The former president of the Nigerian Council of Registered Insurance Brokers, Chief Babajide Olatunde-Agbeja, says lack of punitive measures, delay of claim payments and ignorance on the part of the insuring public are responsible for the low penetration of insurance in Nigeria. In this interview with ABIOLA ODUTOLA, the Chairman of Boff & Co insurance broking firm, outlines how the Federal Government, operators and the general public can join hands to transform the sector. Excerpts:
The insurance sector is over 100 years old in Nigeria but there is still low penetration. What can be done to address this development?
There is no doubt that the sector has not penetrated the nation as one should expect. When I was the president of the Nigerian Council of Registered Insurance Brokers in 2005, that was my cross. I made sure that we talked about insurance to anybody who cared to listen and in particular, insurance broking. I am still a board member of NCRIB and I still sing it to them every year that they must have a programme in place to educate and enlighten the public. During my tenure, we had a radio programme, sponsored by different insurance companies. During this programme, I was amazed on how Nigerians reacted to insurance. Some would call us thieves, day light robbers and 419 but I patiently explained to them. To penetrate further, we all have to keep singing it as a song till the public accepts it.
What are the factors responsible?
Prompt payment of claims. The greatest advertisement any insurance firm will have is prompt payment of claims. It is easy to ask for money from the public but operators find it difficult to settle claims. That alone scares people from the sector and it should not be but things are changing now.
For instance, an insurance broking firm, Boff & Co paid aviation claims within five months, instead of the conventional two or three years. The insurance industry in Nigeria now pays faster than their counterparts in London.
As an insurance broker with 35 years’ experience, how can delay of claims payment be addressed?
Claim processing has been a major challenge in the industry. What most insurance company do not understand is that one satisfied customer is better than spending fortunes to advertise your company in the media. Claim processing can be simplified because people who trust you with their premium want their claims to be paid as soon as possible. They do not want to hear stories or excuses from you and a lot of insurance firms are used to telling stories on the reasons the claims cannot be paid early. Once there is a claim, the firms should find out if there are no traces of fraud and once that is confirmed, claims should be settled immediately.
National Insurance Commission introduced a new regulation that would allow insurance firms and broking to manage the affairs of companies for a maximum of 10 years. What is your take on this?
Such directive can work in the business, conglomerate sector and public owned companies but not in a professional based sector like law, architecture, engineering and insurance broking. It cannot work because the older you are, the more mature you will become. Why will you say someone in this sector should go home and sleep after 10 years? That can be tested with the non-executive directors but not managing directors.
Recently, FG said some insurance policies have become compulsory for the Nigerians. What is the level of compliance?
The compliance level is still low and that is because there are no punitive measures attached to the directive. The fortunes of the insurance sector will improve if compulsory insurance could be enforced. We appeal to FG to ensure there are punitive measures that are attached to define these compulsory insurances. This will ensure a win-win situation for all stakeholders as claims will be paid to victims of accidents, especially third parties. This is not about insurance companies but the insuring public.
How will this affect the insuring public?
There are several cases of building collapse that affect third parties because the houses are not insured. Who pays for burial or take care of the children and wives of the deceased? If there are punitive measures attached, owners of buildings will insure their properties and insurance companies will pay claims and take care of the bereaved.
From your experience, do you believe most of the multi-nationals in the country comply with the compulsory insurance?
The multinationals comply with compulsory insurance because they can afford it. Also, they deal with FG and it has a way of cross-checking their documents when they bid for contracts. They submit their group life policy, third party motor policy, among others. It is the ordinary member of the public that do not comply. Out of about 14 million cars in Nigeria, it only about 4 million that are insured. That is because Nigerians believe they are donating money to the insurance companies if they buy car policy at N5,000 but that is not true because if the vehicle has accident, the firm will pay third party liability up to N1 million.
What are your expectations from the President Muhammadu Buhari-led administration in terms of regulation in the insurance sector?
I expect the FG to pass a law that allows brokers only to handle all insurances in Nigeria, which will benefit the insuring public greatly. I have had several complaints from the public about their dissatisfaction over their settlement offers. People patronise non-brokers due to ignorance. They do not understand that using a broker guarantees you a good analysis of your portfolio, processing of your renewals and claims settlement. This will be similar to what is obtainable in the Nigerian capital market, where it is only the stockbrokers that are permitted to trade on shares.
But the insurance brokers will also benefit greatly from this?
No, it is not that we are looking for jobs or will benefit from it. Brokers are consultants that fight cases of their clients permanently for free. They do not get paid by the insuring public but from the brokerage fee of policies. Brokers can also get their clients about 10 per cent discount or more from their fleets, which they do not know and either the insurance firms or agents disclose this fact. Brokers know the firms that are outstanding across different fields of clients’ interest. We do not put clients’ eggs in one basket but we spread them. We know the firms that are good in life, fire or oil and gas, among others. Which ever line of business our client does, we know the best firm to approach. So, if we are that good, why should the public patronise companies (insurance companies) that want to maximize their profit leaving the professionals that serve them for almost free. If the law is passed, it is to the advantage of the general public.
What is your message for the up and coming insurance brokers?
First of all, they must be people of high integrity because broking is about integrity. The business is about asking the public to trust you. Why should they trust you? Action speaks louder than voice. Brokers must carry their customers along in every process and ensure they personalise their services. If that is done, such customers will advertise their company to his friends and loved ones. They should do it right so that the system can throw them up as a success.