the Company for growth?
When you look at our market and the society, insurance is a hard sell. It’s a line of business that people still fear venturing into. So, to sell insurance we try as much as possible to do it in a positive manner so that we don’t create more challenges for the industry. Be that as it may, going back to the question that you asked, I assumed this position precisely on May 1 2016, and got NAICOM approval on June 13 2016. My mission here is very simple and clear, it is to reposition, rebrand, and make the company stronger to stand the test of time, in terms of productivity, staff welfare, customers satisfaction as well as a profit making venture. There are a lot of things we have designed prior to my joining and even after my resumption.
What are these things? Basically, it is to drive the income of the institution in such a way that we will not only be seen developing the company, but also developing the market size of the industry. If there is anything that will be advantageous for us as an institution and the country at large, it is the population. And what I want you to realise is that in practice, majority of insurance companies- all run after the same insurance business. As it is today, in terms of contribution to the GDP, the industry is still contributing less than one per cent. And if you are talking of a way we can develop the market, it is to see a way we can develop new market. How can this be done? It is through the population that we have. Our own focus would be more of driving the retail side. These are the people that are yet to understand and appreciate the benefits of insurance. You will discover that most individuals do not have insurance policies. Our focus would be more of driving the retail side so as to increase the premium income for the industry and at the end of the day, we would have been seen to be contributing more to the income of the industry and increase the level of insurance contribution to the GDP.
FBN General Insurance recently launched a promo on Motor Insurance policies, how would you describe this exercise?
In terms of market acceptability of the product, I will say it was quite an average result, but I believe the period of the promo was very short and we were still able to get some market acceptance within that short time.
We have been able to do two things with the promo. First is to create awareness on the benefits that is available in our motor insurance policies. Part of the reason for the product is sensitivity to price and benefits. Some people feel that there are some benefits that are under the comprehensive cover that they don’t really want. It is just to try to give them the option of choice from the available products. That was what informed that and I strongly believe that by the time we do the next promo, it will be something that will be very good, and the performance would be better than the first one. It is always expected for a product that is just newly introduced to have a fair result, but as we move on, acceptability will improve in terms of patronage. But it was a worthwhile experience and we believe that more of such would be coming in the near future.
The insurance guideline review committee has submitted its revised guideline to the finance ministry. Are you confident the bill will get NASS passage into law this time? If done, what will be the impact of this on the insurance industry?
In terms of being optimistic, in as much as we are not God, we cannot be so certain about something, but the intention is very clear. There has been a lot of debate; suggestions and arguments over the bill, but the house will be the one to take the decision on that. Our own role is to be able to put things together and contribute towards making sure that the government eventually signs on the right things.
If it succeeds, it is going to sanitise the industry and allow the industry to stand together and act as one. And we believe of course, insurance is a single profession, whether you are adjusters, brokers or underwriters, we are all professionals in this industry, only the roles differ, but they are all key to the practice of insurance in Nigeria and all over the world.
So, the bill is to bring all of the different bodies that are standing alone today together and the effect would be more meaningful and positive for us as an industry
What are your plans on product research and development?
Product development is something that is ongoing. The need for insurance differs and there are individuals whose needs are equally different and there are different groups and associations that exist as well. In the case of insurance, the need for Mr. A might not necessarily be the same for Mr. B., so what we have been doing before now is to take time to look at the different needs of groups and associations and identify those insurances as they relate to what they do. Insurance need for manufacturing industries is not the same for hospitals, neither for a market trader. So, what we have been doing is to identify each group and also understand the risk each and every one of them is exposed to and come up with products that really meet their need. But clearly, the level of sensitisation in terms of reaching out to people to understand the benefit is even more critical because no matter how good a product is on paper, if you don’t communicate it to people- the buyer or the users- there is no way it will be known. So, we are combining both our market research product development with communication. We believe that is the only way we can achieve the set objectives of making people see the worth and value of insurance.
What are the effects of the new CBN Forex policy on insurance?
It is a good thing that the forex policy came up at this time because what we were doing in the time past was not something that we could really sustain, whereby the official price was pegged and the black market, which is more or less, the parallel market, seems to be almost times two of the official price at some point, if not more.
But as it is, the level of demand and supply determines the price and the effect of this on insurance today and it stands that most of our oil and gas related insurances that were dollar-denominated policies are more stabilised. As it is now, it affords everybody the opportunity to develop his dollar-denominated fund. Currently, where you paid premium in dollars, the sum assured or settlement is going to be in dollars. Here, you can as well play with your dollar account in terms of whether to invest it in treasury bills, fixed deposits or commercial papers in the same denomination, rather than conversion to naira. Because the challenge you are going to have is that, conversion today is like gambling, you never can tell what it will look like tomorrow. So, the only difference we are having now is that most organisations would be operating their dollar-denominated accounts separately from that of naira, and that is safer than converting to local currency, because you want to invest, believing that the return on investment would be higher on the naira denominated. But the challenge is that whatever you realise from such an investment, you are not sure whether it will be able to address the fluctuation that will come thereafter.
Recently in Abuja, the issue of Infrastructure investment was mooted and most of the operators believe they can invest in infrastructure through Annuity fund or the statutory fund deposited at the CBN. Do you think this is achievable?
For me nothing is impossible. What is just required is for us to have a clear understanding on what we really want to do. Because, it is good they are talking about Annuity. For General Business, we might not be able to do so because our fund is a short term. The risk that we manage is not a long-term risk. So, the level of commitment of insurance companies like ours cannot be as much as the life offices, but that does not mean we cannot play, but only that the percentage of the fund we can commit into such project cannot be compared to a life office that have a long-term fund with it, but it’s a good development for us. If you look at it, the challenge we are having as a nation in driving our business today is the cost of providing infrastructure for our self, which is so much. So, if the platform can be provided by government, and allow private sector to participate, it’s surely going to help in the long run to determine the level of the operational cost because the operational cost of the business today is so huge that it affects investment plans of most organisations.
In terms of growth in the industry, how will you assess the industry in the last six to seven months?
In terms of growth, we have not been able to experience much growth as an industry, the reason being the fact that the government did not really come out with economic policies on time, so also the budget was not released on time. Not many people have a clear understanding of the direction of the economy that really affected so many companies in terms of taking up insurance policies. So, what we experienced at the first half of this year is more or less on the average. Most insurance companies that were even able to retain their existing accounts and are able to write premium equal to what they wrote in 2015, I will say they have even tried. Because when the economy is also challenged, and inflation is on the increase, seriously, it has negative impacts on the entire economic situation of the country. Insurance is a hard sell, people try to look at areas of cost management in their business activities, which invariably has resulted into a lot of deduction in sum insured, rates, and even at times, you even see some of our clients doing monthly or quarterly payment of insurance. So, rather than pay an annual premium, some are paying, monthly, quarterly and half-yearly. So, invariably, when you look at the premium income of the industry, it is not something to be happy about.
MODESTUS ANAESORONYE