In this interview with NIKE POPOOLA, the Managing Director, NEM Insurance Plc, Mr. Tope Smart, speaks on why upcoming entrepreneurs should inculcate insurance into their operations
What are the things that can be done to increase insurance participation?
The penetration level of insurance is very low in Nigeria and all over Africa. In Nigeria, it is quite worrisome because the penetration level is less than one per cent and one of the things we are trying to do is to take insurance to the grassroots.
One of the products we have designed in NEM is the rent assurance, and we have some other products that have a general appeal to people at the lower cadre so that everybody will be able to have and afford insurance.
Some people say they are unable to buy insurance because they don’t have money but we have made some of these products affordable such that even an average man on the street can afford to buy them. These products are retail in nature and we take them to the grassroots and they have general appeal. That is one thing we have done.
Additionally, we are trying to sensitise the public because over the years people have a general apathy towards insurance because they believe that their claims will not be paid. We have improved significantly because of payment of claims and, we are trying to create more awareness by publicising some of the claims that the industry has paid so that some of those doubting will be able to say now that they have an assurance that insurance companies in Nigeria pay claims.
What are they major things increasing claims portfolio in the general business?
Oil and gas is quite good but it can be high. Claims don’t come in quickly from but when it comes, it is very volatile; the same thing too with aviation. But for us in NEM, it is a question of the product lines. We usually have highest income from motor insurance and expectedly too, that is where we pay our biggest claim. So it is a structure of the premium line that we sell.
How can the industry develop the micro insurance market?
We have just started and we still have a long way to go. For instance, I attended a conference on micro insurance in India and they have several products. You will discover that many of those products are tailor made to meet the needs of the clients in that environment.
Some of them may not really meet our needs when we look at the peculiarity of the Nigerian environment, but I believe that we have started something. One good thing about this micro insurance is that it is taking us back to the basis.
Over the years, the insurance industry had more or less neglected some of these small products that meet the needs of every man on the street. By this micro insurance, we are going back to look at some of these products and see the products to design for the average man on the street.
I believe that with the kind of environment that we find ourselves now and with the kind of regulation that we are having; in the very near future, we will be able to have some of these products that have a general appeal to the members of the public.
How can insurance be used to solve problem of incessant market fires in the country?
Anytime it happens, the loss is always severe. Many of the traders do not have insurance. At the time of major loss, many of them cry because they have nothing to fall back on.
There is the need to appeal to traders to take insurance to curtail some of these losses so that all of them, no matter how small can buy insurance to take care of such when it happens because it may or may not happen. But when it happens, you will have something to fall back on through financial compensation.
Many of the traders are not aware of insurance but some will say nothing will happen. So they need to inculcate insurance in their day to day operations and have a rest of mind that if anything happens, they will have something to fall on.
What are the kinds of insurance policies an upcoming entrepreneur needs to take?
For such entrepreneurs, they need to be educated on the benefits of insurance. For instance, for a young entrepreneur, you will want to advice that fire and burglary insurance are very important. If anything happens to their warehouse and goods, they will be able to get something. I think they need to be aware and educated about insurance to guard against the future risks. For some of these small entrepreneurs, if anything happens it may send them completely out of business if they don’t have insurance but insurance will help them to come back to their business.
Do people take insurance every time they get loans from lending institutions?
Where loans are granted, the institutions will always insist that insurance must be in place to take care of those products. However in Nigeria, the loan is not available to many of the young entrepreneurs. So it is like a struggle, but despite that; it is always very important to protect their business against any unforeseeable loss. No matter how small, they should have it at the back of their mind that their business setting is not concluded until they have taken up insurance product to cover their operations.
How affordable is it getting insurance for small businesses when seeking for loan?
It is not expensive, it is just that many of them are unable to access the loans because of some of the conditions that some banks demand and because of this, many of them don’t have the loans. So they just struggle to put their savings together to start their business.
Maybe one of the things we can do is to appeal to the government to tell the banks that they need to support business and one of the ways is by making it to be very flexible for people to access the loans. From small beginnings, they can begin to do their business and before you know it a business that started with N10, 000 today can grow to become N1bn tomorrow.
What is the normal claims process a policy holder needs to follow?
What the claimant needs is to submit all documents to his insurance company or broker if the broker is involved. Insurance companies don’t ask for the impossible. They just want you to substantiate that you have suffered a loss by making available some of the documents to your insurance company or through your broker. Once insurance companies are able to verify your loss, your claims will be paid.
How has the no premium no cover law impacted on the industry?
It is a very good policy and one of the best that has come out in support of the industry. It has really eliminated credit because before its enforcement, people would come and do insurance without paying. It has boosted our liquidity and through that, we are able to pay claims as at when due.
What should the public know about insurance?
My advice is for them to test insurance companies and most importantly, they have a regulator. If they take up insurance and if there is any complaint, they have a regulator to intervene on their behalf.
Recently, some Nigerian insurance firms were recognised for good performance in Africa. What has the sector done to stand out among other counterparts in the continent?
Insurance level is increasing in Nigeria though we are still evolving. I believe that with the kind of structure that the industry has especially the operators and the regulator; it has enabled the insurance sector to grow. The premium of Nigerian insurance industry is growing yearly and the level of confidence is improving.
Also, in an attempt to grow higher, you will discover that every company in Nigeria is trying to be creative, trying to create new products that will make their products to be more acceptable to members of the public. Everybody is doing one thing or the other and that healthy competition has enabled the insurance industry in Nigeria to step up. That is what accounted for the recognition Nigeria insurers got.
How was NEM’s last financial performance?
There is improvement over what we did in 2013. All the indices were quite positive. Our gross income grew by about 10 per cent and our bottom line grew by over a 100 per cent, and we are hoping to improve on that.
How will your new office boost your operations?
We intend to leverage on our building which has a lot of facilities, than where we were before, and we intend to use this facility to better the lots of our clients to improve our services to them. We believe that once they are delighted, they will always want to come back and through that get referrals from our clients.
What are the innovations coming from NEM?
At the moment, we are doing a kind of research to get some products that will be to the benefit of our clients. We want to delight them because a satisfied customer is somebody who is always delighted to come back, and one of the things we are trying to do in NEM is to have a customer service centre that will be open for 24 hours and people can easily access them and get their complaints across to them to get solution to their problems.
How have you been able to sustain dividend culture payment every year?
Our policy is to delight all our stakeholders and one of our critical stakeholders is our shareholders. And, we are going to ensure that they get returns on their investments.
We have done everything possible to ensure that year in year out, we delight them by way of rewarding them because they have been there and are very loyal and have been there with us over the years and we want to ensure that we give them adequate dividend every year.