There are insurance companies in Nigeria that are painting the image of the entire insurance companies in the country black. These are the companies that are giving insurance companies in the country bad names.
But of the fact is that all insurance companies in the country are not the same. Many insurance companies in the country
are really doing well and have good reviews from their customers. Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss (Wikipedia 2019).
An average Nigerian will tell you that he will not use his or her hard earned money to go and buy insurance. He will tell you that he rather use that money to go and buy bottles of beer and consume them to his satisfaction than to go and invest the money in insurance. Such person sees the insurance companies in the Federal Republic of Nigeria as scam. He will categorically tell you that insurance is scam.
As a financial advisor in FBN Insurance, I have met with many people who have had bad experience with insurance companies in the country. Some of these people will tell you that if you do not have any other thing to discuss apart from insurance that you should not bother saying anything. Some Nigerian insurance companies have messed a lot of things up and this have been robbing some good ones.
In this article, I will be discussing some issues with some insurance companies in the country. These are crucial issues that make prospects disagree with buying some insurance services. Also, I will recommend few insurance companies that you can buy insurance policies from. They are tested and are doing well in the market. Also, possible solutions on challenges in Nigerian insurance companies will be discussed.
There have been progress in the recent time in products design in insurance industry of Nigeria. These are products that are designed to meet the needs of the policyholders. Unlike when Nigerians see insurance as what you buy to have life coverage and if the life insured dies, the beneficiary is paid claim, the recent products designed have gone beyond that. They are nice products and are affordable.
When I went to sell an insurance policy to an officer of a Nigerian Police Force in Delta State, he gave me complain that touched me after the close of the business I came for. He said that he bought an education endowment policy from Standard Alliance insurance company. He saved with the company for three years and then stopped paying his premium as of when due.
Because the minimum maturity time for the policy is 5 years, he waited for that maturity time. When it got to 5 years, he went to the company to make his claim. He was told he will be charged for not saving to the maturity time which is normal with insurance when the policyholder do not save all he suppose to save till maturity. He agreed that he get paid the supposed amount of money.
He was told that head office will issue cheque to the branch where he bought the policy. When that is done, he will be called to come over and claim the cheque. That was said to him by the branch manager of the office he visited.
Mr Alex who is the policyholder has waited for the cheque for over one year now but nothing has been issued by Standard Alliance Insurance Company. After the complain, I told him that I would write to the insurance company requesting for the cheque. Do you know that for up to two weeks from now, the insurance company has not respond to any of my mails. It is a problem.
Standard Alliance Insurance company of Nigeria has really failed many customers. The company has many negative reviews online and it does not tell good of them. The company has poor customer service relationship. The company is giving many other insurance companies in Nigeria negative reputation.
I personally took it to their Facebook page and I was surprised to see the comments of other customers having same issue. Some complained that their maturity benefits have not been paid to them for almost two years now. The staff that responded to the negative response said that the company has been handed over to new management.
My question is: can't the new management pay the people they have been owing for long? As of September 2019, I have not received any response from Standard Alliance on the payment of Mr Alex's maturity benefit. That is annoying.
The Company is jointly owned by FBN Holdings Plc (65%) and the Sanlam Group, one of the largest financial institutions in South Africa (35%) and it officially commenced operations on the 1st of September 2010. The acronym FBN stands for First Bank of Nigeria. FBN Holding Plc manages the invested part of the premiums paid by customers while Sanlam Group of South African is the one responsible for the risk management aspect.
With FBN Insurance, you as a policyholder can check how much you have contributed in your policy so far. You can do that using the FBNInsurance Customers App installed in your phone. Even when you have not received alert on any of the premiums you paid sometime ago, the customers App can help you do that.
Another good thing about this company is when it comes to customer service. Their customer service is sound and can reply to your mails within a short time. They are professionals when it comes to that. They give you direct answers when they write to you.
Claim making and maturity benefit payment is fast in FBNInsurance. This can be carried out within 8 days of application to make claim. You can be paid your maturity benefit when you send mail to the company using your email. That is to say you do not need to visit any branch of the company to make claim or be paid your money after maturity. Unlike some companies that will tell you to wait for cheque, FBNInsurance credits your account directly once you fill and send your maturity discharge form back to them.
LEADWAY ASSURANCE COMPANY LIMITED (‘LEADWAY’) is one of Nigeria’s foremost insurance service companies, with a reputation for service efficiency and customer reliability. For over 45 years, LEADWAY has honored its underwriting commitments and has earned its reputation of excellence in claims handling. The evolution of LEADWAY since 1970 has mirrored the dramatic expansion of indigenous insurance service providers, with LEADWAY remaining in the forefront as an insurer of repute.
The company is among the first set of insurance companies in Nigeria that first developed customers App. The company has large number of agents that are serious with their businesses. These agents work as team and are good in strategic marketing.
LeadWay Insurance Company Limited of Nigeria has positive reviews from her customers. A customer, Japhetick Chuks Eze, gave this testimony about the company "I have seen from Leadway that insurance is for real. I thank you Leadway Assurance. Kudos to you!” That is the spirit and if all insurance companies in Nigeria start doing what they are to do and do them well, the insurance industry will start having good reputation in the country.
Customers service relationship is very important for every company that wants to grow. LeadWay as an insurance company gets it right in this. You can even reach them via Facebook Messenger. The company also has customer App that runs in both android and iPhones.
