Mr. Val Ojumah is the Managing Director of First Life Insurance Plc. In this interview with Ebere Nwoji, he spoke on his company’s experience in the insurance sector, the future of life insurance in Nigeria, among other issues. Excerpts:
Your company, First Life Insurance, is a life insurance specialist but recently ventured into general business having taken over Oasis Insurance , what is your experience like in the two classes of business which you are into now, and how will you compare the two?
If you look at the history of insurance in Nigeria, it actually started from life assurance. American insurance among the earliest insurance firms cut their teeth from life insurance, not general insurance. Over time, we got inflation, and because of certain level of malpractices that are inherent in business, the growth of life insurance actually became negative and because of compulsory insurance on general insurance products, a lot of people moved from life assurance into general insurance.
Today, the reverse is the case. Many have come to realise that the new growth potential in the industry is in life insurance business. Now, you see that a lot of companies that left life insurance before, because they are not making enough money, are gradually coming back because that is the future of insurance industry in Nigeria.
So, we are very confident that life insurance in Nigeria is the way to go and the future of insurance industry in Nigeria.
First life Insurance, five years back, kind of compelled the industry regulator, National Insurance Commission. (NAICOM) to issue fresh license to it even when there was a kind of embargo on issuance of license with a promise that it would set a pace in the industry in a way that will justify such a move, how far have you proved yourself in this regard in this five years of existence?
Very clearly, I think NAICOM has used FBN Insurance as a company that has made a difference in the industry in our short lifespan. Practically, everything NAICOM is doing today, we, as a company, are actively involved in it. So, they are very proud of what we have been able to do, we have utilised the resources of our owners, the technical ability and the experience of Sanlam Group, who has been in the business of insurance in South Africa for over a 100 years. We have also utilised the resources of FBN, especially with over 10 million strong customer base and nearly 750 branches nationwide to actively make a point, that insurance business can indeed make money in Nigeria.
The regulator would be happy it issued fresh licence to this company, in over 20 years and because of our achievement, NAICOM is now prepared to do more of that for new entrants to be part of insurance as a business.
As a subsidiary of a bank, you supposed to be in love with ban assurance, what is your feelings about scrapping of bancassurance in Nigeria by the CBN?
As you are aware, we pioneered bancassurance in Nigeria and for obvious reasons, because it was a reserved growth area on our plan. Over time, everybody know that as a distribution model, bancassurance is the important way to go. So, everybody started to follow what we are doing and that is when CBN decided to regulate the practice. Yes, there is a new regulation from CBN and the industry is awaiting also a similar regulation from NAICOM and we think before the end of this year that will be released. In harmony with CBN regulation, the industry will again start a vibrant Bancassurance practice in Nigeria.
In your five years of operation as an insurance company in Nigera, what positive impact have you made to the general development of the nation’s economy?
We have over 200 staff and 1400 sales agents. So, I am very proud of the fact that we have been able to provide employment directly to over a 1,500 people and that we have provided living for over 2,000 people. So, my pride is the fact that we have supported government drive to provide employment for millions of Nigerians . Over the last five years, we have focused on insurance. Today, we have over 200,000 people paying premium regularly in our products. As you are aware, we pioneered micro insurance, through which we are able to bring insurance to people who otherwise did not thought about insurance before.
We have successfully been paying dividend to shareholders since 2012, this is achieveable because of the commitment of the employees, stakeholders and the parent company, FBN and Sanlam Group. Together, we have been able to change the landscape of insurance in Nigeria and we are very proud of where we are and where we are going to.
So what is your experience in micro insurance like?
As you are aware, insurance is not really part of our culture in the country, this is something we are working together from the regulator and the operator. From my study, I know insurance is more important for the poor than for the rich. With penetration under one percent, you can understand why insurers can measure with their counterparts in banks and other lucrative sectors.
So, we are working to grow the business, to increase insurance awareness to the public and to make sure that the general population discoverd the value in insurance.
What are your plans on how to push your various micro insurance products among Nigerians?
From day one, we recognised that the large proportion of our population don’t buy insurance. So, we have come up with what we called penny products that enables the ordinary person to buy insurance at just N2,000 even before the regulator came up with micro insurance policy. As a company, we recognised microinsurance to this economy. That was equally the motivating force why we go into mobile insurance. As you are very much aware, there are more than 100 million mobile lines in Nigeria.
So, the easiest way to reach them is through mobile insurance, because large proportion of the populace fits into these products. This is growth area and an important area.
Can you shed light on your financials in the past three years?
For instance, in 2012, our Gross Written Premium was below N2 billion, and operating profit was within 200 million. Gross Written Premium in 2014 in the Life business is N7.3 billion, while the operating profit was over a billion Naira. Our return on equity also rose 24 per cent. And this year, we are maintaining the same returns on equity. Our Gross Premium forecast is N10 billion for 2015. Our aim is to give good returns on equity as well as grow gross written premium. We are second in the industry in terms of efficiency, our operating cost, income ratio is one of the best in the industry, hovering around 22 to 25 per cent, while others in the industry is around 76 per cent.