From Edet Udoh, Lagos
Relative to the size of the Nigerian economy and the opportunities it offers, the insurance sector needs serious capitalization to increase its capacity to underwrite transactions in sectors such as the oil and gas, marine, aviation, technology, etc, Managing Director/Chief Executive Officer, Access Bank Plc, Herbert Wigwe, has said.
Wigwe said this while delivering a theme paper, “Disruption, Innovation and Business Growth” at the just concluded 2019 National Insurance Conference (NIC) in Abuja, organized by the Insurance Industry Consultative Council (IICC).
He said the recent raise in minimum capital for insurance industry on May 21, 2019, by the National Insurance Commission (NAICOM) by over 200% will go a long way towards repositioning the Nigerian insurance sector.
“Early this year (May 21, 2019), NAICOM raised the minimum capital for the insurance industry by over 200%. Whilst this will go a long way towards repositioning the Nigerian insurance sector in terms of product offerings and customer experience, the sector must grow big enough to provide cover for huge exposures,” he said.
It should be recalled that on May 21, 2019, NAICOM issued a circular to all Chief Executive Officers of insurance and reinsurance firms in Nigerian to recapitalize. The new capital regime requires Life business to raise its capital from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion while reinsurance firms are expected to jerk up their capital from N10 billion to N20 billion.
With the advent of innovation, he advocated strategic alliances and partnerships between traditional insurance companies with upcoming insurtechs so as to explore the technological and growth opportunities therefrom and give customers better and more innovative product offerings.
He said Claim verification processes must also be reviewed to foster trust, noting that partnership with the Banks for viable Bancassurance opportunities is also a formidable route to growth.
On insurance penetration, he called on insurance companies to make more use of the new media and ‘digital’ to deepen insurance at the retail segment of the market, noting that the need for the implementation of a robust compulsory insurance policy cannot be over emphasised.
“It appears the Nigerian insurance sector has started experiencing disruptions as Insurtech start-ups leverage technology to take advantage of the opportunities in the sector to gain market share and pursue growth. In 2014, AutoGenius which was launched by Venia Technologies allows users to buy auto insurance online, working with traditional insurance companies to shape user experience.
“Similarly, CompareIN which was launched in 2015 allows users compare and buy an insurance policy online. Also, Cassava allows individuals make small weekly and monthly insurance subscription payments via debit card or USSD.
“Today, businesses and economies compete in a networked world in which the key to competitive advantage is no longer the sum of all efficiencies, but the sum of all connections.
“Strategy, therefore, must be focused on widening and deepening linkages to access ecosystems of technology, talent and information. Today’s decision-makers must let go of the traditional linear thinking of change and think strategically about the forces of disruption and innovation shaping our future. Innovation is our new reality,” he added.