Why industry loses N20 billion mobile insurance to ICT's sector

By Bankole Orimisan

The nation's insurance industry seems to have losing estimated of N20 billion expected premium to be generated from mobile insurance with network operators  on yearly basis to sell insurance products and also to receive claims through mobile phone across the country.

   This, The Guardian, learnt that is as a result of non concrete agreement between the Nigerian Communication Commission(NCC) and the National Insurance Commission(NAICOM) to reach a compromise on licencing of players from the telecoms operators and insurance sectors respectively, is scuttling the use of mobile phones to deploy insurance products and services to the public to generate more income for both agencies in the country

   This, according to findings, is limiting the capacity of insurance companies to effectively deploy micro insurance products through mobile technologies, thereby, leading to low insurance penetration.     

    The two regulators had last year met to reinstate the sales of insurance through platforms of telecommunications firms, but the inability to put finishing touches to the agreement is now having a toll on the profitability of the insurance industry. While NAICOM intends to licence any telecommunications operator intending to operate in insurance space, NCC wants to do the same to insurance companies willing to use telecommunication platforms to sell their products.    According to the Head Corporate Affair, Nigerian Communication Commission(NCC) Tony Ojobo, who spoke to the The Guardian on the development over the weekend said that there is non problem between NCC and NAICOM, because for Nigeria to buy insurance products through mobile phone, this is as good as someone open an account with any bank via mobile and also make hotel reservation all these are called value added service. NCC is not insurance regulator, if NAICOM has a particular about that should register their complain with the NCC, he said.

   According to stakeholders in the sector, until there is a concrete agreement between the two regulators, insurers cannot go ahead to sell micro insurance products through mobile phones, although, few underwriting firms have now resorted to using USSD to sell their products and services. 

   Experts, however, said, the industry will continue to lose about N20 billion yearly, until the issues between the two regulators are amicably resolved. If finally, the embargo placed on mobile insurance in 2016 by NAICOM is finally lifted, this will enable NAICOM licenced telecommunications operators and ensure effective distribution channel for sale of insurance products.

    The commission had to place such embargo after observing that insurers were surcharged in the earlier agreement. The regulator demanded to licence any telecommunications outfit intending to sell insurance on its platform. NCC, on the other hand, is demanding same from insurers willing to use telcos as a platform to sell insurance products. Hence, there was the need to come up with a joint guideline to regulate mobile insurance business in the country. 

   Before the embargo was placed in 2016, at least 150,000 people subscribed to mobile insurance on a monthly basis then, and several millions of naira of premiums generated monthly, even though, only few underwriters were into it then. The likes of FBNInsurance, Cornerstone Insurance, among others were performing well, until the embargo, which meant they had to forfeit the revenue window. Group managing director, Cornerstone Insurance Plc, Mr. Ganiyu Musa said the first phase of its mobile insurance product tagged Airtel Insurance operated for 18 months, saying, throughout this period, about 4.7 million people tried to register for the product with 2.7 million subscribers succeeded, while about 1.8 million covers were purchased in the process. 

   “During that period, we paid about 329 claims on hospitalization, and I think we paid about three claims on death,” he pointed out. Through mobile insurance, he believes millions of people would be persuaded to buy insurance products, thereby generating billions of premium. 

   To this end, chairman, Zenith Bank Plc,Jim Ovia, has advised NAICOM to collaborate with NCC to increase insurance penetration through mobile phone technology. For insurers to break the circle, he said, they have to intensify efforts in deploying micro-insurance products through mobile phones. Noting that insurers could contribute up to 12.5 per cent to the nation’s Gross Domestic Product (GDP) by 2025, with the deployment of micro-insurance through digital technology,  he urged operators to migrate from traditional ways of offering insurance, to embracing new methods of insurance. Citing the innovative example of Prudential Life Insurance Ghana, which achieved 1.5 million policies in 12 months using mobile phone technology.

   Ovia, who is also the chairman, Zenith General Insurance Limited, disclosed that Prudential Zenith Nigeria, together with other insurance companies are now ready to deploy micro insurance products through the use of mobile phone technology as soon as both the NCC and NAICOM could collaborate and approve to do so. 

   The Commissioner for insurance, Alhaji Mohammed Kari, also added that mobile insurance will not only deepen penetration to the mass of uninsured populace in Nigeria; it will reduce operational cost of insurance companies and make them more profitable.