The Battle for Numbers: Going with 1.03m Individual Policyholders

Nigeria’s insurance industry led by the regulator, National Insurance Commission (NAICOM) may have finally decided to pull its gloves off and fight for the share of the country’s huge population by recently announcing that, as at December 31, 2020, there were 1.03m individual policyholders and 891,218 corporate policyholders, making a total of 1,921,218 policyholders in Nigeria!

According to NAICOM, these policyholders attributed to the industry’s premium income of N520bn in that year, yet leaving insurance penetration at less than one percent and insurance density at less than three percent.

Much as these numbers cannot compare favourably with those of other financial services providers in Nigeria, especially the banks, and other insurance markets in Africa, we have recently seen measureable optimism by the regulator to lead this new battle for numbers.

The efforts to reactivate partnerships with other stakeholders like National Pensions Commission (PENCOM), Federal Fire Service (FFS), Federal Road Safety Corps (FRSC), National Health Insurance Scheme (NHIS), Federal Ministry of Transportation and Federal Capital Territory Ministry coupled with the release of its 3-year Strategic Plan are highly commendable, especially coming along with the commencement of the implementation of the new Code of Corporate Governance and the journey to IFRS 17.

To develop the insurance market in Nigeria, more individuals in Nigeria need to become policyholders, and this is the battle cry NAICOM has made by this action to its licensed operators to join now.

Can insurance companies, insurance brokers and agents begin to tell us how many policyholders they have under their management? Could this become the new basis for competition in the market? What were these figures before NAICOM announced?

What 1.9m Policyholders Represent

With a clear and valid position as we now have concerning the number of insurance policyholders in Nigeria, it is important to consider the possible detailed breakdown of the top numbers, with a view to appreciating its sustainable growth.

Firstly, of the 1.03m individual policyholders, how many are:

Life and General Insurance Policyholders
Nigerians and Non-Nigerians
Male and Female
Young and Old
Employed and Self-employed
Employees of Public Sector and Private Sector
Residents of Lagos and Those Outside Lagos (Lagos contributes over 80 percent of the insurance industry’s Annual Premium Income)
Direct clients of Insurers and Through Intermediaries (Agents or Brokers)
Then, importantly, how many have been enjoying the protection of the regulator as required by the law? In this regard, it would be necessary to know:

How many of them reported claims and how many have been settled?
How many claims were denied, repudiated and/or dishonoured?
How many claims were not settled and how many are under adjudication?
How many are Life or General Insurance claims?
Generally, numbers elicit questions and queries that bring improvements to processes and the regulator knows this. Next, we will expect insurance companies to come out with their numbers.

Of the 891,218 corporate organizations that are policyholders, it should matter how many are wholly Nigerian to ascertain their level of acceptance of insurance as well as their experiences with regards to claims payments by insurers.

It had been previously reported that the premium remittance by corporate organizations constitutes about 80 percent of the industry’s entire Annual Premium Income, while they also receive the bulk of claims paid out by insurers in any one year.

When most of the policyholders have yearly General (Non-Life) Business contracts, it is easy to lose the numbers as policyholders drop their policies on account of “not seeing value” in paying another premium.

The greatest challenge of the insurance industry in Nigeria is most probably how to make insurance attractive to more Nigerians amidst the huge population of over 206m people and still growing.

How 1.03m Individuals Can Help Win More

Considering that the insurance industry, thanks to NAICOM, now have these individuals as policyholders, they can be possibly engaged in ways that will earn more. Some of the ways they can be engaged are:

Critically appraising the data to give them an easier sense of identification as insurance policyholders. Most of these 1.03m policyholders are employees of governments and businesses who will not have any contact with their insurers, so to make them feel appreciated and valuable, the insurance industry will have to go beyond the relationship with their employers to make them feel the impact of insurance. When there are channels that they are encouraged to use in reaching to their insurers, they will become more educated and enlightened about insurance, and have the capabilities to spread the word and bring more people on board;
Creating accredited electronic and digitally driven platforms where these customers can share and exchange their experiences and expectations about the insurance industry would be necessary to retain them and grow the number of policyholders periodically. Just imagine when they would have to interact on product needs, level of service and innovative solutions across the financial services sector;
Promoting the use of the Agency System as a client-management one where a ratio of One Agent to One Hundred Policyholders could be adopted and implemented, meaning about 100,000 Agency Force would have been established.
Nigeria can do as well as China does with its population in terms of insurance with the emergent digitization environment but this cannot happen without a clear Digital Agenda, an outcome of the combination of regulators and operators.

For many decades, there have been many visible points of disconnect and contradiction affecting the effective functioning of the insurance industry in Nigeria, largely due to the absence of data and application of data analytics in everyday market engagements.

Now it can be possible to see one Nigerian who has an insurance policy distinguished from the other that does not have one, and our story regarding low insurance penetration can begin to give way to a more interesting time.

I am one of the 1.03m individual policyholders in Nigeria; how about you? Time to restart!

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