Coronation Research has urged the Nigerian Communications Commission (NCC) and Central Bank of Nigeria (CBN) to use the existing technology platforms to boost the growth and acceptance of insurance in the country.
The firm tasked the regulators to position the sector for radical growth, as it is important for the National Insurance Commission to partner counterparts in the telecommunication, banking sectors and apply the technology that transformed the duo to reach the industry’s potential.
Head, Coronation Research, Guy Czatoryski, who disclosed at the NSE insurance sector forum, expects NAICOM to consider the lessons learned in Asian markets, and also in West Africa, which shows how insurance can be rolled out to tens of millions of customers.
He said, “NAICOM can reach out to the 38.5 million bank depositors with Bank Verification Numbers through the CBN and the 172.9 million telecoms subscribers with the support of NCC. It won’t be a bad start for distributing insurance with Telcos.
“Nigeria has achieved great things in financial services. Pension Fund penetration is an example, with the total assets under management of its pension funds growing, in real terms, at 9.8% between 2008-2018 and taking the proportion of the population covered up to 4.3% and rising.”
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According to him, insurance or microinsurance can be hand out for free as such will help overcome the initial objection people have to pay for something that they do not understand and may not trust as practised in other markets.
“In India, Bharti Airtel, a telecom company, offers free personal accident insurance to customers of its online payment bank, Airtel Payments Bank. The customer’s mobile number is his/her account number, cash withdrawals and deposits are possible through merchant partners, and an online debit card is available through a partnership with MasterCard. Customers receive free accident insurance cover.
“In Pakistan, U Microfinance Bank, owned by the Pakistan Telecommunications Corporations, entered into a partnership with MicroEnsure Pakistan to launch an insurance product for bank customers in 2018. Customers with a minimum level of deposits in their business current accounts were offered free life and permanent disability cover,” he added.
Appreciating Coronation for the insights, Chief Executive Officer, NSE, Oscar Onyema, also urged NAICOM to explore the opportunities across both banking and telecommunication industries.
He said, “The Nigerian Insurance industry has grown remarkably over the years, generating a Gross Premium Income (GPI) of ₦448.6 billion in 2018, reflecting a 12% growth from 2017. The industry also recorded an increase in its asset base by an estimated sum of ₦1.3 trillion as at December 31, 2018, reflecting a 17% Compound Annual Growth Rate over the last three years.”
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According to the National Bureau of Statistics (NBS), Onyema added that the Insurance sector recorded a nominal growth rate of 6.69% and a real GDP growth rate of 3.96% in Q3 2019 from 4.48% in Q2 2019 and 1.03% in Q3 2018.
“Although this data indicates a positive outlook in the Nigerian insurance industry, the reality and headwinds faced by operators in the sector are quite formidable. Many licensed insurers are largely undercapitalized, thus limiting their ability to take on big-ticket in-country risks, as is often required in the oil & gas, marine and aviation sectors. 2As at Q3 2019, the insurance sector contributed less than 1% to the Gross Domestic Product (GDP) of Nigeria,” he added.