Established in 1963, AIICO Insurance Plc (NSE Ticker: “AIICO”) is an insurance, pensions management, and asset management Group in Nigeria with market-leading positions in its key business lines:
Life assurance and annuity
General insurance and special risks
Pension management
Health insurance and
Asset management
AIICO commenced operations in Nigeria in 1963 as an Agency office of American Life Insurance Company (“ALICO”) – at the time, a subsidiary of American International Group (“AIG”). The Company was renamed American International Insurance Company Limited (“AIICO”) upon the acquisition of a 60% stake by the Federal Government of Nigeria, and later listed on the Nigerian Stock Exchange in 1990, after which both shareholders – the Federal Government of Nigeria and AIG divested (Sourced from the company's website). The insurance company has good management team.
Note: Other life insurance companies in Nigeria includes Mutual Benefit Life Assurance Company, Old Mutual Benefit Assurance Company, Custodian Life Assurance Company, Ensure Insurance Company, ARMS Life Insurance Company, Royal Prud Life Assurance PLC, Cornerstone Insurance PLC, and AXA Mansard Insurance PLC
Insurance penetration in Nigeria is low and that is negatively affecting the industry. The low standard of living is a major reason for the poor attitude of Nigerians towards insurance services. The per capital income in Nigeria is very low and thus insurance penetration into the economy is bound to be low.
Nigeria’s insurance penetration of 0.4 percent has been described as one of the lowest in Africa. Oni said that the nation’s insurance penetration of 0.4 percent figure makes its insurance sector a non-starter compared with South Africa with 16.9 percent and Kenya with 2.9 percent penetration respectively" (Cynthia Alo 2018).
According to the Organization for Economic Co-operation and Development (OECD) insurance penetration in United States of America in the year 2017 was 11.2%. In the same year, France, United Kingdom, Luxembourg and Spain has insurance penetration of 10.6%, 12.8%, 38.8%, and 5.2% respectively. These statistics are far greater than that of Nigeria. Sincerely there is trouble in the insurance industry of Nigeria.
The question on how much insurance industry in Nigeria has contributed to the Gross Domestic Product (GDP) has been asked by many people. And statistically, it show that the industry is doing little. And such is not a good result. Insurance sector only contributes about 0.4% of Nigeria’s GDP, far less than Nollywood. Unlike South Africa where 80% of Africa’s premium comes from and accounts for 13% of the country’s GDP, while in Kenya insurance account for 3% of the GDP (Rilwan 2017).
(1) Poor customer care services
(2) Claim issue
(3) Insincerity
(4) Economic Instability
(5) Poor Integration of information Technology
(6) Lack of skilled workers
(7) Inadequate product knowledge
(8) Poor awareness Creation (Advert)
As big as Amazon USA is, they respond to their customers request and complain within 3 days at most. This is a company that has the second largest number of employees in the United States of America. They do business both locally and international and yet have time to answer their large customer base. That is one part of customer service that needs to be emulated.
It is very annoying when you forward complain and make a request that needs an answer and someone do not answer. The email you sent to the company was delivered, someone received it and yet that person did not respond. What level of disrespect and arrogance is that?
That is what we see today in Nigerian insurance companies. You send mail to them and after one month there is no response. How will such insurance company grow? Someone that created his or her precious time to write to your company is not stupid. He or she has his or her reason for writing to your company.
Many insurance companies in the country has this problem. It is a problem among insurance companies that needs to be resolved. Poor customer services are of many forms. Insurance companies and their agents do not take care of their clients well in Nigeria.
Any company that wants to succeed in the market be it insurance or not should be ready to interact with her customers effectively. This will make the customers know that you have them at heart and always ready to hear their complains and give them the answers they want.
Many insurance companies in Nigeria has failed on this. They are not always listening to the complain of their customers and help them out by giving them the appropriate answers. Sometimes, customers and prospects send mails without receiving any response. It is bad and any insurance company that has this kind of challenge does not worth doing business with.
Any customer that has difficulty to make claim of his already saved money at maturity will never recommend insurance to someone else. This is what have been killing insurance companies in Nigeria over the years. When customers are not happy because of the stress they passed through when they wanted to claim their maturity benefit, they find it difficult to promote insurance. We hear people say that insurance in Nigeria does not work and one of the reasons is because of the difficulty they experienced when it was time for them to be paid.
Irrespective of the improvement in claim payment in the recent years, many insurance companies in Nigeria are still not doing their best. FBNInsurance paid N4.8bn claims in 2018, declares dividend (FBNInsurance 2019). LeadWay Assurance paid what was higher than that as claim in 2017. According to 2017 Audited Financial Statements, Leadway Assurance Company paid total claim of N27.4 billion in 2017.
The claim payment by the company is good but there are many that are not doing well in claim payment. Some customers are discouraged from entering into any other insurance policy after their initial bad experience. They decided not to give listening ear to anything call insurance in Nigeria. Till date, many people who were once customers in any insurance company are feeling sad for buying insurance sometime in their life.
Claim issue is bad and that is one of the major problems with Nigerian Insurance companies. Some policyholders were not paid their claims on time. Sometimes it lasted up to 4 months before they got paid. Action like this is annoying and frustrating.
When you were making premiums payment it was easy but stories and delay come in when it was time to claim your benefit. Delay in claim settlement has weakened many Nigerian insurance companies. Why not settle claims on time and put smiles on the faces of your customers. Insurance companies should consider their reputations and be careful with claim issues.
Sometimes, we see insurance agents selling insurance policies which has maturity duration of 5 years for 3years to customers. Some of these customers do not have the time to read the policy documents and hence rely on what they where told by the agent. When it gets to 3 years and they visit the insurance office, that is when they become surprised that the policies they are into runs for minimum duration of 5 years. Issue of this kind has caused quarrel and fight in insurance offices.
