Nigeria Insurance Industry Still at Infancy Stage – THISDAYLIVE

You simply turned 60 years. What does that imply to you? Share with us the story of your journey for the previous 60 years.

I actually don’t know what it means to be 60 as a result of I don’t really feel 60. I can’t see any distinction between once I was 31 once I began Mutual Benefits Assurance and the best way I’m feeling now. I’m filled with power and I thank God for His grace.

My first diploma was in Agricultural Economics. When I used to be partly three, the idea of Agricultural Insurance was launched. I used to be concerned with it. So, I went to my lecturer and advised him that I want to select Agric Insurance as my mission matter. But he stated no. Other lecturers within the division additionally stated no, that it was a brand new space and there wouldn’t be sufficient supplies for the research. I went to the central library, Oluwasanmi Library. I searched all of the ebook indexes for weeks to see if there may very well be something. God so good, I discovered one ebook, about 1,015 pages with the title Agricultural Insurance authored by FAO (Food and Agriculture Organization). I took the ebook and puzzled what sort of article it may very well be. Then, I went to my lecturer, confirmed him the ebook and I advised him I’d be writing my mission on this. Then he stated, “If you insist then, you should do an extract.” I wrote a 25-page extract and I used to be allowed to go forward with the subject. But my lecturers stated if I took up the mission I have to be keen to pursue it to PhD degree. I agreed.

After my NYSC, I returned to the campus to start my post-graduate research. But I discovered the pay slip of considered one of my lecturers, Professor Alimi, who was then Mr Alimi. He had completed his MPhil, was doing his PhD and he was given graduate assistantship. His wage was N600. And I stated, “Oga, is this what you are earning? And you are doing your PhD.” He stated ‘yes’. At that time, I resolved to not be an educational.

By the time I completed, the federal government had arrange the Nigerian Agric Insurance Company and I utilized for a job there. But NICON Insurance later provided me employment as a result of one of many panelists who interviewed me for the NAIC job felt I’d be extra helpful at NICON. At that point, NAIC was a subsidiary of NICON.

Within two years of becoming a member of NICON, I certified as a chartered insurer. But opposite to NICON’s regulation that anybody who certified as a chartered insurer have to be promoted, I wasn’t promoted. So, although I cherished the job, I turned pissed off. As a end result, I began in search of alternatives outdoors NICON.

After I certified as a chartered insurer, I made a decision to take the skilled examination of the Institute of Chartered Accountants of Nigeria (ICAN) and I cleared the muse at a sitting. I then registered for PE I however in the middle of that I noticed an advert stating that an organization was in search of any individual that had first diploma in any discipline, a chartered insurer, and working information of accounting with 4 years expertise to be the Managing Director. When I noticed the advert, I advised myself that the place was meant for me, so I utilized for the job.

I handed the interview however was advised that they’d not supply me the place of MD however Associate Director. The firm, referred to as Finance and Insurance Expert Limited, was owned by considered one of my bosses at NICON, Mr Remi Olowude. I initially refused to take up the supply however he persuaded me.

While working with Mr Olowude, I had written the feasibility research for a brand new insurance broking agency. The firm was VTL Brokers. When they have been going to recruit the top of the agency, I used to be provided the place. The promoter of the business, Mr Akin Opeodu, did one factor for me. He stated, “Look, It won’t be ideal for me to just treat you as an employee. If you’re going to run as chief executive, I will convince my board to take 51%, you take 49% for yourself but don’t own it all alone”. I’ve by no means come throughout something like that in my life. So I search for some individuals to purchase a few of the shares allotted to me.

But then from the primary day, I referred to as all of the shareholders and advised them my plan. I stated I’d run the corporate for 4 years. In the fifth 12 months, I’d put together to start out an insurance firm. I’d run that firm for 10 years. And after 10 years, I’d type a re-insurance firm. I put down a gorgeous plan prepared for them they usually all agreed. And simply as I stated, after 4 years, I left VTL to start out Mutual Benefits.

Why is the insurance trade not capable of do in addition to the banking sector?

