How Poor operators’ participation derailed insurance industry rebranding project

What was conceived to be a game changer by operators in the insurance industry could not kick off due to low level of participation by industry players; EDET UDOH reports.

Insurance is a service that allows you, your family and colleagues have peace and confidence in the future. Currently, there are various kinds of insurance – life, property, health, goods, enterprises etc. But how did all this begin to function?

Development of insurance took place long before Nigeria became the independent country. Since that period, Nigeria has overcome a long path filled with different changes.

As years went by, the evolution of insurance became more and more visible, though, in comparison with other world countries, insurance in Nigeria is developed quite poorly. The reasons for this come not only from insurance services but also from economic sector.

In 1976, the Nigerian Insurance Act was signed. There were no regulatory requirements for the insurers’ solvency. However, the situation is changing: in 2003 a new Insurance Act came into being and by early 2007 all insurers and reinsurers were required to increase authorized capital to new and higher standards.

National Insurance Commission (NAICOM) – no longer accepts borrowed funds from banks and real estate property.

Thus, the development of insurance in Nigeria was influenced by the following factors: – Colonial heritage in the form of branches of European insurance companies; They brought their own standards and regulations, which, of course, served as a good impulse and an example.

Why N300m insurance industry rebranding project was stopped

A member of the Media and Publicity Sub-Committee of the Insurers’ Committee, Toye Odunsi, has given reasons why the embattled N300 million insurance industry rebranding project was stopped.

According to him, “The rebranding project has been stopped. We did this because of issues regarding poor participation by operators. We have to come back to it. We are back on the drawing board.”  

The N300 million insurance rebranding project billed to address this negative image seems to have done little or nothing to redeem the image of the industry despite several millions of Naira committed to the project that started in 2018.

Over the years, the industry has been stunted by lack of patronage resulting from apathy of Nigerians towards the industry as many say most insurance companies never pay compensation.

The rebranding project

The insurance rebranding project is an innovation of the Insurers’ Committee, comprising of the managers of the 58 registered insurance companies as well as the National Insurance Commission (NAICOM). The initiative is aimed at deepening insurance acceptance and penetration through massive insurance education and awareness across all states of the federation, with Lagos and Abuja expected to be the pilot states.

While NAICOM had contributed N40 million towards the project, the 58 insurance companies are expected to contribute the remaining N260 billion, even though, Nigeria Insurers Association (NIA), Nigerian Council of Registered Insurance Brokers (NCRIB), Institute of Loss Adjusters of Nigeria (ILAN) and Association of Registered Insurance Agents of Nigeria (ARIAN), have promised funding support to this rebranding initiative. 

The insurance industry rebranding was mooted to change the current poor public perception about insurance products and services and also educate the public on the need to embrace insurance as a tool for poverty alleviation.

Part of the exercise which was contracted to Alder Consulting, was to create a tempo and the hype that would attract the public attention to insurance through, print, electronic and social media platforms.

Blueprint investigation revealed that the first phase of the project gulped N30 million while N90 million was released by the Insurers’ Committee to the consultant to initiate the second phase of the project, meaning that the total amount spent so far on the project is N120 million.

The failure of the project, according to market observers, was because it was a project anchored on social media, and the same social media not only killed the project, they buried it and even celebrated the burial with negative comments that further add salt to injury.

Loop-sided financial commitment

Further enquiry revealed that NAICOM donated N40 million to the project, with Leadway Assurance Company Limited being the highest donor among insurance operators. Other donations range from N2 million to N5 million each depending on their financial prowess while some did not even contribute at all.

The lopsided financial commitment to the project was another clog in the wheel of progress of the project. This is so because as soon as NAICOM announced the recapitlaisation plan, first with cancelled Tier-Based Minimum Solvency Capital (TBMSC) and later the current recapitlisation regime, companies channeling their finances toward boosting their capitalisation, neglecting the financial commitment to the insurance rebranding initiative. 

In the end, it was a ‘money miss road’ project as experts believed the N120 million spent on the project could have brought a better result if it was effectively deployed.

Reviewing the project

But all hope seems not lost as the Insurers’ Committee rose up from its meeting recently with a decision to review the rebranding project. 