On the other note, some insincere agents sometimes increase the maturity duration of endowment policies. They do this because they want to earn higher commissions on those policies. This makes the policyholders to be paid lesser than how much they suppose to receive at maturity. Sometimes they are even short paid as a result of this.
As a financial advisor, I have met many prospects who just believe that insurance is a plan that one picks from any insurance company and the beneficiary makes claim of some amount of money at their death. That is just a shallow understanding of what insurance is all about. Insurance of the modern day has grown beyond that. There are many types of insurance products that the masses do not know about.
How can other sectors in Nigeria be pumping money into physical and online advertisement and insurance industry in the country is adamant about theirs. Awareness creation is important and has been the backbone of many surviving companies in the world.
Thanks to Leadway Assurance company in their recent campaign in online advertisement. Such step has really helped the company and created avenue for people to know more about insurance products. Poor awareness creation is one of the factors that makes the growth of insurance in the country stunted and such is to be corrected. Advertisement carries good power and product consumption is obtainable through it.
A stable economy promotes the savings necessary to finance investments which is a prerequisite for achieving a viable insurance industry which can help sustain economic growth (Osinuga Damilola 2016). According to Damilola, that is the standard that easily promote insurance businesses in countries. Looking at the economies of United States of America, Canada and even our fellow African country South Africa, their economies are stable. And because of this reason, insurance is promoted in those countries.
Many educated people consider many factors before going into insurance policies. These factors include foreign exchange reserves, government debt, government deficits, inflation, interest rates and exchange rates. Factors of these kinds make them no whether to invest into insurance or not.
Inflation for instance has discouraged many people from buying insurance policies from Nigerian insurance companies. Inflation is a general increase in prices and fall in the purchasing value of money. Some policyholders in insurance companies have saved money for up to 6 years of maturity and ended up not being happy. The reason is because the money they saved for years could not buy something reasonable again. Inflation ends up affecting the value of the money.
Imagine those in financial department in Nigeria insurance companies not knowing the customers they have paid at maturity. Also, some of them have short paid many customers at the maturity of their policies. They did not do their calculations well and end up messing things up. Some that are short paid visit the insurance branch of the company that short paid them creating scene. This has made people have soar taste of the industry.
How can people that has that kind of experience encourage others to buy insurance? Though some of them end up getting the balance of their outstanding money paid back to them but yet are not happy. Attitude of this nature has messed up the insurance industry in Nigeria.
Also, some insurance companies in Nigeria do not give good training to their staff before proper employment. They put them in some departments and hence lack the skills needed for effective job performance. Lack of skills results to inefficiency in job performance. Also, some insurance companies employ people because they are related to the top officers without having the required skill.
There are insurance companies in Nigeria that still operate in old ways. Functions which are carried out automatically in some advanced countries are still operated manually in Nigeria. That does not tell good of our Nigerian insurance companies.
For example, only few insurance companies in Nigeria has mobile applications for easy insurance transactions. These apps enable customers to carry out some functions easily on their own without visiting the insurance offices. Customers can view the statement of their policies, buy new insurance products, get the contact of their agents, check to know whether their policies are still active, make payments, and also send direct enquiry to head office. Technology of this nature has really made people have confidence in insurance companies.
Insurance companies in Nigeria that are not taking full utility of the advantage offered by today's technology are dragging the Nigerian insurance industry back. They need to correct this. If they do not do so, people may still not believe in flexibility of insurance. Premium report in some Nigerian insurance companies are still carried out manually. It is time for the report to be done automatically using the proper information technology approach. This will enhance the companies better.
Many insurance agents do not have any good knowledge of the products they sell in the industry. This has really soil the image of insurance industry in Nigeria. Imagine an agent giving a customer an interest rate of 50% at the commencement of an endowment policy just for the customer to find out at the maturity that it was only small interest that was added.
Many agents in Nigeria industry do not understand that insurance policies are not for interest. Insurance is mainly for risk management of many kinds. Even for endowment plans, there is some amount of money that goes for insurance coverage. So, poor education of agents to have good knowledge of the products they sell is affecting the insurance companies in Nigeria.
How many times do insurance companies organize training in a year to refresh their knowledge on the products they sell. Their are some technical terms used in insurance companies that many salespersons do not understand. These terms need to still be taught to agents for good comprehension.
NAICOM should create awareness of her existence through television channels and newspapers. They should spread the information that any policyholder having issues with claim or the like should write to them quoting the insurance company he or she is having issue of claim with and other important detail. With this development, NAICOM writes to the insurance company in question and the claim settled easily. They should employ good number of capable workers that can easily respond to policyholders complain.
There are capable software engineering companies in Nigeria that know what they do. Some of these companies should be called for assistance and be paid properly. These companies will organize team of Information Technology experts that will work steady with insurance companies in Nigeria.
I see the joy in policyholders faces when they check their total paid premiums using the insurance company's mobile application. They smile and know that they are doing great. They can even make payments using these applications without visiting the insurance office or banks. But not all insurance companies in Nigeria have developed their own applications. Those who have not should do so.
Automation is important in the industry as well. It is time for policyholders to automatically get alert on their paid premiums on their phones immediately they make their payments. This will go a long way to make Nigerians trust insurance in the country. It is time to stop manual report and embrace automation.
Also, they should be informed to sell the products the way they are. They should not give their customers high interest rate which make them disappointed at maturity of their endowment policies. That is deception and should not be accepted. Any agent that is found guilty should be punished after investigation.
Also, the capturing team and administrators should do their own jobs. They should not do their jobs half way. If it a particular staff's job to capture proposal forms, that should be done fast and accurately. If a customer writes for update of information, example phone number, that should be done as fast as possible.
