Early in March this year, Stanbic IBTC announced the commencement of insurance brokerage business, following the operational license it was granted by the National Insurance Commission (NAICOM) in February 2016. The commencement of business by Stanbic IBTC Insurance Broker brings to 300 the number of registered insurance brokerage firms in the country. With insurance companies fewer than 50, that is a ratio of about 6:1. Many will wonder why so many insurance brokers; what are their specific roles in the insurance industry and are they really needed?
To answer these questions, it would be instructive to examine the reasons given by Stanbic IBTC for establishing a brokerage company while also looking at the larger roles insurance brokerage and the insurance industry play in the economy. “The business was established to fill perceived gaps in the industry, part of which includes helping clients effectively manage their risks and claims processes, thereby ensuring peace of mind through risk transfer, efficient insurance claims payment and exceptional quality of service,” said the Chief Executive of Stanbic IBTC Insurance Brokers, Anselem Igbo, in the statement announcing commencement of business.
Igbo talked about “gaps” in the industry. Indeed, for a population of 140 million people (last population census figure in 2006) or 186 million (United Nations 2016 estimates), 300 insurance brokerage firms, roughly one firm to 620,000 people, is grossly inadequate considering how important insurance is to individuals, businesses as well as the nation in protecting against financial losses that could otherwise have dire consequences. There are risks at every turn in life relating to personal, family, health, business, career or even the loss of life that do result in financial losses and lead to unforeseen hardships. It is these risks that insurance seeks to mitigate.
The insurance industry in the country, like elsewhere, has sought to perform this critical role over the past few decades. It could, however, be rightly argued that the insurance industry in Nigeria has had its fair share of credibility challenges due to a lack of proper understanding by the populace of its critical intervention role. Thus, the insurance broker essentially functions to bridge the understanding gap. So, for instance, your insurance broker, which is your financial advisor that answers to you and not the insurer, will readily devote time to let you know the difference between a property policy and a vehicle policy, which many policyholders often confuse to be the same.
The insurance industry typically has several hundreds of products and services created to address every conceivable occurrence. The ability of the insurance broker to engage the insuring public at the micro level makes his services very important and could help clients save costs on premiums.Insurance brokers are trained in risk management and to understand every aspect of the insurance business, which gives them a broader understanding of products and services and how clients can best take advantage of such. There are so many insurance policies, from motor, general to life insurance, to choose from that it could sometimes be a challenge getting the right policy for your specific situation and needs. Based on professional risk assessment, the insurance broker can quickly sieve through these and get you a bespoke policy at minimal cost.
Even when you have decided on the type of insurance policy you want, having to comb through the details to fully understand the requirements could sometimes be exacting or even confusing. Many of us do not have the time or the temperament for such necessary details. Failure to fully understand these details have been known to push up premium payments and present difficulties in making claims when the need arises. The insurance broker can help a client appreciate the details of a policy and equally assess the level of cover needed for adequate protection. The broker ensures the grey areas, such as premium payment, terms and conditions, and claims processes are fully thrashed out and understood by his client.
An insurance broker, due to training and experience, has a vast knowledge and thorough understanding of the insurance market and can often find you a good deal by offering comparable products from several insurers to choose from. They can also negotiate favourable premiums on your behalf. In the event you need a specialized cover, a broker can prepare a bespoke insurance and risk management programme just for you. In such cases, the broker designs the policies, negotiate the terms with insurance companies and place the cover with the insurer. A broker monitors trends in the industry that could impact your policy and advise you accordingly.
Perhaps the most important aspect of an insurance broker’s role, which will resonate with the insuring public, is the ability to ensure your claims are fairly and speedily handled and settled. They help you with the process and ensure a fair settlement. Claims payments have often been the source of disaffection between the insurer and the insured. In spite of the best efforts of the insurer to ensure proper understanding of the claims process by the insured, many policyholders sometimes still have difficulties mastering the process and the necessary documentations. For instance, to make a motor claim on accident, it is standard to notify the insurance company within 30 days of the accident with supporting documents such as a police report, a photograph of the accidented vehicle, certificate of insurance, a claim form, an estimate of loss, among other supporting documents for indemnity to be paid. All of these can be speedily and accurately handled by an insurance broker, who has a duty to ensure you are adequately indemnified.
Today, the services of insurance brokers like Stanbic IBTC Insurance Brokers are even more essential than before because the insurance business has grown even more complex due to the use of cutting-edge technology in the industry to create better products and provide top-of-the-range services. So, to answer the question above, yes, you do need an insurance broker to provide direction as you negotiate your next cover, renew an existing policy, search for the best rates, require a bespoke policy, seek better understanding of insurance products and services or process your claims. Insurance is another form of investment, and it is only smart to allow professionals point you in the right direction to save you time, effort and money, while boosting your chances of maximum returns on every naira spent.
Adebola, Adebayo