But whether the committee will get it right or wrong this time, industry watchers are watching with keen interest.

However, later in the year, a project tagged ‘Wetin U Carry’ which looks like rebranding insurance concept was initiated by the Nigerian Insurers Association (NIA). 

Stakeholders’ views

Speaking at the launch of the project, the Director-General, (NIA), Mrs. Yetunde Ilori’ said the industry is set to tackle the menace of fake motor insurance papers on Nigerian roads by launching ‘Wetin U Carry’ where vehicle owners can confirm the authenticity of their insurance papers by dialing *565*11# on their phones.

Stating that the campaign is using Lagos as its pilot State, she added that the association will also have mobile teams that will be cross-checking insurance paper of motorists on the roads and advise whose paper is about to expire to quickly renew them.

She promised that the campaign will go round all the states of the federation as times progresses, adding that the *565*11# USSD code can work from anywhere in the country.

Ilori noted that the association had deployed a team of 33 persons, known as Insurance Squad, to all parts of Lagos State to educate the public on the benefits of possessing genuine motor insurance covers.

However, checks by our correspondent revealed that the campaign can only boast of two giant bill boards in Lagos, one on the Island and another on the mainland, with the Insurance Squad nowhere to be seen during the duration of the campaign.

Thereafter, the association said it took the campaign to parks and garages. 

Recapitalisation hammer hovers

Meanwhile, as insurance companies are bracing up for recapitalisation, no fewer than 10 companies had approached the capital market to seek assistance towards raising funds to recapitalise to the new threshold  ahead of the June 2020 deadline given to underwriting firms to do so.

The National Insurance Commission(NAICOM) had earlier ordered insurance companies with composite licence  to upgrade their capital base from N5 billion to N18 billion; Life insurance firms were required to increase their minimum capital requirement from N2 billion to N8 billion, amounting to 400 per cent increase in their capitalisation. 

Similarly, General insurance companies  are to raise their capital base to N10 billion from N3 billion , even as Reinsurance Firms will now need N20 billion capital base to operate Reinsurance business in the country.

To this end, some of the companies eyeing the capital market to raise funds, according to investigation, include: WAPIC Insurance Plc, LASACO Assurance Plc, Consolidated Hallmark Insurance Plc, AIICO Insurance Plc, Sovereign Trust Insurance Plc, Royal Exchange Plc, Linkage Assurance Plc, NEM Insurance Plc, among others.

About 10 more insurance companies are expected to approach the capital market to raise fund in a bid to meet the June 2020 recapitalisation deadline of the insurance industry, our findings revealed.

While some are exploring business combination, some are interested in outright acquisition.

With the passage of 2020 national budget into law, the year seems to be ending in a good note. And with the budget having the insurance and pension components in it, market observers believe insurers will benefit from federal government insurance renewals as well as underwriting of some capital projects allocated for in the budget.

Speaking on this development, the Executive Secretary, Nigerian Council of Registered Insurance Brokers(NCRIB), Mr. Fatai Adegbenro, applauded the federal government and the National Assembly to have passed the 2020 budget earlier than it used to be, stating that, this would ensure there is enough time to execute projects allocated for in the budget, unlike the previous years where projects are rolled back into another year because budgets are passed late in the year and no enough time to execute projects.

Moreover, he said, this will also ensure that government and its agencies renew their insurances as and when due, thereby, contributing to growth in premium income of the insurance industry.

As federal government embarks on capital projects, he said, insurers would equally be able to underwrite especially those capital intensive projects, saying, the timely passage of the budget would lead to rapid economic transformation and growth, while ensuring that government has more time to provide the needed infrastructure that will lead the country to its promise land.

Earlier, the Managing Director/CEO, African Alliance Insurance Plc, Mrs. Funmi Omo, had said that the continuous late passage of budget in the previous years has done more harm to the country, while also affecting government to appropriately renew its insurances, especially on Group life insurance cover.

With the enforcement of ‘No Premium No Cover’ policy in insurance industry, she said, the inability to renew group life for government employees is endangering the lives of dependents of those workers should any worker die while in active service.

She urged government to always pass the budget as earlier as possible just as it is being done in developed economy, so that, the rate of economic growth and development can be faster.