Can AXA trigger a change in insurance industry?

Chuks Udo Okonta

The coming of AXA one of the global top 10 insurance outfits into Nigerian Insurance Market, made global news, but observers are anxiously waiting to see what the firm has in its kitty for the industry which is believed to be performing below its potentials.    

AXA last year acquired 100 per cent of Assur Africa Holdings (“AAH”) which holds a 77 per cent stake in the composite insurance company Mansard Insurance plc for Euro 198 million (N43.14 billion).

The AXA Group is a worldwide leader in insurance and asset management, with 157,000 employees serving 102 million clients in 56 countries. In 2013, IFRS revenues amounted to Euro 91.2 billion and IFRS underlying earnings to Euro 4.7 billion. AXA had Euro 1,113 billion in assets under management as of December 31, 2013.

The Managing Director Riskguard-Africa Nigeria Limited and National Technical Adviser, Insurance Consumers Association of Nigeria (ISAN) Yemi Soladoye, believes that for the insurance industry to fully maximise its potentials, there must be a trigger from within.

According to him the trigger from within will happen when one insurance company decides to change the market by providing improved customer service that will change the focus of the industry.

Observers are really keen to know whether the renowned insurance giant – AXA would be able to trigger the desired change in the industry.

The question has become necessary as observer believed the influx of other big names into the industry has not moved the industry to where it is expected to occupy.

At the last count no fewer than six private equity firms mostly from South Africa have taken key positions in the Nigerian market, and are gradually bringing to bear their experience and skills in the respective organisations where they have invested.

Those on the scene are: Asset and Resources Management (ARM) Limited with funds under management in excess of $2.7 billion about N436 billion, which recently bought a 52.2 percent equity stake in ChrystaLife Assurance plc, now called ARM Life; and Old Mutual of South Africa with $15 billion under management, which recently acquired Oceanic Insurance now called Old Mutual Nigeria.

Before now, we have had the likes of Sanlam of South Africa partnering FBN Life Assurance Limited, a member of FBN Holdings; NSIA Participation South Africa buying 96.15 percent in ADIC Insurance Limited; Alternative Capital buying majority stake in Law Union and Rock Insurance plc; Capital Alliance for Cornerstone Insurance plc while Metropolitan Life also of South Africa partnering UBA Life Insurance to become UBA Metropolitan Life.

Soladoye

Soladoye who at one of the insurance gathering asked one of the investors to make public` what new thing they had for the industry, believed there are three things that are lacking in the market why it has not developed and according to him until they are adopted the market cannot develop.

“The first thing is full adoption of retail insurance. The second is full adoption of retail insurance and third full adoption of retail insurance. There is no other thing. We have a population of over 170 million people. Unless underwriters understand that insurance is like banking which focuses on retail and create access to insurance products, through the foot soldiers, wide spread offices, train people to sell products, give good services to customers, design and develop products that are relevant to the public and enter into strategic alliances with no traditional channels -what we are doing is using brokers who only engage in corporate and government business to distribute our product,” he said.

He said it behooves on the operators to sit and agree to face the retail market, and strive to insure at least 10 million people within the next five years, adding that if that is done at the rate of N3000 that would amount to huge premium income for the industry.

He noted that it is a national duty that insurance companies give the public financial protection which is presently lacking in the country.

The Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo-Iweala, at the insurance summit has also highlighted on the challenges that AXA has to deplore its expertise to tackle so that it can make significant in road in the market.

According to her some of the challenges are lack of consumer trust, fragmentation of the industry and general shortage of skilled professionals.

She noted that if the potentials of the industry must be harness, the challenges must be tackled head-on, adding that due to lack of consumer trust, many Nigerians are sceptical and hold a negative perception of the industry.

She said: "Low enforcement of compulsory insurance: I would want to touch on the low levels of enforcement of compulsory insurance in the country. And in this case, the regulator and most of our government agencies have more work to do.

"If you take the case of compulsory motor vehicle insurance (third-party liability), only 1 in 8 Nigerian cars (13 percent) have genuine insurance. Compare this to Ghana, where the compliance rate is reportedly about 60 percent. Or take the case of mandatory group life insurance for large businesses and organizations; again only a few large corporate in the oil and gas sector, the Federal Civil Service and the Police Service are compliant. Many of our CAC-registered businesses do not comply with the law.

"Shortage of skilled professionals. There is also the third problem of a general lack of skilled professionals in the industry – from underwriters, to brokers, to regulators and so on. Am informed by NAICOM that we currently have less than 10 professional actuaries in the country! This is grossly inadequate for the type of insurance industry we want to build in Africa’s largest economy.  Lessons from Banking and Pension Reforms"

 

ABOUT AXA IN AFRICA

AXA´s presence in Africa consists of operations in Cameroon (#4 in P&C with 10 per cent market share and revenues of Euro 19 million), Gabon (#5 in P&C with 14 per cent market share and revenues of Euro 23 million), Ivory Coast (#5 in P&C with seven per cent market share and revenues of Euro 16 million), Morocco (#3 in P&C with 16 per cent market share and revenues of Euro 250 million; #5 in Life with 10 per cent market share and revenues of Euro 71 million), Senegal (#1 in P&C with 17 per cent market share and revenues of Euro 18 million), as well as greenfield operations in Algeria (ca. one per cent market share In P&C with revenues of Euro 11 million and nine per cent market share in Life with revenues of Euro 7 million).

ABOUT THE AXA GROUP

The AXA Group is a worldwide leader in insurance and asset management, with 157,000 employees serving 102 million clients in 56 countries. In 2013, IFRS revenues amounted to Euro 91.2 billion and IFRS underlying earnings to Euro 4.7 billion. AXA had Euro 1,113 billion in assets under management as of December 31, 2013.

The AXA ordinary share is listed on compartment A of Euronext Paris under the ticker symbol CS (ISN FR 0000120628 – Bloomberg: CS FP – Reuters: AXAF.PA). AXA’s American Depository Share is also quoted on the OTC QX platform under the ticker symbol AXAHY.

The AXA Group is included in the main international SRI indexes, such as Dow Jones Sustainability Index (DJSI) and FTSE4GOOD.

It is a founding member of the UN Environment Programme’s Finance Initiative (UNEP FI) Principles for Sustainable Insurance and a signatory of the UN Principles for Responsible Investment.