INSURANCE

Nigeria 2018 | FINANCE | B2B

Despite the massive potential in the local insurance sector given the low penetration rate, companies do not expect to see much progress without efforts to raise greater awareness.

Ganiyu Musa
GANIYU MUSA
Group Managing Director & CEO
Cornerstone Insurance
Funmi Omo
FUNMI OMO
Managing Director
African Alliance Insurance Plc.

Can you provide a brief overview of your operations in Nigeria?

GANIYU MUSA We seek to play a much larger role in the industry, so, naturally, we must look at two different parts: organic growth or acquisition. Starting in 2011, we began searching for appropriate partners that would fit in terms of financial synergies and culture. Fin Insurance added significant complements to what we were doing. We have been interested in takaful insurance and partnering with Fin will give us the necessary exposure to the Northern market. Additionally, one of the major problems in the industry is distribution, and bank insurance is a major component of our retail strategy. We had the first full year of joint operations in 2016, and our business combination is playing out exactly as anticipated. We have increased our footprint across the country, improving synergies.

FUNMI OMO African Alliance Insurance Plc. is the first indigenous life insurance company in Nigeria and is well over 50 years old. It is wholly owned by Nigerians. We only do life insurance and have a variety of products to cater to all ages and groups of the society. We pioneered takaful in Nigeria, and it has done well. We are also pioneers in the field of micro-insurance, particularly the adaptation of Esusu, our indigenous savings product into life insurance. Therefore, that product is a combination of life insurance and savings targeted at the micro level. African Alliance remains at the forefront of innovation in the life insurance business, and we control a reasonable share of the market. We are one of the leaders in Nigeria's annuity market as well.

How would you assess public awareness of insurance?

GM Awareness is still relatively low, though it is improving. The majority of the general public is not even aware that it can use insurance as a coping mechanism for some of its financial and social conditions. Unfortunately, raising awareness costs a great deal of money. Fortunately, the industry has sought to correct this with the help of the government and through private initiatives. We need collaborative efforts because the benefits of insurance go far beyond the industry. The government is working hard on financial inclusion and insurance is a key part of that package. Those who need insurance the most are the ones who are not even aware that they need insurance, ironically. Clearly, the government has a major role in improving insurance penetration.

FO Nigeria's rural poor is not aware of the benefits of insurance and does not see insurance as a need. We need to educate people and change their mindsets. Unfortunately, the sector has not had much encouragement from the government. The public sector is supposed to be the largest spender in the economy; however, even the government puts insurance spending last. It is important that we are able to work with government agencies, as well as come together as an industry. We cannot improve penetration if we are unable to create awareness of insurance, but a single company cannot do it alone. However, we can still do our bit when we pool our resources together and communicate with the public to get people interested in insurance.

Where do you see the industry moving?

GM We can only go in one direction when we have penetration of less than 0.5%: up. Our economy is the largest in Africa, and we have one of the largest populations on the continent. Fortunately the federal government has recognized the power of insurance and focused a great deal of attention on improving the industry. There is a great deal of upside potential in the industry, and this is proven by the amount of activity in the segment.

FO If we continue at this same pace, there will not be much development. I still see the potential in the insurance industry over the next few years here. There is great room for development and expansion, though as a body we need to rise up. We are not putting enough resources together to apply pressure in terms of penetration and where we should be. We keep talking about the potential because we have the population base, but it is necessary to be able to turn that potential into something productive.