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From
left: President Nigerian Council of Registered Insurance Brokers (NCRIB),
Ayodapo Shoderu and Managing Director Staco Insurance Plc, Shakiru Oyefeso (middle)
at the NCRIB members evening in Lagos.
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PRESENTATION OF THE MD/CEO OF
STACO INSURANCE PLC
AT THE JULY 2014 EDITION OF
NCRIB BROKERS EVENING
ON TUESDAY 1ST OF JULY, 2014
Members of the Governing Board of NCRIB
The Executive Secretary of NCRIB
Distinguish Insurance Brokers
Gentlemen of the Press
Ladies and Gentlemen
INTRODUCTION:
It gives us great pleasure to be invited to host this month’s edition of the highly esteemed Brokers’ Evening. This edition of Brokers Evening is important to us in many ways. First it is happening on the first day of the second half of the year. Second, It is happening on the year of our of 20th Anniversary and thirdly, today marks about the third year we hosted the Brokers Evening though in the Council’s old structure; the more reason why we are happy to be hosting this particular event in this new and beautiful building.
On this note, on behalf of the Board of Directors, Management and staff of Staco Insurance Plc, I wish to thank the President and Governing Board of NCRIB for giving us this opportunity not only to express our heartfelt gratitude to the Insurance Brokers for keeping us in business but to also use this medium to share with you some of the success stories of Staco Insurance.
BRIEF ABOUT STACO:
STACO Insurance Plc is a product of a well thought out acquisition carried out on Alpha Insurance Plc in 1994 when the company under the former name of Standard Trust Assurance and now Staco Insurance Plc commenced General Insurance and Special Risks Business.
The ownership structure of the company is purely Nigerians who have distinguished themselves in their various business endeavours and managed by seasoned professionals who have proven integrity in the Nigerian Insurance Industry. The company’s total assets base is in excess of eight billion naira and it is one of the forty-nine (49) Underwriting firms that successfully recapitalised following Federal Government of Nigeria’s directives to Insurance companies to recapitalise in 2006. Subsequently, the company became listed on the Nigerian Stock Exchange (NSE) and also had a name change from Standard Trust Assurance to Staco Insurance Plc in 2007.
The company’s strength lies in its passion for high standards and prompt claims settlement. Staco for instance paid claims amounting to N1.87 billion last year, while as at today we have paid about N900 million in claims. This and the notable quality services delivery by the company every time has enabled it to win numerous awards amongst others. Out of which, is the prestigious Insurance Company of the Year Award conferred on the company in 2009 by Thisday Newspaper. Our company also won the Miss. Insurance Beauty Pageant in 2008/2009 period and the current 2014/2015 period.
This goes to prove that Staco ladies are embodiment of beauty and brains. I must also add that the modest achievement recorded by the company since its establishment had been possible through foresighted leadership and excellent team spirit by the staff of the company. Our vision is to be a world class provider of Insurance and other financial services and we pursue this vision vigorously.
REFLECTIONS ON STACO-BROKERS RELATIONSHIP:
Once again, we are most delighted to be invited to host the NCRIB Members’ Evening because of our firm belief that it is a viable interactive platform between leading Underwriters in the Nigerian market and the Insurance Brokers. I am particularly gratified to lead the team of Staco Insurance Plc to this great event for two significant reasons:
First, I am always desirous to compliment the success of my "big brother and uncle", Mr. Ayodapo Shoderu the President of the NCRIB and with whom I have had so many years of fruitful relationship. I have watched closely the agenda of the President since his assumption of office, especially his disposition towards widening insurance density through grassroots penetration. We must all reckon with the fact that the Insurance industry has remained underdeveloped because we have over the years placed more emphasis on large government and corporate accounts, leaving the grassroots unattended to.
This is not the case in advanced countries where insurance is the way of life and the last hope of all citizens. The efforts of our regulator in deepening Insurance penetration by introducing the six compulsory insurances and anchoring sustained campaigns should be supported by other key stakeholders like Underwriters, Brokers and Loss Adjusters.