According to Ekerete Ola, "There has to be one reason why insurance companies are NOT RESPONDING to the hues and cries of policyholders, big and small, that have unsettled claims stretching for nine months and more. That reason is simply that insurance companies do not see policyholders as their means of survival (Ekerete Ola 2019)" When insurance companies in Nigeria truly see policyholders as the reason for their existence, they will change their ways and relate well.
Nigerian insurance companies can dedicate a unique Whatsapp numbers that customers can easily chat them up with. This is a new development in banks. If insurance companies can follow suit, it will enhance relationship with policyholders.
Insurance companies should organize seminars in states in Nigeria at least 4 times in a years. This will help grow the industry. Also, online advertising will still help. Nigerians use data to browse the internet everyday. Online advertisement on internet web pages will lead to clicks and then the information on that insurance product read.
• Akinbola O, & Isaac L (2010), ETHICAL ISSUE: A PROBLEM IN NIGERIA INSURANCE COMPANIES, published by School of Management Blekinge Institute of Technology Sweden, Sweden
• Chris Agabi (2019), Leadway Assurance paid N33.8bn claims in 2018, published by Daily Trust, Abuja, Nigeria
• Cynthia Alo (2018),Nigeria ranks low in insurance penetration in Africa – Oni, Published by Vanguard News, Lagos, Nigeria
• Damilola Osinuga (2016), THE CHALLENGES OF THE NIGERIAN INSURANCE INDUSTRY, Published by LinkIn, Sunnyvale, California, U.S
• Ekerete Olawoye (2019), Insurance In Nigeria: Approaching 2020, published by Proshare, Nigeria
• Ekerete Olawoye (2018), Unsettled Claims Now Unsettling Nigeria's Insurance Industry, published by Proshare, Lagos, Nigeria
• FBN Insurance (2019), About Us, published by FBN Insurance, Lagos, Nigeria. Retrieved September 20, 2019.
• FBN Insurance (2018), FBNInsurance pays N4.8bn claims in 2018, declares dividend, Published by FBN Insurance, Lagos, Nigeria
• LeadWay Assurance Limited (2019), About Us, published by LeadWay Assurance Limited, Lagos, Nigeria. Retrieved September 21, 2019
• OECD (2019), Insurance Indicators: Penetration, published by Organization for Economic Co-operation and Development (OECD), Paris France, retrieved September 23, 2019
• Rilwan (2017), Insurance sector contribution to Nigeria’s GDP poorest in Africa, published by The Nations newspaper, Nigeria
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| By Darwinek (Own work), licensed under CC-BY-SA-3.0 |
are really doing well and have good reviews from their customers. Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss (Wikipedia 2019).
An average Nigerian will tell you that he will not use his or her hard earned money to go and buy insurance. He will tell you that he rather use that money to go and buy bottles of beer and consume them to his satisfaction than to go and invest the money in insurance. Such person sees the insurance companies in the Federal Republic of Nigeria as scam. He will categorically tell you that insurance is scam.
As a financial advisor in FBN Insurance, I have met with many people who have had bad experience with insurance companies in the country. Some of these people will tell you that if you do not have any other thing to discuss apart from insurance that you should not bother saying anything. Some Nigerian insurance companies have messed a lot of things up and this have been robbing some good ones.
In this article, I will be discussing some issues with some insurance companies in the country. These are crucial issues that make prospects disagree with buying some insurance services. Also, I will recommend few insurance companies that you can buy insurance policies from. They are tested and are doing well in the market. Also, possible solutions on challenges in Nigerian insurance companies will be discussed.
There have been progress in the recent time in products design in insurance industry of Nigeria. These are products that are designed to meet the needs of the policyholders. Unlike when Nigerians see insurance as what you buy to have life coverage and if the life insured dies, the beneficiary is paid claim, the recent products designed have gone beyond that. They are nice products and are affordable.
The sad Stories of Policyholders
As a financial advisor in an insurance company that has good reputation, I have seen customers that complained bitterly of their bad experiences from some insurance companies. These issues came when it was time for them to make claim. Such experience is not what a policyholder in any insurance company suppose to have.When I went to sell an insurance policy to an officer of a Nigerian Police Force in Delta State, he gave me complain that touched me after the close of the business I came for. He said that he bought an education endowment policy from Standard Alliance insurance company. He saved with the company for three years and then stopped paying his premium as of when due.
Because the minimum maturity time for the policy is 5 years, he waited for that maturity time. When it got to 5 years, he went to the company to make his claim. He was told he will be charged for not saving to the maturity time which is normal with insurance when the policyholder do not save all he suppose to save till maturity. He agreed that he get paid the supposed amount of money.
He was told that head office will issue cheque to the branch where he bought the policy. When that is done, he will be called to come over and claim the cheque. That was said to him by the branch manager of the office he visited.
Mr Alex who is the policyholder has waited for the cheque for over one year now but nothing has been issued by Standard Alliance Insurance Company. After the complain, I told him that I would write to the insurance company requesting for the cheque. Do you know that for up to two weeks from now, the insurance company has not respond to any of my mails. It is a problem.
Standard Alliance Insurance company of Nigeria has really failed many customers. The company has many negative reviews online and it does not tell good of them. The company has poor customer service relationship. The company is giving many other insurance companies in Nigeria negative reputation.
I personally took it to their Facebook page and I was surprised to see the comments of other customers having same issue. Some complained that their maturity benefits have not been paid to them for almost two years now. The staff that responded to the negative response said that the company has been handed over to new management.
