Premium going down over low purchasing power of Nigerians – Tope Smart

NEM Insurance Plc recently had its 2016 Management Retreat with the focus on evaluating its operations in the current year and also come up with strategies to cope with current economic realities, Tope Smart, managing director/CEO of the Company in this interview with Modestus Anaesoronye shared his thought on challenges in the environment and how the future looks for the industry. Excerpts:

You are here on a management retreat, what does this mean for your organisation and what do you intend to achieve?

Normally, it is always good for any proactive organisation to go back to the drawing board, look at the environment and strategise on how to move forward. This one is even most important because everyone knows that the country is going through a tough time, so it’s necessary that we review our activities and plan for the future. So, it is extremely important that we sit down and have a total evaluation of our operations within the landscape of the economy and then chat a way forward, not just to survive but also to thrive.

Before this retreat, you must have looked at the economy and how it is impacting on the insurance business, how would you access the situation based on your operations?

Every aspect of the economy as far Nigeria is concerned is feeling the impact. Of course, we know how we found ourselves to where we are today because we failed to save for the rainy day. With the way the economy is going, it is no more news that the economy is in full recession having posted negative results in the last two quarters. And because insurance in not immune to the economy, so whatever affects other sectors also affect the insurance industry because insurance is part and parcel of the economy. We discovered that premiums are going down as result of the falling purchasing power of Nigerians and even the financial institution loans are going bad and so the insurance elements in all these transactions have been affected negatively. So it has affected the industry negatively.

What are your plans going forward having seen the situation of the economy?

That is why we are here for this retreat to see where we are in the business, look at the leakages and find ways to block them; to see how we can redouble our efforts to remain afloat and thrive, post growth and remain relevant in the economy.

When you look at last quarter performance of some of the companies, it looks like there is still hope for the year. What is your view?

What you see are the result of some of the measures we had put in place before now because we saw the situation coming and we did some things. We dint really meet our expectation at the end of third quarter but there was still marginal growth over what we did at the same time last year. I am talking with respect to NEM.

Looking at your branches and the way it is structured, where is your strength?

Well, some people are privileged with captive accounts. For NEM, we don’t have a captive account. Every third party we see we struggle for it. We don’t have the privilege of saying this particular account is ours that we don’t need to struggle for it. Every third party policy, as small as third party, we struggle for it. But to the glory of God, God has been kind to us. Service delivery is our hallmark, we seek to delight our customers and because they are happy they come back to us, and not only come back to us they make referrals.

Given increasing default rate in contracts and loan repayment, what is the potential of bond insurance at this time?

Insurance bond has never been a good product in this industry. You know, it depends largely on integrity and unfortunately integrity is a scares commodity in this part of the world. Here people collect money to execute a particular contract and at the end of the day the money is diverted. And is not an area you gamble with because you have to be extremely sure, not 99 percent but 100 percent sure that it will not fall back.

But what particular product would you say is cash cow at this time of economic recession?

There is no particular product one can really say is the best at this time because the problem on ground is cash to pay for premium. Your underwriting must be very sound. You must look at every risk based on their individual merits before you say you are writing them. Don’t forget also that at this time there are so many claims and some of them are fraudulent. And it is common at this time when people or companies that are pressed and looking for all means to survive put up fictitious claims and they document them. And you are not likely to fish out the fraudulent aspect of it, and you pay. Again, ordinarily some claims people would have overlooked they want to get it paid at this time. During recession like this nobody wants to overlook one naira.