Nigeria and other African countries generated a whopping N22 trillion ($60 billion) cumulative insurance premium in their last financial year end, LEADERSHIP learnt.
Out of this premium, Nigeria generated about N350 billion insurance premium in its 2016 financial year.
While the premium in US dollar term represents a decline over the previous year, it increased when converted to local currencies. The reason for a drop in insurance premium in dollar term, investigation shows, was as a result of the economic recession that affected Nigeria and some African countries in 2015 and 2016.
During the recession period, the foreign exchange market was favourable to dollar than Naira and other African currencies, thereby, cutting down the profit margin of African insurance industry for the 2016 financial year, when converted to dollar. To this end, in local currency, premium volume has not declined since 2011.
With the advent of new technologies and the ambition of insurance industry to create and deliver tailored products to clients, insurance operators, at the ongoing African Insurance Organisation(AIO) in Accra, Ghana, said their relevance as a key sector for the prosperity and progress of Africa’s economies has greatly improved.
The Secretary General of the African Insurance Organisation, Prisca Soares, at the conference, said: “According to the AIO members polled for this survey, policymakers and regulators pay greater attention to our sector while consumers have started to realise the benefits insurance offers in protecting their assets. Our industry currently accounts for insurance premiums of US$ 60.7 billion, which in US$ terms represents a decline over the previous year. However, in local currency premium volume has not declined since 2011.”
The underlying economic and societal fundamentals of Africa’s insurance markets, she said, remained largely unchanged to last year’s survey. To her, abundant natural resources, the young and growing societies, an expanding middle class and the advent of new technologies, drive insurance demand.
The recent economic recovery – though still fragile in some countries, she stressed, added further momentum to the continent’s insurance outlook. “As elsewhere, however, insurance markets suffer from excess capacity and cut-throat competition. As rates are low, regulators aim to protect domestic insurers from foreign competition with higher barriers of entry,” she pointed out.
Stating that the continent’s low insurance penetration is one of the market’s largest opportunities, she added that, with the economic rebound, insurers increased their efforts to broaden their product offering and widen distribution in the last financial year.
Technology provides new avenues for innovation, both in commercial and personal lines, and helps to bridge geographical distances, increases scale and thus improves efficiency, she stressed.
Moreover, chief executive officer, Lloyd’s of London, Inga Beale, urged insurance outfits to embrace the latest technologies to fasten claims process, noting that, policyholders must be served through latest technology that will make claims process seamless and timely.
According to her, “with the latest technology, you should have records of claims and be able to track it. We need to provide the customers with necessity to track their claims.”
On his part, the special advisor, LeapFrog Strategic African Investments (LSAI), Mr. Doug Lacey, said, customers remain the most asset of any business, charging African underwriters to cement a better relationship with policyholders to the extent of understanding their personal life.
Through this, he said, products would be tailored towards meeting the needs of individual customers, rather than a stereotype approach of assuming what the customers need.
“For effective service delivery to customers, insurers must adopt human-centric approach rather than product-centric approach in product delivery. The human aspect is very important to the industry. We must be ambitious to provide the best services to our customers.”
“We don’t need to assume that everybody has the same needs. So, use technology to determine what each and every individual wants. Technology reaches more people than the traditional means of service delivery” he pointed out.
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