My question is: can't the new management pay the people they have been owing for long? As of September 2019, I have not received any response from Standard Alliance on the payment of Mr Alex's maturity benefit. That is annoying.
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| By Chartered Insurance Institute of Nigeria (own work) licensed under CC-BY-SA-3.0 |
Recommended Insurance Companies in Nigeria to Buy Policies from
FBNInsurance
FBN Insurance is a modern day insurance company managed by First bank of Nigeria. According to the company's website, "FBNInsurance is a life insurance business providing coverage for Individual and Corporate Clients." The life insurance company is innovative and has improved over the years in the field of risk management. Their coverage of both life and general businesses has really helped many Nigerians manage the unexpected when they happened.The Company is jointly owned by FBN Holdings Plc (65%) and the Sanlam Group, one of the largest financial institutions in South Africa (35%) and it officially commenced operations on the 1st of September 2010. The acronym FBN stands for First Bank of Nigeria. FBN Holding Plc manages the invested part of the premiums paid by customers while Sanlam Group of South African is the one responsible for the risk management aspect.
With FBN Insurance, you as a policyholder can check how much you have contributed in your policy so far. You can do that using the FBNInsurance Customers App installed in your phone. Even when you have not received alert on any of the premiums you paid sometime ago, the customers App can help you do that.
Another good thing about this company is when it comes to customer service. Their customer service is sound and can reply to your mails within a short time. They are professionals when it comes to that. They give you direct answers when they write to you.
Claim making and maturity benefit payment is fast in FBNInsurance. This can be carried out within 8 days of application to make claim. You can be paid your maturity benefit when you send mail to the company using your email. That is to say you do not need to visit any branch of the company to make claim or be paid your money after maturity. Unlike some companies that will tell you to wait for cheque, FBNInsurance credits your account directly once you fill and send your maturity discharge form back to them.
LeadWay Assurance Company Limited
This is one of the old insurance companies that has been in existence in Nigeria. The company is rated as number one insurance company in Nigeria as of the time this article is first published in September 2019. LeadWay Insurance has proven her worth and stood the test of time. The company is innovative and has good management team. According to Daily Trust media company of Nigeria, Leadway Assurance paid N33.8bn claims in 2018 (Chris Agabi 2019).LEADWAY ASSURANCE COMPANY LIMITED (‘LEADWAY’) is one of Nigeria’s foremost insurance service companies, with a reputation for service efficiency and customer reliability. For over 45 years, LEADWAY has honored its underwriting commitments and has earned its reputation of excellence in claims handling. The evolution of LEADWAY since 1970 has mirrored the dramatic expansion of indigenous insurance service providers, with LEADWAY remaining in the forefront as an insurer of repute.
The company is among the first set of insurance companies in Nigeria that first developed customers App. The company has large number of agents that are serious with their businesses. These agents work as team and are good in strategic marketing.
LeadWay Insurance Company Limited of Nigeria has positive reviews from her customers. A customer, Japhetick Chuks Eze, gave this testimony about the company "I have seen from Leadway that insurance is for real. I thank you Leadway Assurance. Kudos to you!” That is the spirit and if all insurance companies in Nigeria start doing what they are to do and do them well, the insurance industry will start having good reputation in the country.
Customers service relationship is very important for every company that wants to grow. LeadWay as an insurance company gets it right in this. You can even reach them via Facebook Messenger. The company also has customer App that runs in both android and iPhones.
AIICO Insurance
This is another insurance company that I recommend to any person that wants to buy insurance service in Nigeria. AIICO stands for American International Insurance Company Limited. Their relationship with customers is okay and the company has many kinds of insurance services. Unlike Standard Alliance Insurance company, AIICO Insurance has good reputation. The company sells term insurance, endowment, savings and also general insurance services.Established in 1963, AIICO Insurance Plc (NSE Ticker: “AIICO”) is an insurance, pensions management, and asset management Group in Nigeria with market-leading positions in its key business lines:
Life assurance and annuity
General insurance and special risks
Pension management
Health insurance and
Asset management
AIICO commenced operations in Nigeria in 1963 as an Agency office of American Life Insurance Company (“ALICO”) – at the time, a subsidiary of American International Group (“AIG”). The Company was renamed American International Insurance Company Limited (“AIICO”) upon the acquisition of a 60% stake by the Federal Government of Nigeria, and later listed on the Nigerian Stock Exchange in 1990, after which both shareholders – the Federal Government of Nigeria and AIG divested (Sourced from the company's website). The insurance company has good management team.
Note: Other life insurance companies in Nigeria includes Mutual Benefit Life Assurance Company, Old Mutual Benefit Assurance Company, Custodian Life Assurance Company, Ensure Insurance Company, ARMS Life Insurance Company, Royal Prud Life Assurance PLC, Cornerstone Insurance PLC, and AXA Mansard Insurance PLC
Overview and Statistics on Insurance
Insurance is good and important for but individuals and groups. But it takes and enlightened person to understand this fact. We live in a world where one cannot predict the damage that may occur the next minute. And hence the need for insurance comes into play.Insurance penetration in Nigeria is low and that is negatively affecting the industry. The low standard of living is a major reason for the poor attitude of Nigerians towards insurance services. The per capital income in Nigeria is very low and thus insurance penetration into the economy is bound to be low.
Nigeria’s insurance penetration of 0.4 percent has been described as one of the lowest in Africa. Oni said that the nation’s insurance penetration of 0.4 percent figure makes its insurance sector a non-starter compared with South Africa with 16.9 percent and Kenya with 2.9 percent penetration respectively" (Cynthia Alo 2018).
