|Mr. Tope Smart
MD, NEM Insurance Plc
In this interview with the Managing Director, NEM Insurance Plc, Tope Smart, he says even though many people now believe in the nation’s insurance industry unlike before, the government need to enforce compulsory insurances while the burden is on insurance operators to make people understand the benefits of insurance, among other issues: He spoke with SOLA ALABADAN. Excerpts:
NEM Insurance Company recently moved into its new head office the Nigerian insurance industry can be proud of, how has this edifice impacted on your company?
First and foremost, I will say it is good to have a structure of this nature.
We are talking about the level of impact this building has had on NEM and on the industry. We have to look at it again from the industry angle; it has actually impacted on the insurance industry not only on NEM because since we commissioned the building, we have been receiving several visitors. And many of them have been surprised that the insurance industry that many of them have written off is making progress, particularly with this kind of structure in place. So, I will say that NEM has benefitted and the entire industry too has benefitted. I recall that some people working in the industry came here; they said that they have never believed in the industry but that with this structure, they now believe that there is a great future for insurance industry.
How will you assess the Nigerian insurance market at present and the industry five years ago in terms of operations, manpower, among others?
I think the industry has moved from where it was five years ago and there are a lot of potentials in the industry. There are so many issues concerning the industry.
The first issue was that of confidence; you know the level of confidence in the industry is totally different from what it used to be before. The level of confidence has risen and to that extent, so many people now believe in the industry. You will agree with me that the industry has improved by way of response; response to some of the big claims which is in billions of naira that happened in the last five years. And that gives a kind of confidence in the insuring public that of course they now believe in the industry. About four to five years ago, some of the businesses that were taken abroad, have come back to Nigeria because of the kind of response that the industry gave to claims payment.
Having operated in the industry for many years, what is the focus of NEM now and where is the company going from here?
NEM has always been a responsible, reliable and faithful company to its clients. What NEM symbolises is excellence by way of our commitment and our response to claims. So, I will say, though we are not yet there but NEM is evolving and our focus is to be one of the top three insurance companies in Nigeria and we are working towards that. There is a lot of prospect and the potential. We have reengineered our operations and we will continue to do that and we have tried to differentiate our brand from others through our attitude and through our character and all these combined together have differentiated us from other brands in the market.
In terms of products, where is your niche market?
Well, I will say NEM plays in every sector of the economy, we are quite at home with all the various sectors of the economy and to that extent, we are doing well in virtually all these products.
Is it motor insurance we are talking about, is it general accident, fire and if you look at the statistics, you will agree with me that we are doing very well with all these products. The area where we are actually looking at to put more efforts to grow than where we are and that is the area of oil and gas. We are deploying a lot of resources to get a good proportion that we feel will be in the interest of NEM.
Market watchers say the industry is fragmented and that there is need for consolidation. Is NEM considering mergers and acquisitions?
People have been talking about consolidation. Why not? The bigger the better. NEM too is looking at that direction towards partnering either by way of acquisition or merger. We are looking at it. We believe that it improves on the entire industry.
Do you feel threatened by the foreign investors coming into the nation’s insurance industry and the fact that more are still coming?
We are not threatened. As a matter of fact, it is good competition because you will then be able to separate the boys from the men. So, it is a welcome development.
The contribution of insurance industry to the nation’s GDP is not significant at present, how do you think the industry can improve on this?
Our contribution to GDP has been very insignificant. Having said that, don’t forget that the pension which is part of the insurance industry was taken away from the industry. If you look at other markets globally, pension is part of the insurance industry and if you add what they are doing now, it would have added to the contribution of the insurance industry. So, we would have done more and our contribution to the GDP would have been more significant.
However, there are still so many issues concerning the industry. There is the issue of confidence and level of awareness. We still need to do a lot more in terms of awareness. Awareness is not about illiteracy. People who are even literate including the professors still don’t know the benefits of insurance. So, we still have a lot to do in that area by trying to let people realise what they can derive from insurance. For instance, somebody who has spent about N5 million to acquire a car will not want to pay 300, 000 naira or 200, 000 thousand to buy insurance and protect their investment in that car. He will tell you he does not believe in that. He will rather get third party insurance which is the minimum requirement by the law.
Another area is government itself. Government need to believe in the industry and contribute to its development.
If you look at what obtains in other parts of the world where there are compulsory insurances and government create an enabling environment where it ensures that people comply. They enforce the laws. In Nigeria, enforcement is the problem and without enforcement, premiums are lost to fake insurance.
Don’t be surprised that a lot of people still carry fake insurance certificate of non-existing companies like Lion of Africa, ACEN, vigilant insurance, etc. and it is because there is no enforcement and nobody bother to look at that area. So, you will discover that a lot in money is being lost and until government comes in to actually enforce these laws, we will continue to lose money.
For instance, look at the area of group life. Government has tried to an extent by saying that you must have your group life certificate to do a lot of things as a company. They are enforcing it through the National Pension Commission (PenCom). If government can do this in the area of motor insurance, building under erection and other products, it is going to bring a lot of income for the industry and the Nigerian economy.
PenCom has been able to do it because of their close relationship with government and they have been able to get the buy in of government. But insurance, the Nigerian Insurers Association (NIA) cannot do it alone because it cannot bite. So, we have taken it up with our regulator and we are hopeful that there will be a change.