Let me simply say immediately that insurance, despite the fact that it’s about 100 years previous in Nigeria, continues to be at its infancy stage. If I’m not mistaken, insurance penetration in Nigeria right now continues to be underneath 0.25 per cent. Insurance has targeted majorly on company sector and there hasn’t been any try in any way to penetrate the casual sector as a result of if insurance is to develop, I’ll inform you, it has to deal with the casual sector. Every transaction that occurs in Nigeria as of right now is ratio one to 9; that’s 1% for the formal sector and 9% for the casual sector and the casual sector shouldn’t be captured.

We are targeted majorly on company insurance. And when you look at the large time gamers, the place do you discover them? You discover them within the cities. In truth, there are firms whose advertising and marketing methods solely work on a regional foundation. The prime flight insurance firms don’t have branches in every single place. They have in Lagos, which serves as their head workplace, they’ve in Kaduna, Abuja after which in Port Harcourt.

All the large time insurance firms, that is how they function. They didn’t take time to develop the casual sector. But that was till I got here into the scene as a result of individuals name me ‘Apostle of Retail Insurance’. 

When we began, the large brokers managed the market. They didn’t have belief in us. At that point, when you had not produced 5 12 months monetary statements, you would not get business from them. The focus of the large time insurance brokers is principally on the large firms. But after we began, I stated I couldn’t wait 5 years. So, we went into retail and our retail was totally developed within the tenth 12 months after we moved to our head workplace on Ikorodu Road. And we did this so properly that NAICOM needed to come and duplicate what we have been doing for the trade.

Insurance practitioners have to open up the market; we’ve got to patronize the casual sector, the commerce associations, unions, distant villages and which means we have to have illustration in every single place throughout Nigeria.

For the primary time we noticed NAICOM revoke the licence of some insurance firms. Looking at the challenges within the trade, are we going to see extra of that as a result of now there have been considerations about capitalization and the battle for the trade to reform?

I actually want we had a really highly effective regulator. We’ve had firms on the brink for thus lengthy. But the boldness to sanitize the trade was not there. If you look at the businesses disrupting the market right now, it’s nonetheless these massive gamers. When you have got the regulated dictating to the regulator, it’s a significant problem. We’ve at all times had these challenges. 

Look, all of the insurance firms that went down, they went on their very own volition; they died a pure dying, not as a result of NAICOM was concerned. You solely hear about NAICOM when it has to do with capitalization. I can inform you that the insurance trade shouldn’t be properly regulated. For occasion, NAICOM officers have been with us at Mutual Benefits about 4, 5 weeks in the past they usually have been with us for about two weeks. But earlier than then when was the final time we noticed them? Maybe about 15 years in the past. So, the trade is weak as a result of we’ve got a particularly weak regulator within the trade.

At a degree after we had a number of native content material insurance policies, which have been imagined to allow an trade like yours, we came upon that the insurance performs at a really, very insignificant degree. What do you assume may be executed?

I’ll inform you immediately. It nonetheless boils right down to NAICOM. The insurance trade right now has the capability to underwrite any danger on this market. We don’t even have to get to N10 billion and N8 billion capital base, however we’re there now. I’m not saying that as a result of we’ve got any problem in recapitalizing, Mutual Benefits has been totally capitalized. But even earlier than then, we’re saying we don’t have to do past N3 billion or N2 billion capital. What is the essence of reinsurance? The reinsurance that we’ve got has given us multiples of capability. With reinsurance, what sort of danger can’t the insurance firms in Nigeria underwrite? So I say if NAICOM will rise as much as its duty and help the trade, and make sure the proper factor is finished, we’ll exhaust the capability.

How can we deal with the unethical practices which can be rife within the insurance trade?

Unethical follow is the bane of this trade; it’s nonetheless in operation until tomorrow. Look, I delivered a paper at a Chartered Insurance Institute of Nigeria (CIIN) convention on the event. The Insurance Commissioner at the time, Mr Fola Daniel, was additionally in attendance.

In my paper, I stated that there have been two units of individuals killing this trade; the large brokers and secondly the large underwriters. I stated the large brokers compete on the idea of worth, not on the idea of service. So, if one thing is N1billion, for them to get the account, it will likely be principally on pricing. They may worth themselves as little as N50million. Something that’s imagined to value N1 billion premium, they’d compete amongst themselves and convey it right down to N50 million. Who loses? It is the trade. Can I do it? I can’t. The massive brokers and the large underwriters are those that have interaction on this. 

