Sector Sustains Losing Streak With N20b In Mobile Insurance
There seems to be no end to the insurance sector’s losses, as an estimated N20 billion yearly expected premium from mobile insurance may have been taken over by network operators, which now sell insurance products and also receive claims through mobile phone across the country.This,The Guardian learnt, was a consequence of non-concrete agreement between the Nigerian Communication Commission (NCC) and the National Insurance Commission (NAICOM).
The development, which has not allowed a compromise to be reached on licencing of players between the telecommunications operators and insurance sectors, is now challenging the use of mobile phones to deploy insurance products and services to the public to generate more income for both agencies.According to findings, it is limiting the capacity of insurance companies to effectively deploy micro insurance products through mobile technologies, thereby, leading to low insurance penetration and calculable losses to the tune of N20 billion yearly.
The two regulators had last year, met to reinstate the sales of insurance through platforms of telecommunications companies, but the inability to finalise the agreement is currently taking its toll on the profitability of the insurance industry.While NAICOM intends to licence any telecommunications operator intending to operate in the insurance space, NCC wants to do the same to insurance companies willing to use telecommunications platforms to sell their products.
According to the Director of Public Affairs of the Nigerian Communications Commission (NCC), Tony Ojobo, who spoke with The Guardian on the development over the weekend, said there is no problem between NCC and NAICOM, because for Nigeria to buy insurance products through mobile phone, this is as good as someone opening an account with any bank via mobile phone.
He said it is also as good as making a hotel reservation through the same means, which is all about value added services, adding that NCC is not insurance regulator, but if NAICOM has a particular issue about that it should register its complaints with the NCC.
For stakeholders in the sector, until there is a concrete agreement between the two regulators, insurers cannot go ahead to sell micro insurance products through mobile phones, although, few underwriting companies have now resorted to using USSD to do so. They however, said the industry will continue to lose more billions on yearly basis, until the issues between the two regulators are amicably resolved and if finally, the embargo placed on mobile insurance in 2016, by NAICOM, is finally lifted, it would enable NAICOM-licenced telecommunications operators to ensure effective distribution channel for the sale of insurance products.
The commission had placed such embargo after observing that insurers were surcharged in the earlier agreement and demanded to licence any telecommunications outfit intending to sell insurance on its platform.NCC, on the other hand, demanded same from insurers willing to use network operators as a platform to sell insurance products, a development the brewed disagreement and the need to come up with a joint guideline to regulate mobile insurance business in the country.
Before the embargo was placed in 2016, at least 150,000 people subscribed to mobile insurance on a monthly basis, while several millions of naira of premiums were generated monthly, even though, only few underwriters were into it then.
The likes of FBNInsurance, Cornerstone Insurance, among others, were performing well in the market space, until the embargo, which meant they had to forfeit the earnings opportunities. The Group Managing Director, Cornerstone Insurance Plc, Ganiyu Musa, said the first phase of its mobile insurance product tagged “Airtel Insurance”, operated for 18 months, attracted about 4.7 million people who tried to register for the product, with 2.7 million subscribers succeeding, while about 1.8 million covers were purchased in the process.
“During that period, we paid about 329 claims on hospitalisation, and I think we paid about three claims on death,” he pointed out.Through mobile insurance, he believes millions of people would be persuaded to buy insurance products, thereby generating billions of premium.
The Chairman of Zenith Bank Plc, Jim Ovia, advised NAICOM to collaborate with NCC to increase insurance penetration through mobile phone technology.He said insurers have to intensify efforts in deploying micro-insurance products through mobile phones, noting that the sector could contribute up to 12.5 per cent to the nation’s Gross Domestic Product (GDP) by 2025, with the deployment of micro-insurance through digital technology.
He also urged operators to migrate from traditional ways of offering insurance, to embracing new methods of insurance, citing the innovative example of Prudential Life Insurance Ghana, which achieved 1.5 million policies in 12 months using mobile phone technology.
Ovia, who is also the Chairman of Zenith General Insurance Limited, disclosed that Prudential Zenith Nigeria, together with other insurance companies, are now ready to deploy micro insurance products through the use of mobile phone technology as soon as both the NCC and NAICOM collaborate and approve the strategy.The Commissioner for insurance, Alhaji Mohammed Kari, however, added that mobile insurance will not only deepen penetration to the mass of uninsured populace in Nigeria, but will reduce operational cost of insurance companies and make them more profitable.