Why Insurance Acceptance, Penetration Is Low In Nigeria – Insurance Broker

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Mr. Babajide Olatunde-Agbeja is the chairman/CEO, Boff & Company Insurance Brokers Limited, an Ibadan-based firm. In this interview with ZAKA KHALIQ, he looks at the economy and identifies the issues stunting the growth of the insurance industry in Nigeria.

It seems subscription to life insurance is very low in Nigeria compared to for instance South Africa. What is responsible?

Nigeria is entirely a religious country. I read a write-up recently linking religion and economic development. The highly developed economies are not very religious. The developing economies are highly religious and that is where Nigeria fits into. We are highly religious and highly corrupt. So, life insurance is not popular here because Muslims believe Allah giveth and taketh. To them, if He takes me away tomorrow, he will provide for my children and my family, so, I don’t need insurance. But, I can only say you need insurance because even Bible says heaven helps those who help themselves. If you have education insurance and you die, all your children will be educated. It won’t be because you are dead, your children starts to hawk in the street.

Life insurance is so important, and I am happy it is made compulsory for those with three or more employees. In South Africa, they are more developed than Nigeria, in this aspect. If we can limit corruption and over-religion, we will grow as a nation and our demand for insurance will increase.

Do you think multi-national companies subscribing to compulsory insurance, judging from your interactions with them?

Yes, the multi-nationals have insurance. They comply because they can afford it.  They, in most cases, deal with government and government has a way of cross-checking insurance in bidding for government businesses. All your bidding documents require you to submit group life policy, third party motor policy and so on, so they have no option than to comply. It is the ordinary members of the public that don’t comply.

Are you proposing that people should not buy insurance unless they go through insurance brokers?

Yes, I want insurance broking law to be implemented so that all the insurance in Nigeria can be passed through insurance brokers. There is no insurance broker that is not an insurance professional.  By law, you can’t even set up a broking firm except by ACII, that is, the Associate of the Chartered Insurance Institute, by examination; whereas, you can set up an insurance company as a business. So, an insurance company is set up to make profit. They want the issues of claims to be minimal so that they can make their profit and when they can get away with it illegally, they will do so.

But if it is a broker, which is your own consultant, he will be fighting your case on your behalf permanently. We (insurance brokers) are not getting paid by the insuring public; we get paid by insurance law. We get our brokerage fees from the N5,000 you paid on third party, without getting extra. Whereas, as brokers, we can also help you get discount on these policies, we can combine you into a fleet and still give you 10 to 20 per cent discount which you don’t know about but we know about it.

The National Insurance Commission (NAICOM) is planning to extend the implementation of a maximum of 10 years tenure for CEOs to insurance brokers. Having managed your company for the last 25 years, what is your reaction to this?

The 10 years tenure cannot work in a professional set up. It can work in a business or conglomerates but in a professional set up like law, architecture and insurance brokerage, the older you are, the more matured you are in the system. Why will you say somebody who have spent up to 10 years should go home and sleep, when he is a professional? Somebody who has had 35 years experience in the industry is a professional. When you are a public company, the tenure limit could be implemented because the public owns you. May be you have about 5,000 shareholders, the tenure limit could be adopted to give room for other shareholders to come on board than for one person to be there for 25 to 35 years.

The broking firms in the country are going through a tough time now. What is your assessment of the brokerage industry in the next five years, considering that regulation is tough on your other colleagues? 

If you are good broker, people will always look for you. Remember that Boff & Company don’t always advertise, but yet we are performing well. Though, direct marketing might have evolved in the next five years, but insurance brokerage, especially the big broking firms would still be relevant.

An airline will be stupid to go directly to an insurance company, so also is a factory using a boiler. This is because the risks are so intricate, inter-woven and peculiar, which requires the expertise of a broker. Yes, in five years time, there will be direct marketing, and retail products that will lead to the death of some insurance broking firms, but the big ones will survive.

What will be your advice to young brokerage firms for surviving the tough operating environment?

Someone with integrity and professionalism will succeed. First of all, you must be of high integrity; broking is about integrity because we are saying trust me. Action speaks louder than voice.

We have a major claim in Ibadan right now and the client is overwhelmed that we have been with him two to three times a week for the past five weeks after the incident occurred. That is personalized service. I am sure by the time we settle that claim, the client will sing our name to all his friends. So, my advice to the young ones is to do things right, once you do it right, the system will lift you up. Don’t cut corners because you want to make quick profit.

What are the major challenges you have faced overtime and how are you able to surmount them?

We have a fantastic system in the company and our staff management is fantastic. Once you joined Boff, you feel a sense of belonging. Most of those who left us have gone to start their own companies or gone overseas. Hardly will you find anybody poaching our staff because we pride ourselves in training and retraining them both locally and internationally, so, we have a pride of place.

Going forward, what do you think should be done to deepen insurance penetration?

We all know there is low insurance awareness in the country. This is bigger than Boff. My focus on assumption of office in 2005 as the president of Nigerian Council of Registered Insurance Brokers (NCRIB), was to increase insurance awareness.

I ensured that we promoted insurance education and awareness.  When I was also the chairman of the Western Region of NCRIB, we had a radio programme, known as Insurance Awareness. It was a programme of the Western Region, sponsored by some insurance companies. For 30 minutes in a week, we were live on Radio Nigeria FM and you will be amazed how unaware insurance public is. Some will call us thieves, daylight robbers, 419, and so on, but I patiently explained to them the need for insurance.

I know, I have been in this industry for 35 years, 10 years as an employee and 25 years in Boff and Co, then we, as operators, must be doing something right. We inherited a totally unknown industry, but we have gotten to a stage where there are insurance correspondents in virtually every newspaper. So, the awareness is coming but it’s a project that is bigger than Boff.

In the aviation industry, operators are now seeking for monthly insurance cover. Is this the best alternative?

Monthly cover in the aviation industry started with the implementation of the No Premium No Cover (NPNC). Some of them pay millions of dollar as insurance premium, but in the developed world, credit facility is key. You need to have credit to operate. In the developed world, you have specialised companies that form insurance premium.


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