I’ve a private expertise. I did a business. I quoted $1.4 million for NIMASA and I took the business out. It was P&I (safety and indemnity). We had solely 18 golf equipment the world over. We don’t have anybody in Africa as a result of that was the time of apartheid; that they had their very own P&I and it was not out there to anyone, it simply took care of South Africa’s pursuits. So, the remainder, we had 17. So, I quoted and I received the business. The following 12 months one broking agency took the account they usually received $500,000 for the account I received for $1.4m. And then, I went to see the MD and requested him who quoted the $500,000. He stated it was Guardian Trust. Where is Guardian Trust right now?

I stated, “Oga, this is an international policy, we don’t have it in Nigeria. So, why would anybody want to do it for $500,000?” He stated, “Look, Akin I am a broker. I want this business. Whether I quoted it one Naira or two Naira, as long as I have my commission, when the thing happens, it is his problem.” So, you possibly can see, once you discuss of unethical practices, NAICOM has plenty of position to play in sanitizing the trade. 

About 4 or 5 years later, the brokers once more invited me as a visitor speaker on insurance improvement. I can’t bear in mind the subject however I ready my paper. The Commissioner for Insurance was scheduled to present the opening comment. He spoke for half-hour. When it was my flip to talk, I received up. I stated, “Ladies and gentlemen, this is the topic that you gave to me. I have prepared it but I have taken five issues from the remark that the Commissioner has made. And that would take time, so, please, keep my paper, print for everybody, I won’t talk on the paper.”

I picked up the Commissioner; what did I inform him? The Commissioner was speaking of risk-based supervision. He took about 5 matters however a very powerful factor he stated was that the trade couldn’t get to the N1 trillion premium revenue mark as a result of we selected to present pointless reductions. And he stated, “You are giving as much as 95 per cent discount to people that are richer than you.” I stated to him, “Mr Commissioner, who is to regulate this industry? If the banks say the MPR is 14 per cent and you can do five per cent above it. If the lending rate in the country is about 22 per cent and somebody says ‘I will give you 60 per cent return on your money’, would the Central Bank allow that bank to run?”

I stated, “Remember the wonder banks. So, what are you regulating if you say you are the industry regulator and you, Commissioner, are saying that the industry is giving much discount, 90 something per cent discount.” So, who’re the businesses which can be concerned? What have you ever executed to them?” It was very embarrassing to the Commissioner that day.  So, if there may be going to be higher moral follow, it nonetheless has to do with the trade regulator.

You constructed a multinational in lower than twenty years. How did that occur?

One factor that’s serving to us is the truth that we do what I name strategic planning successfully. Every 5 years, we glance at what we have been doing and you recognize, the business cycle, they are saying, it goes in half cycle, as soon as it will get to the height, we don’t permit it to go down however we take it to a different peak. In Mutual Benefits, we’re 27 years previous now, we’ve got had about three, 4, 5 peaks and when it will get to the height we take it to a different peak. So, we do strategic planning, we glance at improvement, we glance at the market, we glance at the setting and we resolve on what to do.

But a significant improvement that we had was after we had the “Wind of Change”, that technique doc, is definitely what propelled us into these numerous issues that we do. And the principle purpose why we went into it was we have been trying at each funding and narrowing it right down to insurance. When we went into transportation, our concern was how would insurance profit from it? For that transportation, each drop carries a cost and we organized it in such a means that after you pay your N100, N10 involves insurance. Even when you take a experience from Ojota to Maryland, N10 out of the fare goes into insurance. So, the whole lot was tailored in direction of boosting the insurance business.

We went into banking to develop micro-insurance. We noticed the necessity to set up a microfinance financial institution. We made a presentation to NAICOM about proudly owning a microfinance financial institution they usually accepted it for us. And about two to 3 years after, we generated about 60,000 particular person insurance policies on account of our proudly owning a financial institution. That added loads to the underside line of Mutual Benefits. So, it was really a strategic pondering, trying at the setting and creating the capability to have the ability to clear up recognized issues. When we get into a brand new factor, we search for good individuals who we predict can deal with it and we give them the free hand to deal with it underneath steerage. That’s how we develop.