The future of the Nigerian insurance market is in the retail space and only operators who invest in this segment and embrace technology would survive the future, analysts say.
Insurance brokers who concentrate on corporate clients without diversifying also face tough times as the number of such clients shrinks, they say.
Nigeria has a population of about 177 million; 2.47 percent population growth rate; 70 percent labour force engaged in agri and small businesses, while the penetration of insurance is less than one percent.
Ope Osiyemi, managing director; EdgeEdwards Company Limited, says the potential of the Nigerian insurance market, given its population is huge, but the real growth is in the retail space and only players who buy into new technologies will survive the future.
Osiyemi further says operators must take advantage of distribution platforms to drive retail, distribute products and collect premium.
“The current and future challenges of the insurance industry will be easily solved and enhance the relevance of the sector within the eco-system if operators adopt new technologies.
“Information technologies beyond social media will play a key role as data, predictive modeling, mobile technology, cloud computing, will clearly impact the dynamics of the industry, Osiyemi observes.
Fumi Babington-Ashaye, managing director/CEO, Risk Analyst Insurance Brokers, agrees that the future of insurance is in the retail, “the retail end is the future of the business, but not at this time when majority of the population are struggling to feed daily.
“The economy is in recession and the prices of almost everything have gone up – food, fuel and household commodities, and insurance is least in the demand of the average person, including the corporates”.
Banbington-Ashaye also states that it is only when there is stability in the economy and the middle class are able to get employment, SME’s thrive and industries expand, and there is enough disposable income in the hand of consumers, that insurance can pick up.
“For retail, it is the way to go, but we as brokers must have a robust IT, leverage on technology platforms like telecommunications, mobile shops and other platforms to be able to sell insurance.”
Somebody said that in the 21st century a lot of businesses will disappear, this is true. It is technology platforms that we need to make us remain relevant, she says.
Bode Opadokun, managing director/CEO, FBN General Insurance Limited says the majority of insurance companies run after the same 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 develop the retail market.
“These are the people that are yet to understand and appreciate the benefits of insurance. Our focus would be more of driving the retail side, so as to increase the premium income of the industry”.
Clinton Brown, business development manager at SSP says brokers are far more crucial partners for insurers in the commercial space than the personal one, referring to a recent SSP white paper, “Where next on the distribution journey”.
He adds that insurers may be looking to provide access through a greater number of brokers but at a lower cost, through the networks and strategic partners underpinned by a technology solution. “While brokers are the dominant distribution channel in the commercial space, they start to lose market share when it comes to SMEs and micro-SMEs, as business owners look to repeat their personal lines purchasing experience in the online space.
“A lot of factors are leading to a more digital commercial landscape, which mirrors the transformation that is taking the personal lines world by storm,” says Brown. “We’re seeing different buying behaviours from consumers who are more aware of the need for cost-effectiveness, along with transparency, ease of doing business and faster turnaround.”
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