Oldmutual says better to woo than force the insurance market

by Ignatius Chukwu

September 25, 2017 | 2:02 pm
  |     |     |   Start Conversation

Oldmutual Insurance Group, one of the biggest insurance companies in South Africa, has said that despite the very low insurance penetration in West Africa, it is still better to strive to woo customers than to apply force through laws and regulations. The insurance giant has conducted its business in Nigeria for close to five years.

Insurance penetration in Africa’s largest economy by GDP is under 1 percent, which is abysmally low when compared to 15.4 percent penetration in South Africa, 7.7 percent in Namibia, 3.4 percent in Kenya, and 3.0 percent in Morocco.

The low insurance penetration situation persists even though Nigeria has “the fundamentals for a thriving insurance industry” such as a vast population of over 180 million an active economy.

Oldmutual stormed Port Harcourt to fight for market share in the oil-rich region, offering unique products that may woo oil workers and others.

Zomunoda Chizura, the company’s group managing director (GMD) for West Africa, told BusinessDay in an exclusive interview at the Hotel Presidential in Port Harcourt Wednesday evening of September 20 2017 that it is risky to force citizens to take up insurance policies.

He said that persuasion is the best option for the sake of sustainability, adding that Oldmutual is out to bring about massive education as a strategy and tool for increased penetration.

One major challenge that experts have identified in the industry in the country has been product distribution and how to deepen penetration to the uninsured populace. So far, there appears to be only one well-developed distribution channel, the broker channel, which is said to control about 70 percent of total premium generation in the market.

And insurance firms and regulators in the country over time seem to have focused on this channel, to the detriment of the overall insurance industry. The retail segment of the market has been left largely untapped.

Chizura said: “I think for it to be sustainable, it has to be left to willingness. Regulations may help but in our company, we believe in solutions that attract people. Even before people are forced, they would see the benefits for themselves. For instance, if they see across generations that insurance can help, they will join. If my children see that insurance helped me, they would take up insurance. The solution is in talking to customers than compulsory insurance.”

According to him, West Africa has huge insurance opportunities. “We think the penetration of insurance in West Africa is much lower than other comparable economies,” he said. “It is less than one per cent in Ghana and in Nigeria compared with other countries such as South Africa where the penetration is more than 15 percent.”

Oldmutual is out to boost the Nigerian economy by creating a pool of savings now that the economy is out of recession, he said, as the company is set to grow with the economy.

“So, the West African insurance market offers a massive growth opportunity. The economy is improving in West Africa and we do see a lot of opportunities,” CHizura said.

On the plans for the Port Harcourt market, the Oldmutual boss said: “Port Harcourt is an economic hub because of oil; so Oldmutual has solutions to the oil sector and to the employees. We also have retail solutions. There is opportunity in every direction in Port Harcourt.”

Giving reasons for the low penetration, Japheth Duru, Oldmutual’s acting general manager in charge of general insurance blamed it on level of poverty, low per capita income of Nigeria and ignorance.

“We require the right education, the right campaign; mass literacy campaign to move people to understand the benefit of insurance. Insurance practitioners, operators need to take up this task. Some people think it requires millions of naira to get a cover. A customer can take a small amount of cover. It is just that education that is required to get the masses aware of the critical place of insurance in their lives.”

Speaking on measures to boost insurance in Nigeria, Keith Alford, the managing director of the group’s life business, said Oldmutual has already developed five financial education modules to boost awareness.

“Everybody wants to improve insurance awareness in Nigeria. It’s education that will do it. We have five modules to make people have financial education. It is about financial education to create awareness.”

He said protection is the driving strategy. This is aimed at making people realize that life insurance is about protection. “Everybody needs protection. To be a responsible head of a family, you would want to protect your family and take care of the risk. If they see it as a protection service, they will embrace it. There is the investment aspect of it. If they see products that help the pocket, it will motivate them too.”

The Port Harcourt branch manager, Leonard Oyinbo, said the region was a fertile ground for insurance business, saying the Wednesday event was meant to bring the insurable public face to face with Oldmutual leaders in West Africa to prepare grounds for more relationship.

Ignatius Chukwu

by Ignatius Chukwu

September 25, 2017 | 2:02 pm
  |     |     |   Start Conversation

Big Read |  


What Nigeria must do before signing AfCFTA

Nigeria’s President Muhammadu Buhari last Wednesday gave a hint that he would sign the African Continental Free Trade Area (AfCFTA)...

Top 100 (300 x250)

MTN Felele


Newsletter CompanyReport