Alhaji Muhammadu Bagudu Hussaini, Managing Director and CEO, Nicon Insurance : Interview

Alhaji Muhammadu Bagudu Hussaini, Managing Director and CEO, Nicon Insurance

Interview : Alhaji Muhammadu Bagudu Hussaini

What is being done to increase the insurance penetration rate in Nigeria?

ALHAJI MUHAMMADU BAGUDU HUSSAINI: Insurance policies are not at the forefront of people’s minds in Nigeria. When people do not have enough to get by, they do not think much about insurance, despite the necessity of safeguarding their possessions. Providers must make sure these underserved people are informed about and involved with the insurance sector. Newly insured people will spread knowledge of the advantages of insurance within their social circles, and in this way the industry will reach less-penetrated areas.

Insurance providers need more personnel to educate the population in general. Micro-insurance is a good way to engage with poorer segments. There are large volumes and huge possibilities, especially in the north of the country, where the population is growing and there is an increasing number of micro-businesses. Micro-insurance represents a lot of long-term potential, but the industry is not yet engaging enough in that field. If enough Nigerians realise the advantages of insuring even limited possessions, returns could prove substantial.

How can insurance companies overcome the lack of consumer trust in the industry?

HUSSAINI: Providers need to acknowledge the mistrust and scepticism of consumers. New regulation on supervision and control of insurance providers’ ability to meet their obligations could restore the overall trust of consumers in the industry.

Historically, there have been cases of companies that ran out of funds without informing their customers. In addition, while the majority of insurance providers in Nigeria have always been properly licensed, some fundamentals that are required of insurance companies to make sure they are economically viable were neglected. Over time the ability of some providers to operate correctly was eroded. The best way to ensure insurance companies do not fail to make payments is through a risk-spreading mechanism, in which providers work together and exchange information. When there are risks that one insurer cannot bear, there are opportunities for co-insurance, by which mechanism the underwriting houses share risk and pay claims proportionally. Another possibility is facultative reinsurance, whereby a company pays a fee to pass a portion of its risk to another company. Policyholders are not involved in this process in any way.

There is a pressing need for more transparency in the sector. If consumers are aware of the capabilities of insurance providers to meet their obligations, this will result in more widespread demand for insurance. The government has introduced regulation and incentives to make the sector healthier, by prompting companies to pay closer attention to their finances. More regulatory oversight will also contribute to the health of the sector.

How can foreign investment help bring new impetus to the insurance sector?

HUSSAINI: Foreign investors with the necessary know-how, especially with regards to digitisation, can expand very quickly in the country, as insurance services are not highly developed in Nigeria. There are a lot of insurance providers in the country, and while there is an urgent need for consolidation in the market, the capital investment required to engage in such a structural overhaul cannot be provided by most local insurance companies. If proper investment was made and cutting-edge technology introduced, many less prominent players could be edged out, and new, more dominant ones created.

The insurance industry is also very conservative, and innovations are not taken up quickly. However, the advantages of digital services in engaging people who live in remote areas cannot be overstated.

Share

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Nigeria 2019

Insurance chapter from The Report: Nigeria 2019

Cover of The Report: Nigeria 2019

The Report

This article is from the Insurance chapter of The Report: Nigeria 2019. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart