The Nigerian insurance industry is seeing an increased consumer appetite for health, life insurance and other related policies in the wake of the COVID-19 pandemic and associated economic uncertainties.
The drive, industry analysts say, is connected to many people becoming more aware, and now willing to manage their financial shocks, critical illnesses and other negative impacts of the pandemic that was worsened by inflation.
Enhancing Financial Innovation & Access (EFInA), in its Access to Financial Services in Nigeria 2020 Survey, observed that about three out of five adults experienced a financial shock or an event that had a large negative impact on their finances in the past 12 months, mainly driven by medical emergencies, inflation and impact of the COVID-19 pandemic.
According to EFInA, out of 2.1 million insured adults in the new microinsurance scheme, most consumers focused on health, auto, life and education policies.
Ganiyu Musa, chairman of Nigerian insurers Association, said there had been a surge in the demand for health, life, asset protection insurances since COVID-19 and EndSARS crises in Nigeria.
Musa said many people had seen the need to protect themselves and their loved ones with insurance solutions that enable them to plan for the future.
According to him, the market is responding to the development by creating more awareness on the benefits of having insurance, particularly at difficult times.
This development, according to most insurers, is what is driving their new quest to have health insurance subsidiaries in their bucket of operations.
However, analysts at PwC say as carriers (insurers) navigate from their initial response to a longer-term strategy, they will likely need to adjust their approach based on shifts in consumer behaviour.
“Financial stress correlates with dissatisfaction – but insurance carriers can improve customer satisfaction by introducing alternative pricing, bundling plans and, of course, upping their digital game,” they said.
EFInA said out of the 2.1 million microinsurance policies sold, demand for health insurance (medical and critical illnesses) accounted for 45 percent of the total issued policies in Nigeria, while life insurance accounting for 17 percent.
Auto insurance (car/vehicle, motor bikes insurance) accounted for 16 percent of the total issued policies, while education plan for children accounted for11 percent.
EFInA notes that lack of appropriate information on insurance and low levels of trust in insurance institutions are major barriers that has dragged uptake and usage of insurance
It, however, highlighted the various demand side and supply side challenges hindering uptake. For the demand side, it listed weak customer value proposition and products bundling, challenges during claims settlement, superstitious beliefs, religious reasons, and lack of trust in micro pension scheme.
On the supply side, it listed inadequate/inefficient distribution channels, high cost of microinsurance scheme, insufficient profiling and understanding of the Nigerian microinsurance market, as well as no testimonial marketing.
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According to Biodun Adedipe, lead consultant at B. Adedipe Associates Limited, what customers of insurance need is peace of mind, and they will be willing to pay for a solution that gives that.
“The fundamentals of excellent customer service include a clear understanding of who your customer is; the problems that customers want you to solve for them; how, where and when they want those problems solved; what they are willing to pay happily for the solutions offered and how much they value your relationship with them,” he said.
The National Insurance Commission (NAICOM) has continued its drive towards financial inclusion and deeper market penetration with the licensing of six microinsurance standalone players, and a few window operators. It has expanded focus on technology to boost access to insurance.
“We are exploring ways to take insurance to where the other financial sectors are or even surpass that mark, as financial transactions are more of a one-stop shop for everything and it is either we key in or we lose the business to more innovative outlets that will seize it from us,” Sunday Thomas, commissioner for insurance, said.
He said the commission would be unveiling a sandbox to give room for innovative expansion of insurance reach.
Thomas said the web aggregators’ guideline recently released by NAICOM was aimed at opening access to insurance and a means of creating a convenient market for insurance.
He added that it had also led the industry’s investment in digital capabilities and automation, such as the launching of NAICOM Portal and the launch of the BimaLab Project.
The BimaLab Insurtech Accelerator platform selects, coaches and mentors insurtech firms, granting these firms access to FSD Africa BimaLab Grant Fund in developing innovative business solutions focused on solving compelling economic or social problems, Thomas said.