Nairametrics| AIICO Insurance plc, one of the foremost insurance companies in the country announced that it is currently investigating fraud allegations against one of its staff. The company also mentioned that it had provided multiple payment channels for payment and renewal of insurance policies. Mutual Benefits Insurance, however, recently dispelled rumours of fraud by one of its staff.
This is clearly an industry wide issue. Insurance firms in the country need to borrow a leaf from their banking counterparts as regards their adoption of technology to check against incidences of fraud. Marketing and subscription of insurance policies are still being done face to face using retail agents. Failure to adopt technology means insurance firms will lose significant market share amongst the younger generation, who prefer to do financial transactions using tools such as mobile apps and USSD codes.
While the Nigerian Insurance Association (NIA) has embarked on enlightenment campaigns to educate Nigerians about the benefits of Insurance, a lot more needs to be done by the insurance companies. Nigeria has one of the lowest insurance penetration rates in Africa at 0.6% in 2013, despite having a population of over 170 million people.
If the insurance companies fail to move with the times, the coming wave of financial technology (fintech) companies will swallow up their market share – the same way banks have dominated the financial sector space for several decades in Nigeria. Insurance companies need to allocate more resources to fintech, as well as carrying out customer surveys. NAICOM the industry regulator needs to put in place policies that encourage companies to innovate, the same way the Central Bank of Nigeria (CBN) encouraged banks to go cashless.
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Point well made, the insurance industry has a lot to benefit from developing seamless channels of payment, through increasing use of modern technology. However, of particular importance is the nature of insurance business, “insurance products are sold, not bought.” Intermediaries (brokers and agents) also contribute to the development of the insurance market.
Insurance companies must deal decisively with erring agents to protect the integrity of the market, and also develop a strong KYC model that will enable them to own the policyholder going forward.