Secondly, Staco places high premium on relationship with Insurance Brokers as they constitute critical stakeholders with whom any progressive Underwriter must have a relationship. As you are aware, Insurance Brokers have continued to be responsible for a significant chunk of the nation’s insurances, hence we could safely refer to the market as a Brokers-Market.
THE CHANGING ROLE OF INSURANCE BROKERS:
Despite more subdued growth forecasts than before the global economic crisis and ongoing political instability in the countries in OPEC, in which Nigeria is a member are still of very real interest to the international insurance market. A number of factors are driving ongoing interest, including:
Education continues to improve across the country, paving the way for ongoing economic prosperity and making the hunt for local staff less onerous
Lack of ambitious mega construction projects, either underway or planned, are boosting employment and wealth, and facilitating economic progress.
Insurance penetration levels are currently low compared with those in other emerging markets.
There is a growing middle class with a greater understanding of insurance and its benefits. Our future market lies in this class and we have to imbibe them.
Larger companies in particular are becoming more aware of the need for risk management.
Banks and financial centres in the country are becoming more sophisticated and regulation is improving, making this a much easier country in which to do business.
Due to these positive factors over the last few years, there has been an influx of international insurers and reinsurers looking to benefit from the growth potential the region has to offer.
This has created fierce competition for business, resulting in rates being kept unrealistically low. But following an increasing number of claims linked to some extreme carelessness in the country and political unrest, some insurers are reviewing their rates, wordings and breath of cover.
Insurers and reinsurers are taking a greater interest in their client’s underlying risk, and are keener to understand the client’s attitude to risk management, international regulation and best practice. This is where Brokers can assist.
As the market evolves, the role of Insurance Brokers in the success of the Insurance market in the country will be pivotal.
Insurance Brokers will provide a vital link between the client and the market, not just helping to place business, but also educating and working alongside risk managers and other insurance buyers helping them to understand the breadth of insurance protection available and advising them on the latest development in risk management and best practice corporate governance.
Mega Construction Projects:
As a result of local government and foreign investment, the construction industry across the country is experiencing a marked resurgence. There are some significance infrastructure projects planned over the next few years such as the Eko Atlantic City and reconstruction of Airports across the country which was initiated by former Aviation Minister Stella Oduah. These are worth hundreds of billions of dollars, which will require considerable capacity and local insurance expertise to underwrite and broker.
Other areas predicted to grow include renewable energy, education, tourism and health, all of which will require sophisticated insurance support if they are to take off in the way that government leaders would like them to. Brokers with the ability and locally based experience to provide due diligence and risk reviews can help companies to streamline their insurance portfolio, so that cover provided ensures full asset protection at a reasonable and proportionate cost.
The role of Brokers in the country is vital. Brokers from both local and international companies need to be prepared to invest in training local talent as without this it will be hard for the insurance industry to keep pace with the developing countries. Locally based Brokers can provide insight and advice to international investors in line with the transformation agenda of the Federal Government, and in turn as the economies of our country start to strengthen so will the need for Insurance. The success of the Muslim Brotherhood could also drive growth for takaful and retakaful covers, as these are acceptable forms of Insurance in Islamic societies, I say this in the Spirit of Ramadan.
As new financial centres develop across the country, so too will the regulatory environment, while this is a good thing, it will place greater responsibility on companies to improve internal controls, increase financial transparency and improve risk management. It does have a sting in the tail, as insurers will need to be aware of the different environment in each jurisdiction and amend their approach and process accordingly.
This of course is where a strong local broking community comes in to its own, as it steps up to provide advise on the particular requirements of each local market. Brokers need to work closely with clients to highlights the importance and necessity of honest and open financial disclosure in order to allow the appropriate information to be released in order to asses the level of coverage required and in turn to give underwriters a full understanding of the business and its risk mitigating needs.
Joining Forces:
Many International insurance companies and broking houses are looking to establish a local presence via joint ventures with a local insurance brokers as a business partner that will offer access to the market and an understanding of the local business culture . Choosing the "right" partner is vital however, and many companies find operating under a joint venture can be more complex than they had imagined. Structural differences and variations in local business practice can provide significant management challenges for global businesses that are not used to operating on this basis.
