UNLOCKING 180 MILLION POLICY IN THE NIGERIAN RETAIL INSURANCE MARKET

Nigeria was a fast growing country with a population of more than 180 million citizens, and has the biggest GDP on the continent. The acquisition of Ensure Insurance Plc gives us full access to this key insurance market in Africa and marks a major milestone for Allianz’s long-term growth strategy on the continent … it will allow us to offer the best products and services to Nigerian customers in both personal and commercial lines. 

That was the enthusiastic statement of Coenraad Vrolijk,  the Regional CEO Africa, Allianz Group at the conclusion of its take-over of 99.03% stake holdings in Ensure Insurance from Global Oak Holdings in July 2018. The acquisition of Ensure simply followed the established trend since 2014 when AXA SA acquired majority stake in Mansard Insurance Plc for $246m, South Africa’s Liberty Holdings acquired 75 per cent stake in UNIC Insurance Plc for $12m in 2017, and Sunu Assurances Vie Cote d’Ivoire, acquired 60% of Equity Assurance Plc in 2018.

A SCRAMBLE FOR DIAMONDS IN THE ROUGH

Alhaji Mohammed Kari, Commissioner For Insurance buttressing the points made by Coenraad Vrolijk above said the Nigerian development plan,Vision 2020, described the insurance sector as a grossly untapped opportunity with low market penetration. He said that foreign investors, having noted the great opportunities, were attracted by the huge potential in the Nigerian insurance space leading to three foreign acquisitions in 2014, two in 2015, five in 2016, and two currently ongoing.

PROBLEMS CANNOT BE SOLVED AT THE LEVEL OF AWARENESS THAT CREATED THEM

More disruptions are likely to follow in the insurance industry with the expected implementation of Naicom’s new TBMSC for insurers. In this new dispensation, cash is king, and the predatory tendencies of those who have it may result in hostile take-over bids for pennies, of other companies less fortunate. Unless companies rally all their resources, and begin rigorous implementation of strategies and tactics that is capable of breaking the glass ceiling to unlock the massive premium potentially available in the retail segment of the Nigerian insurance market. That is simply the reasons why the foreign acquisitions are taking place.

But I can sense some foreboding skepticism in the top hierarchy leadership of Nigerian insurance companies to the possibility of the retail segment of the market being able to yield its treasures of huge premium income. The apathy is simply contagious. Consider an example. Recently, Mr. Shola Tinubu, President of Nigerian Council of Registered Insurance Brokers (NCRIB) and Managing Director, SCIB referring to the foray of the foreign investors, said recently: 

“…they are seeing that things are not as easy as they thought, the terrain is different. When they are coming in, they are looking at the 180 million Nigerians, but now seeing that the 180 million people don’t want to buy insurance at all.” 

CAN WE UNLOCK THE HIDDEN TREASURES IN THE RETAIL INSURANCE MARKET IN NIGERIA?

But can we achieve significant increase in the fortunes of insurance companies in the retail segment of the Nigerian insurance market? Yes, we can!

With all due humility and sense of duty, I differ considerably with the statement from the NCRIB president. It is not entirely correct that our 180 million people do not want to buy any insurance at all, and neither do I think Compulsory Insurances is going to help either. We have simply failed to produce enough reasons for them to buy. Let me ask some questions here:

Why do almost every Ghanaian families buy funeral policy?
Has any insurance company come up with a product to offer insurance on minimum deposits in Nigeria?
How many of the shops on Oluwole, Balogun, Ladipo, Aspamda, Alaba, Garki, Sabongari, Ariara, Oil Mills markets have insurance covers?
Can insurance products not help when artisan dies, but their members had to go cap in hand begging to bury the dead?
How many of the relevant products are sold in private schools and other government schools in Nigeria?
 How many insurance policies are designed against kidnapping, rape, violent crimes or 419 offences?
How many insurance products are designed for the consumer clusters including NURTW drivers and workers, Keke Napep operators, Okada riders, market men and women, road, water and air travellers, Tanker drivers? Are we then averse to the risk we are supposed to be carrying?

My daughter was once a student in FSTC, Ijebu Mushin, and she paid N1,000 every year for insurance policy for every single one of her six years in the school in a school of about 2,000 students - to an insurance company. I understand that it is the same for all students in the 104 Federal Government Unity Schools.

Another Nigerian insurance company presented a blue-chip bank a product to help to reduce the Credit Loss Provisions on their huge personal and consumer banking loan portfolio, and the result was about N300 million in premium - 1 bank out of about 25. As an industry, the operators have simply not done enough to get the level of penetration that is possible in this country.

ROADMAP FOR UNLOCKING 180 MILLION INSURANCE POLICIES IN NIGERIA: RECOMMENDATIONS

It is a different world we live in, and sell now. Those who profit are those who innovate, those who gained significant consumer insights, and those who have the courage to put the two together in the service of the customer or probable purchaser.

STRATEGY ONE: FISH WHERE THE FISH SWIMS

Why do banks cite branches in malls and open markets?
Why is Zenith Bank offering free rides on Uber?

Why do AirBnB pitch families for unused space for rental accommodation?

Why do Uber ask car owners to work for them through interactions with their mobile app?