According to the Organization for Economic Co-operation and Development (OECD) insurance penetration in United States of America in the year 2017 was 11.2%. In the same year, France, United Kingdom, Luxembourg and Spain has insurance penetration of 10.6%, 12.8%, 38.8%, and 5.2% respectively. These statistics are far greater than that of Nigeria. Sincerely there is trouble in the insurance industry of Nigeria.
The question on how much insurance industry in Nigeria has contributed to the Gross Domestic Product (GDP) has been asked by many people. And statistically, it show that the industry is doing little. And such is not a good result. Insurance sector only contributes about 0.4% of Nigeria’s GDP, far less than Nollywood. Unlike South Africa where 80% of Africa’s premium comes from and accounts for 13% of the country’s GDP, while in Kenya insurance account for 3% of the GDP (Rilwan 2017).
The Problems with Insurance Companies in Nigeria
Notwithstanding the recommendations given on the insurance companies in Nigeria that prospects can buy insurance policies from, their are some issues that many insurance companies in Nigeria is facing. These problems and possible solutions are to be discussed. The suggestions will go a long way in correcting the bad impression many people have in Nigeria towards insurance. The problems of Nigeria insurance companies are:(1) Poor customer care services
(2) Claim issue
(3) Insincerity
(4) Economic Instability
(5) Poor Integration of information Technology
(6) Lack of skilled workers
(7) Inadequate product knowledge
(8) Poor awareness Creation (Advert)
Poor Customer care Services
There is always this joy that you ask questions and someone is always ready to answer you within a short period of time. Such attitude makes you feel good and gives someone good sense of belonging. It shows that someone respects your opinion and is always there for you. It is a good strategy to bring more customers into the company for good and better promotion of the company.As big as Amazon USA is, they respond to their customers request and complain within 3 days at most. This is a company that has the second largest number of employees in the United States of America. They do business both locally and international and yet have time to answer their large customer base. That is one part of customer service that needs to be emulated.
It is very annoying when you forward complain and make a request that needs an answer and someone do not answer. The email you sent to the company was delivered, someone received it and yet that person did not respond. What level of disrespect and arrogance is that?
That is what we see today in Nigerian insurance companies. You send mail to them and after one month there is no response. How will such insurance company grow? Someone that created his or her precious time to write to your company is not stupid. He or she has his or her reason for writing to your company.
Many insurance companies in the country has this problem. It is a problem among insurance companies that needs to be resolved. Poor customer services are of many forms. Insurance companies and their agents do not take care of their clients well in Nigeria.
Any company that wants to succeed in the market be it insurance or not should be ready to interact with her customers effectively. This will make the customers know that you have them at heart and always ready to hear their complains and give them the answers they want.
Many insurance companies in Nigeria has failed on this. They are not always listening to the complain of their customers and help them out by giving them the appropriate answers. Sometimes, customers and prospects send mails without receiving any response. It is bad and any insurance company that has this kind of challenge does not worth doing business with.
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| By ET CONTRIBUTORS (own work); licensed under CC-BY-SA-3.0 |
Claim Issue
The joy of every policyholder or beneficiary is to easily make claim. No one is happy to hear long stories when it is time to make claim of the money they saved with insurance company over the years. Attitude of this kind weakens and discourages prospects and customers from buying insurance policies. It makes customers to lose trust they have in insurance in Nigeria.Any customer that has difficulty to make claim of his already saved money at maturity will never recommend insurance to someone else. This is what have been killing insurance companies in Nigeria over the years. When customers are not happy because of the stress they passed through when they wanted to claim their maturity benefit, they find it difficult to promote insurance. We hear people say that insurance in Nigeria does not work and one of the reasons is because of the difficulty they experienced when it was time for them to be paid.
Irrespective of the improvement in claim payment in the recent years, many insurance companies in Nigeria are still not doing their best. FBNInsurance paid N4.8bn claims in 2018, declares dividend (FBNInsurance 2019). LeadWay Assurance paid what was higher than that as claim in 2017. According to 2017 Audited Financial Statements, Leadway Assurance Company paid total claim of N27.4 billion in 2017.
The claim payment by the company is good but there are many that are not doing well in claim payment. Some customers are discouraged from entering into any other insurance policy after their initial bad experience. They decided not to give listening ear to anything call insurance in Nigeria. Till date, many people who were once customers in any insurance company are feeling sad for buying insurance sometime in their life.
Claim issue is bad and that is one of the major problems with Nigerian Insurance companies. Some policyholders were not paid their claims on time. Sometimes it lasted up to 4 months before they got paid. Action like this is annoying and frustrating.
When you were making premiums payment it was easy but stories and delay come in when it was time to claim your benefit. Delay in claim settlement has weakened many Nigerian insurance companies. Why not settle claims on time and put smiles on the faces of your customers. Insurance companies should consider their reputations and be careful with claim issues.
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| You can buy the paper back format of the author's book from Amazon |
Insincerity
Sorry to say, some insurance companies in Nigeria are not sincere in the way they do their business. I know I am a financial advisor in an insurance company but there are things that insurance companies do that are not in line. Most times, the people that really promote this insincerity is not the company but the people that work in the company. These people are mainly the agents and unit managers in insurance companies in Nigeria. They are painting the image of insurance industry in the country black.Sometimes, we see insurance agents selling insurance policies which has maturity duration of 5 years for 3years to customers. Some of these customers do not have the time to read the policy documents and hence rely on what they where told by the agent. When it gets to 3 years and they visit the insurance office, that is when they become surprised that the policies they are into runs for minimum duration of 5 years. Issue of this kind has caused quarrel and fight in insurance offices.
