Diagnostic study of microinsurance and takaful in Nigeria
The issue
NAICOM wants to make Evidence–based decision on Microinsurance (Mi) in Nigeria.
The Preparation
- A Team of Foreign and Local Consultants assembled
- NAICOM letter distributed to 63 Organizations and Communities across Nigeria.
- Coordinators appointed in 9 States
- 20 FGD slated for 207 Households in 5 geo – political zones.
- Preparation carried out between 2nd April and 11th May 2012.
- Study carried out between 12th May – 28th June 2012
- The project started and ended with the Regulators
THE TERMS OF REFERENCE
v To know the correct state of affairs of Microinsurance in Nigeria
v To identify the Incentives / ability to extend Insurance to the low income group
v To Identify the drivers of market development for Microinsurance
v To prepare the report as a public resource in its own right
v To see if there is the need to redraft any aspect of the Draft Microinsurance guideline to suit cultural/religious beliefs
THE OUTPUT
q Diagnostic Documents
q Focus Group Report and Transcript
q Presentation to the Stakeholders
q Stakeholders dialogue
q Action Plan/ Strategy
q Assistance on Product development
q Commencement with ankle risks and staple products (Trust)
FOCUS OF THE DAIGNOSTIC STUDY
- To determine the state of the current market
- The opportunities
- The challenges
- The Barriers
- The perception of the Market on Insurance / formal sector
- The change of mindset achievable
- Identify the gaps and the level of development
- The intermediation, the Products and the Players
- The available opportunities in Financial Inclusion
- Identify the current State of the market to unlock the potentials
Observations
- Collaboration between the OFIS department of the CBN and NAICOM is essential for downscaling Microinsurance through the MFBs.
- Collaborating with each state branch of the CBN can help on monitoring and expansion of Agric Microinsurance.
- Collaborating with the FSS2020 can help on Insurance Education and Public enlightenment programmes
B). NATIONAL HEALTH INSURANCE SCHEME (NHIS)
The meeting was held with four (4) Directors of NHIS – led by Mr. Adesina and Dr. Okoli
National Health Insurance started in 1999 for organizations with 10 employees and above at premium rate of 10 and 15% of Basic Salary
Observations
- NHIS has achieved a lot on which NAICOM can leverage for Microinsurance in Nigeria.
- The almost 5.0m enrollees under Social Health, MDG and Donor Projects is immediate market for Microinsurance in Nigeria.
- The National spread of NHIS operators and influence up to tertiary institutions can be used by NAICOM for Insurance Education.
- The HMOs and HCPs readily come as partner Agents on other Micro products.
- Collaboration with NHIS will ensure enforcement of the Health Care Professional Indemnity Policy and also build trust and confidence in NHIS.
- Though the HMOs Association seems a bit hostile to Insurance, the regulator is very friendly and understands the importance of collaboration with NAICOM.
- For any subsidized donor funded Microhealth scheme to be sustained, it must be packaged with Microfinance and Microinsurance.
- 2. THE SUPPLIERS
- THE SUPPLY SIDE – MEETING OUTCOME
- Twenty Two (22) existing and potential suppliers in the Insurance and Microifinance Markets were met.
- a). NIGERIA AGRICULTURE INSURANCE CORPORATION (NAIC)
- Represented by 7 Top Management staff led by the Managing Director - Mr. K.K. Yusuff.
Observations
q There is trust issue.
q The Claim process may be cumbersome and frustrating
q There is no Insurance Education programme.
q There is natural spread but few foot soldiers
q There may be elements of mis-selling – farmers in Ibadan want Insurance for the theft of Fish, Farm produce etc. in Keffi, they want for Drought and Fire.
B). UNITYKAPITAL
Representing by 5 Top Management staff led by the Managing Director /CEO.
Observations:
v There is not much on the ground for Mi and Takaful
v The meeting provided change of mindset and generated interest in Mi.
v Very easy to encourage into Mi and Takaful
v Has extensive reach in Northern Nigeria.
v C). UNIC INSURANCE PLC.
v Meeting held with 4 Top Management staff led by the Managing Director – Mr. Friday Orjieh.
v Observations
v Not much on the ground on Mi – only intention.
v The company understands everything about Microinsurance but the marketing team does not see it as Insurance
v The Head of Marketing resigned because the company wants him to include Esusu (Microsaving) as one of his products.
D). MUTUAL BENEFITS ASSURANCE PLC.
Meeting held with five (5) Top Management team members led by the group Managing Director/CEO – Mr. Akin Ogunbiyi.
Observations
- Mutual Benefits is one of the few companies ready for retail market in Nigeria and is deriving maximum benefits from same.
- At the moment has collaboration with about 2m people in NURTW, ACHAN and ACOMORAN that can be classified as Microinsurance prospects.