Although there have been a few setbacks over the past few years to the on-going growth of the country, the outlook remain very positive. The international insurance industry is keen to grow its business in the country and the local market is developing too. Insurance Brokers have an important role to play in the future success of the country providing insights, advice, specialism and risk management advice. If every one is committed to training and developing local talent, the country insurance is set to grow from strength to strength.
TECHNOLOGY CHALLENGES AND THREAT TO BROKING IN OUR INDUSTRY:
In the past, what marketers do to engage customers has changed beyond expectation. This is because the world is now a global village where many things are done with the push of a button. Tools and strategies that were the cutting-edge a decade ago are fast becoming obsolete and new approaches and strategies are evolving. Marketing function in any business endeavour is very dynamic, how marketers engage the customers has profoundly changed. This calls for a reflection by our esteemed Brokers. This is because if care is not taken, before you know Brokers may be forced to background on retail business.
Today, Information and Communications Technology has become a viable channel in the selling of Insurance policies through the use of internet, social media and sms from the telecommunications companies. The question here is that "are the telecoms network companies licensed agent by NAICOM to sell Insurance? This is thought provoking and we should be reminded of how Workmen Compensation was gradually taken away from us.
We, as Insurance marketers need to evolve strategies, structures and capabilities to ensure that we align our selling processes with the latest technology in order not to lose significant income to technological advancement.
May I use this opportunity to commend the Governing Board and Management of the Council for sustaining high ethical values and professionalism amongst NCRIB members. It is my take that if the Insurance Broking business would ever develop, we must begin to place premium on ethics and professionalism. My advice is that Brokers are to pay closer attention to things and development around them and within the nooks and crannies of the country.
CONCLUSION:
My guess is that today’s event should be more of interactive in nature and will not like to bore you with long presentation, but before I conclude my speech, please permit me once again to commend NCRIB for giving us the platform to host this beautiful evening. Whilst admitting that Staco has strived to maintain excellent Brokers’ Relationship, it may not be out of place for some Brokers to make suggestions to us on areas where we could improve.
Banks Owning Insurance Companies: The genesis was not like that in Nigeria in times past. The Insurance Companies at some point owned Banks. E.g. the former Republic Bank, the former NAL Merchant Bank, the former ICON Bank Financial Merchant Bank. The situation at the moment can be attributed to the case of "Goliath and David". Our industry will get back to its good old days.The Banks have realized that what can keep them in business is Risk Management. Who can profess it than ourselves? We are more in line with Risk management than the Bankers.
Our regulators have done a lot to uphold the good code ethics, professionalism and best practice within our industry. Our inability to leave our comfort zone has resulted in a lot of restraint posed by our industry’s rules and regulations. We now feel like we are being chained by our regulators and it is not so but the regulators want us to transform to a learning zone
We have contributed to our own destruction ourselves. There are no mechanisms in our ratings any longer. Let’s go back to our scientific approach to product rating (E.g. Motor Underwriting Policy where the computation is based on cubic capacity, value, and use of vehicle, level of the driving license possessed. Our industry is now seen as unprofessional based on our laziness and shortcut approach to all these basics)
The GDP figure released recently through the rebasing of our national economy is astonishing to say the least. It is even more surprising that the entertainment industry has pushed us into the background.
DANGER SIGNS
Channel of distribution/ New competitors (Not the Banks and not through direct market by insurance companies).
Unsolicited relationship between some underwriters and telecommunications industry. Are the telecommunications companies now Brokers? This question is asked because life assurance products are now sold through them.
FIVE CARDINAL POINTS FOR A GOOD INSURANCE BROKER
How to place the business with the Underwriter without being detrimental.
How to collect premiums from Clients. In this case, the "No premium, No Cover" rule by the insurance Act (2003) which has been well implemented by NAICOM has assisted greatly.
How to collect your client’s genuine claims from the Underwriters is very vital.
The last but not the least is the courage of the insurance broker to repudiate claims that are outside the scope of cover ab-initio.
We are a learning organisation and I assure you of our amenability to positive change. We also wish to use this forum to crave more patronage of our company by Brokers as we promise you a rewarding relationship.
Thank you for listening. God bless.
Shakiru. O. Oyefeso
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