On the other note, some insincere agents sometimes increase the maturity duration of endowment policies. They do this because they want to earn higher commissions on those policies. This makes the policyholders to be paid lesser than how much they suppose to receive at maturity. Sometimes they are even short paid as a result of this.
Poor awareness Creation (Advert)
How much has insurance companies in Nigeria invested in awareness of insurance policies in Nigeria? That is a problem and it does not help the industry. Another challenge revealed is poor advert by insurance companies in Nigeria, there are lots of people in the country that are not aware of insurance and the people that are aware know little or nothing about insurance (Akinbola, & Isaac 2010).As a financial advisor, I have met many prospects who just believe that insurance is a plan that one picks from any insurance company and the beneficiary makes claim of some amount of money at their death. That is just a shallow understanding of what insurance is all about. Insurance of the modern day has grown beyond that. There are many types of insurance products that the masses do not know about.
How can other sectors in Nigeria be pumping money into physical and online advertisement and insurance industry in the country is adamant about theirs. Awareness creation is important and has been the backbone of many surviving companies in the world.
Thanks to Leadway Assurance company in their recent campaign in online advertisement. Such step has really helped the company and created avenue for people to know more about insurance products. Poor awareness creation is one of the factors that makes the growth of insurance in the country stunted and such is to be corrected. Advertisement carries good power and product consumption is obtainable through it.
Economic Instability
Insurance works best in countries where the economy is stable. People feel happy and free to invest into insurance companies in these parts of the world. Their happiness is dependent on some important factors. Unlike in Nigeria where the economy is not stable, the reverse is the case. It is a challenge facing the insurance industry. Today a bag of rice is twenty thousand naira and next month it becomes twenty five thousand naira.A stable economy promotes the savings necessary to finance investments which is a prerequisite for achieving a viable insurance industry which can help sustain economic growth (Osinuga Damilola 2016). According to Damilola, that is the standard that easily promote insurance businesses in countries. Looking at the economies of United States of America, Canada and even our fellow African country South Africa, their economies are stable. And because of this reason, insurance is promoted in those countries.
Many educated people consider many factors before going into insurance policies. These factors include foreign exchange reserves, government debt, government deficits, inflation, interest rates and exchange rates. Factors of these kinds make them no whether to invest into insurance or not.
Inflation for instance has discouraged many people from buying insurance policies from Nigerian insurance companies. Inflation is a general increase in prices and fall in the purchasing value of money. Some policyholders in insurance companies have saved money for up to 6 years of maturity and ended up not being happy. The reason is because the money they saved for years could not buy something reasonable again. Inflation ends up affecting the value of the money.
Lack of skilled Workers
It is indeed annoying that people who are employed by an organization in Nigeria cannot carry out the task given to them. It does not tell good of the company at all. This is not a problem common with insurance companies in Nigeria alone but general organization problem many companies in Nigeria is facing. Lack of skilled workers in insurance companies in Nigeria has left some work undone and some others half done.Imagine those in financial department in Nigeria insurance companies not knowing the customers they have paid at maturity. Also, some of them have short paid many customers at the maturity of their policies. They did not do their calculations well and end up messing things up. Some that are short paid visit the insurance branch of the company that short paid them creating scene. This has made people have soar taste of the industry.
How can people that has that kind of experience encourage others to buy insurance? Though some of them end up getting the balance of their outstanding money paid back to them but yet are not happy. Attitude of this nature has messed up the insurance industry in Nigeria.
Also, some insurance companies in Nigeria do not give good training to their staff before proper employment. They put them in some departments and hence lack the skills needed for effective job performance. Lack of skills results to inefficiency in job performance. Also, some insurance companies employ people because they are related to the top officers without having the required skill.
Poor Integration of information Technology
The world is going digital and it is very important that Nigerian insurance companies should follow the same trend. Failure to do so will make those companies appear to be inferior when compared with that of other insurance companies that have full integration of the technology. Many companies that are into risk management has gone far in information technology.There are insurance companies in Nigeria that still operate in old ways. Functions which are carried out automatically in some advanced countries are still operated manually in Nigeria. That does not tell good of our Nigerian insurance companies.
For example, only few insurance companies in Nigeria has mobile applications for easy insurance transactions. These apps enable customers to carry out some functions easily on their own without visiting the insurance offices. Customers can view the statement of their policies, buy new insurance products, get the contact of their agents, check to know whether their policies are still active, make payments, and also send direct enquiry to head office. Technology of this nature has really made people have confidence in insurance companies.
Insurance companies in Nigeria that are not taking full utility of the advantage offered by today's technology are dragging the Nigerian insurance industry back. They need to correct this. If they do not do so, people may still not believe in flexibility of insurance. Premium report in some Nigerian insurance companies are still carried out manually. It is time for the report to be done automatically using the proper information technology approach. This will enhance the companies better.
Inadequate product knowledge
Have you met an insurance agent that is terrible in marketing before? You found out that everything the agent told you is usually different from the real information backing the policy. You discover this when you visit the company's website or at the maturity of the policy.Many insurance agents do not have any good knowledge of the products they sell in the industry. This has really soil the image of insurance industry in Nigeria. Imagine an agent giving a customer an interest rate of 50% at the commencement of an endowment policy just for the customer to find out at the maturity that it was only small interest that was added.
Many agents in Nigeria industry do not understand that insurance policies are not for interest. Insurance is mainly for risk management of many kinds. Even for endowment plans, there is some amount of money that goes for insurance coverage. So, poor education of agents to have good knowledge of the products they sell is affecting the insurance companies in Nigeria.