Why is GoKada! recruiting okada riders with no money to come ride their okada in Lagos?

How do Paystack get Nigerians to pay N10 billion monthly to individuals and families within a few years of its operation?

How many non-life insurance companies actively recommend products of life companies and vice versa?

Who does the insurance prospect go to before or after his experience with insurance company?

How many structured JV can we point out that is actually contributing great premiums to the insurance industry?

Who does the insurance customer buy from before or after he buys from the insurance company?

How many banks, manufacturers, schools, IT companies and celebrities are actively endorsing their customers, fans or audiences to insurance companies or vice versa?

It is called simply JV. Joint Ventures is partnering strategically to further the cause of your own brand, leveraging the distribution networks, established goodwill and brand assets of others. It also enables the insurance company to partner with a probable purchaser on his/her own terms. The possibilities of Joint Ventures are endless, and operators are only limited by their own creativity. 

Insurance companies must begin to actively innovate to gain access to large customer groups and clusters, and those who have compulsive reasons to use insurance by reason of their association to the group they belong to. We can find them in the banks, cooperatives, artisan groups, SME associations, schools, colleges, universities, religious houses, labour unions, professional bodies, sports and fitness centres, open markets, lock-up shops, transport unions - taxi drivers, bus drivers, trailer drivers, Napep drivers, okada riders - residents associations and CDAs, charity organizations and nongovernmental bodies, vendors, existing customers and prospects.

Insurance companies must be able to sell their products 24/7 irrespective of boundaries, income level, religion or geography. And in the words of the Group Managing Director, Mutual Benefit: 

Insurance companies must create their blue oceans of untapped new markets, and begin to align insurance services to the unique lifestyles of the citizenry in all income groups.

STRATEGY TWO: THE PROSPECT IS NOT WHO WE THINK THEY ARE

Two quick concepts here - The Customer is one who buys from you, but the Client is the one whom you take care of. This what Jay Abraham calls the 'Strategy of Preeminence'.

But who do you think the Prospect is? Yes, the term 'prospect' probably mean many things to many people.

Going forward, we recommend that insurance companies should treat their customers like Clients, and treat their prospects as 'Probable Purchasers'. If your sales team fully comprehend the difference, and put the knowledge to work, the dividend will be instantaneous - increased premium.Try these guide:

1. Who do your probable purchaser buy from before they buy from you, and who are they likely to buy from when they leave you?
2. What do they buy, and how do they buy?
3. What do they say? Who do they talk to? How did they have their say? And where do they hang out?

The concept of the buyers have changed since the advent of social media revolution. Now, your buyer post 'selfie' 24 hours instead of watching television. He 'tweets' all day instead of reading newspaper. Whenever he wants to find out anything about any thing, he simply asks Google. And if he wants to understand complex concepts such as flying an aircraft or even driving a car, he simply open a You Tube how-to video.Thus, deploying the tools of yesteryears to get the business of today's customers is like trying to catch a digital fish with a manual bait, or even trying to shoot the twitter 'bird' with a sling shot. 

Insurance companies require new sets of tools, techniques, understanding and trainings that offer new insights into what the new consumer desires, and how to get the probable purchaser to come in the door, and to spend their hard earned money on insurance offerings.

STRATEGY THREE: ROUND PEGS FOR ROUND HOLES, SQUARE PEGS FOR SQUARE PEGS 

With considerable apologies, I have observed that the makeup of the retail units of most insurance companies today is at best ad-hoc. People are recruited as underwriters, but when the Board query results or suggests more people are needed in marketing, senior and sometimes, junior officials in underwriting get drafted straight to head marketing teams irrespective of competence. I have interacted with Heads of Retail teams who have no idea of what their Job Descriptions are, or how to produce same for their own subordinates. I have also interacted with Heads of Marketing departments whose trainings are not only exclusively suited to how to get more businesses from the industry intermediaries - the Brokers alone, but are at a loss how to get individual consumers to buy.

To make a difference, or make any appreciable impact in the retail segment of the Nigerian insurance industry, people well versed in retail operations or enterprise must head the retail departments of the companies. The term 'Insurance is not bought, but sold' is not for nothing. Considerable education

must be offered to the insurance 'probable purchaser' to get him to buy a product which he has to pay for first, before he can experience its benefits.

New sets of skills are needed urgently to marshall the resources of the insurance companies to unlocking the 180 million insurance policies potentially present in the Nigerian retail insurance market. New sets of skills needed include how the marketing/selling landscape has changed, effective tools for reaching the new consumer, how to leverage the resources of contiguous industries to grow premium income, growth hacking strategies including google analytics, sales funnels, digital marketing, social media, mobile and content marketing, and consultative selling.

These are the routes that I believe will help unlock the hidden treasures - 180 million insurance policies that Coenraad Vrolijk glowingly envisions. We always can get anywhere or anything we want. What is required sometimes is just a little tweak of what we are doing already, or sometimes a complete overhaul of what we have always believed was possible. Which ever one it is, we should start doing them today, then we can stop the steady, but sure crowding out of local investors from the insurance market. it is happening already, but it is in our hands.

 Adewale Fayinka is an insurance practitioner, sales coach, author and member, Chartered Institute of Marketing (UK).

COMMENTS ARE WELCOME!