- The experience and future moves of Mutual Benefits in retail Insurance will surely drag other underwriters into retail business within the next 36 months.
E). AIICO INSURANCE PLC.
Meeting was held with 7 Top Management Staff of AIICO, led by the Group Managing Director/ CEO – Mr. Dele Sobanjo.
Observations
q AIICO and Mutual Benefits Assurance are the two companies in the fore front of retail Insurance in Nigeria
q Use of bundled products will be more appropriate for Microinsurance
q Some of the companies have started experiencing the benefits of collaborating with the Micro Finance Banks.
q The Name given to Products matter a lot to the proposers – so also is the living benefits.
q The Market for Social Clubs, Age Groups and Socio – Cultural Organization is huge for Microinsurance
q The simplicity of the underwriting and claims process will make a big difference.
F). SOVEREIGN TRUST INSURANCE PLC
Meeting with seven (7) Top Management Staff of the company, led by COO – Mr. Sam Ogbodu, the Managing Director apologized to attend the council meeting of NIA.
Observations
• There is the popular impression among the Nigerian Underwriters that retail Insurance is only for life or composite companies
• Some underwriters are already into Microinsurance without knowing it
• Most of the underwriters appreciate the benefits of retail Insurance but the cost of establishing one, the low expertise in the segment and the long gestation period is the problem.
G). CORNERSTONE INSURANCE PLC
The meeting was held with two (2) Senior Management Team of the Company, led by the CEO of Halal Nigeria (the stand alone arm of the Company specialising in Takaful) Alhaja Taibat Adeniran.
The only Micro Takaful in their staple is Esusu used for Rent, Festival etc
Observations
q The mutual concept in Takaful will make sense to most people in Nigeria – Muslima and non – Muslims.
q Investment yield is key to over 90% of Nigerians irrespective of religion.
q Most Muslims in Nigeria are not aware of the existence of Takaful products in Nigeria.
q Most Muslim clerics who are aware of Takaful still see Takaful inside the traditional Insurance operation as unholy.
h). NIGER INSURANCE PLC
The meeting was held with five (5) Top Management Staff of the company led by the Deputy Managing Director – Mr. Adedeji, the Head of Takaful Dept. – M.B Azeez was in attendance
- Focus of the meeting is Takaful
- Premium income was N143 .0m (2009), 341.0m (2010) and N1.03b in 2011
- Operates Takaful in Lagos and Kano for now.
Observations
• There is big market for Takaful and Microinsurance in Nigeria if Aggregators, Association etc can be used.
• Some companies have existing branch networks and alliances that can be leverage on.
i). LEADWAY ASSURANCE PLC -24TH MAY 2012
Meeting was held with four (4) Top Management Staff of the company, led by Mr. Folusho
• The company is still thinking about a number of issues on Microinsurance, Infrastructure to collect premium, reaching the people etc
• Leadway Partnered with World Bank, ILO to see how Microinsurance can work in Nigeria in 2010 but no headway.
Observations
v The company has over the years established itself in the whole sale market
v It appears the company is not ready for the peanut premiums in Microinsurance
v Incidentally, having been the presumed market leader in premium generation, the attention of development agencies is focused on it.
v There is the need to create an industry wide forum for sharing information on market development opportunities especially where the recipient does not need it.
v NAICOM may need to create a Nigeria Government policy on Microinsurance as is done in India.
j). NIGERIA INSURERS ASSOCIATION (NIA)
1st meeting held with the Management Team, led by the DG. – Mr. Dare Thomas
NIGERIA INSURES ASSOCIATION (NIA) MEMBERS
24 Insurance Companies participated – Anchor, Staco, STI, LUR; Cornerstone, UBA Metropolitan, Intercontinental Wapic, Sterling Ass. GNI, Mutual Benefits, CHI, Universal, Union Ass. ADIC, IEI, AA, AIICO, Oasis, Oceanic, Crusader, Goldlink,
Observations
q Those who attended the meeting cannot take business decisions for their companies.
q Microinsurance has huge potential for success in Nigeria but not necessarily through the Insurance practitioners.
q All the market associations in Insurance in Nigeria are not looking at the issues of Market development and Consumer Education.
The Market for Microinsurance in Nigeria.
Population:
• Nigerian has a population of N167.0m .
• 75% of the population lives in the Semi-Urban and Rural Areas
• According to the National Bureau of Statistics (NBS) 112m (67%) of the population live below the poverty line. (2010).
• The outcome of the FGD however shows the following statistics within the 75% Semi- Urban and Rural populace (125.m people)
• Market for Regular Commercial Insurance - 13. m (10%)
• Market for Commercial Microinsurance - 75.m (60%)
• Market for Aid / Support Microinsurance - 37.m (30%)
Anybody who can maintain a GSM can afford Microinsurance
No comments:
Post a Comment