How many times do insurance companies organize training in a year to refresh their knowledge on the products they sell. Their are some technical terms used in insurance companies that many salespersons do not understand. These terms need to still be taught to agents for good comprehension.
Solutions to Challenges in Nigerian Insurance Sector
Proper Monitoring by NAICOM
NAICOM stands for The National Insurance Commission. The National Insurance Commission (NAICOM) was established in 1997 by the National Insurance Commission Act 1997 with responsibility for ensuring the effective administration, supervision, regulation and control of insurance business in Nigeria and protection of insurance policyholders, beneficiaries and third parties to insurance contracts. This body needs to stand on her feet and do her job properly.NAICOM should create awareness of her existence through television channels and newspapers. They should spread the information that any policyholder having issues with claim or the like should write to them quoting the insurance company he or she is having issue of claim with and other important detail. With this development, NAICOM writes to the insurance company in question and the claim settled easily. They should employ good number of capable workers that can easily respond to policyholders complain.
Technology Integration and Automation
It is time for insurance companies in Nigeria to embrace the advantages presented by technological development. We cannot be going backward when the other world insurance companies are becoming more technologically sound. Our insurance companies should follow the trend. They should make insurance more user friendly and interactive.There are capable software engineering companies in Nigeria that know what they do. Some of these companies should be called for assistance and be paid properly. These companies will organize team of Information Technology experts that will work steady with insurance companies in Nigeria.
I see the joy in policyholders faces when they check their total paid premiums using the insurance company's mobile application. They smile and know that they are doing great. They can even make payments using these applications without visiting the insurance office or banks. But not all insurance companies in Nigeria have developed their own applications. Those who have not should do so.
Automation is important in the industry as well. It is time for policyholders to automatically get alert on their paid premiums on their phones immediately they make their payments. This will go a long way to make Nigerians trust insurance in the country. It is time to stop manual report and embrace automation.
Proper Product Knowledge
It is time for insurance companies to train both their agents and those at the back office properly. Everyone should do their jobs and do them well. Let the agents be taught the products they sell to customers properly. The teaching should be carried out every week.Also, they should be informed to sell the products the way they are. They should not give their customers high interest rate which make them disappointed at maturity of their endowment policies. That is deception and should not be accepted. Any agent that is found guilty should be punished after investigation.
Also, the capturing team and administrators should do their own jobs. They should not do their jobs half way. If it a particular staff's job to capture proposal forms, that should be done fast and accurately. If a customer writes for update of information, example phone number, that should be done as fast as possible.
Good Customer Care Service
Insurance companies both life and general insurance companies should learn how to relate with their customers. Even if the customers are saying rubbish through emails, still give them responses. That which you as a company may see as rubbish is important to the customer. That was why the customer created time to write at first.According to Ekerete Ola, "There has to be one reason why insurance companies are NOT RESPONDING to the hues and cries of policyholders, big and small, that have unsettled claims stretching for nine months and more. That reason is simply that insurance companies do not see policyholders as their means of survival (Ekerete Ola 2019)" When insurance companies in Nigeria truly see policyholders as the reason for their existence, they will change their ways and relate well.
Nigerian insurance companies can dedicate a unique Whatsapp numbers that customers can easily chat them up with. This is a new development in banks. If insurance companies can follow suit, it will enhance relationship with policyholders.
Educating the Public
Many people in Nigeria do not have good idea of what insurance is. They do not understand things that are new in the industry. Sensitizing the public on insurance will go a long in promoting insurance services in Nigeria.Insurance companies should organize seminars in states in Nigeria at least 4 times in a years. This will help grow the industry. Also, online advertising will still help. Nigerians use data to browse the internet everyday. Online advertisement on internet web pages will lead to clicks and then the information on that insurance product read.
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| You can buy the e-book format of the author's book from Apple Book Store |
References
• AIICO Insurance Plc (2019), About Us, published by AIICO Insurance Plc, Victoria Island, Lagos, Nigeria. Retrieved September 21, 2019• Akinbola O, & Isaac L (2010), ETHICAL ISSUE: A PROBLEM IN NIGERIA INSURANCE COMPANIES, published by School of Management Blekinge Institute of Technology Sweden, Sweden
• Chris Agabi (2019), Leadway Assurance paid N33.8bn claims in 2018, published by Daily Trust, Abuja, Nigeria
• Cynthia Alo (2018),Nigeria ranks low in insurance penetration in Africa – Oni, Published by Vanguard News, Lagos, Nigeria
• Damilola Osinuga (2016), THE CHALLENGES OF THE NIGERIAN INSURANCE INDUSTRY, Published by LinkIn, Sunnyvale, California, U.S
• Ekerete Olawoye (2019), Insurance In Nigeria: Approaching 2020, published by Proshare, Nigeria
• Ekerete Olawoye (2018), Unsettled Claims Now Unsettling Nigeria's Insurance Industry, published by Proshare, Lagos, Nigeria
• FBN Insurance (2019), About Us, published by FBN Insurance, Lagos, Nigeria. Retrieved September 20, 2019.
• FBN Insurance (2018), FBNInsurance pays N4.8bn claims in 2018, declares dividend, Published by FBN Insurance, Lagos, Nigeria
• LeadWay Assurance Limited (2019), About Us, published by LeadWay Assurance Limited, Lagos, Nigeria. Retrieved September 21, 2019
• OECD (2019), Insurance Indicators: Penetration, published by Organization for Economic Co-operation and Development (OECD), Paris France, retrieved September 23, 2019
• Rilwan (2017), Insurance sector contribution to Nigeria’s GDP poorest in Africa, published by The Nations newspaper, Nigeria
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