By Kenneth Jukpor
Ms Pauline Ochulor works in the Marine Insurance department of KBL Insurance. In this interview with MMS Plus, she bares her mind on the development of insurance business in Nigeria over the years. Pauline also explains the effects of the nation’s ailing economy on the sector and appraises the challenges of non-payment of claims in insurance business. Excerpts:
The patronage of insurance by Nigerians is still relatively low as a result of disproportionate charges, poor awareness and tough economic times. How would you rate the insurance industry in Nigeria?
The awareness about insurance is high now compared to the past. There may be challenges but the industry has been improving. Let me give you an example. You want to do your vehicle insurance and what is the value of your vehicle. You are a gentleman; you can’t misuse your car anyhow. You have to maintain it, even though you have insurance. As an insurer, I’ll give you a basic rate; I can’t give you something lower to pay. However, I don’t think that the rate is the problem when it comes to insurance because the market is large. Someone is always willing and able to pay the rate.
How does the unpredictability of the nation’s economy and politics affect insurance business?
When I started insurance, the awareness was not like what it is today and every insurance person or underwriter wants to maintain his or her name. Good service matters in this business, the services I give to you will determine if you will come back. It doesn’t matter where you are coming from. We are selling the same products and services.
When it comes to claim, maybe that is where you would want to talk about more. If your claim is so complex and dubious, you need to investigate and that is why we get the surveyors and adjusters. They do their job and get back to us. Sometimes, if the loss is your fault based on your ignorance of certain things, we pay something we call ex-gratia in Insurance. It is Latin for “out of goodwill”. We are not paying you, it’s just compensation. If you are not reliable, the insurance is not reliable but because of the relationship, we pay ex-gratia.
Why do you pay ex-gratia, is it stated in the agreement?
It may be because of the insured’s ignorance or unseriousness; your insurance company is not reliable but because of the relationship the company has with the insured, the insurance company could look at it and if it discovers that there hasn’t been any claim since you started trading for about two or three years, it could pay ex-gratia. The insurance company is not supposed to pay but because of the relationship, we now decide to pay. The ex-gratia is like a token.
In the legal framework, is that allowed?
It is allowed because if we decide not to pay you, you can’t hold us responsible when evidence shows that we are not liable for the damage. For instance, when there is theft in your company and it is found that employers of that company were responsible rather than outsiders, how do you argue the claim?
The insurance company doesn’t need to pay you anything because the person is your staff. However, if it’s an external person that does not know anything about the place, the claim will be paid.
We know that we have National Insurance Commission which is supposed to ensure effective administration, supervision and regulation, but how would you describe the regulatory framework for insurance in the country?
They are doing their work. All the rules and regulations are coming from them and we are backing it. Before now, there was nothing like SMS insurance. It’s the retail insurance where you can pay a little. For example, you live in one room and you want to insure your content, we have a package where you can pay a premium as low as N1000. Several platforms have been introduced to ensure Nigerian citizens keep moving to help them grow and help the insurance business to grow also.
When it comes to awareness, we have seen the banking sector do more advertising than Insurance companies, what can you say about this?
Insurance companies usually do awareness. We do market storms, we are everywhere. You don’t go to any major plaza and they will tell you they don’t have insurance, the insurance companies are there. You should also note that whenever the bank is giving you a facility, insurance is part of that facility.
On the aspect of utilization of funds gotten from premiums, most of them are used to invest in stock and securities, what happens when there are losses?
It is not just stock and securities, we pay claims regularly. How do we generate money to pay claims, if we put all our monies in stock and securities? If you read the Financial Dailies, you will see where an insurance company is paying claim of N210million, N50million or N10million. Your car might have a problem and you bring a quotation and you want your claim in less than two days. Maybe you bring a quotation of N200,000 but you didn’t pay me premium of N200,000 Naira and I am paying a claim of N250,000 for a car that you paid N180,000 premium. It’s all about taking care of the risk. In less than 8 months, if the car has another problem, we need to pay for the value and remove the excess.
As long as you are insured for that one year and you have a claim three times, the insurance company will pay you. That money can’t be in stock or securities when you need your claim immediately. There is what we call deposit. We place money in banks to have a relationship. When you have a claim urgently and you want your queue by tomorrow, if I have shares, do you think I will sell it and get that money in time? No, we will pull such fund out from our deposit.
When a bank sees that a company or an individual has deposit, they will want to do business with you at any moment so that it will increase interest. When you put money in deposit, you also increase interest.
What advice do you have for the segment of Nigerians who still don’t have confidence in insurance companies?
Every day we do awareness, we go out. For me as a person, I talk to everybody I meet every day on why they should have an insurance. The body has done a lot to support this business to grow. Those days, there was no awareness or claim, but now when there is a fire incidence, the insurance company comes in and pays. We paid to the families of the victims of the Dana Air crash. Those who still don’t believe in insurance are probably not enlightened.
Over 70% of Nigerians know that insurance is a good business that is why there has been an increase in terms of employment by insurance companies, while there has also been significant increase in the number of persons and value of insurance recorded in recent times. Insurance saving is like a bank. If you see some of the insurance marketers, their presentation, appearance is just like that of the bankers. Some even look smarter than their counterparts from the banks.
The general perspective is that the workforce of Nigerian insurance companies is not properly trained for the job. What is your take on this?
I have gone for a lot of training over the years and I still go for trainings on how to convince people to get businesses. I told you something earlier that I talk to everybody I meet every day about insurance. Awareness and relationship is everything if you want to get to the top in this insurance business. Training is also key and I can assure you that insurance companies take out time to train their members of staff.
A stable economy leads to more savings and more savings leads to more insurance. So how does this affect insurance business?
The NIA and the Insurance Commission have made it easy to get a life insurance and health insurance. You spend so much going to the hospital. For example if you have malaria or typhoid and you were admitted for 3 days, they give you a bill of N10000. If you have a health care insurance scheme, the insurance will take care of it. You take your ID card for identification to a selected hospital and we check the quality of drugs given to you and we pay. Maybe about N300 will be deducted from your salary every month but it’s not up to what you would have paid if you didn’t have insurance. You can fall sick for about 2-3 times a year. Malaria and typhoid are the major illnesses that Nigerians suffer and if you are a family person, you are entitled to two to four persons. So, it’s cheaper to have health insurance.
Secondly, we all know that the economy is not what it was several years ago. My clients keep reducing their premium every year because the income from their businesses are depreciating. What can I do to retain these businesses? I looked for a scheme on how they’ll pay the premium, bring in lower rates and spread their payments.
For example, I have a client who was doing N3million every year. He runs two businesses. He is not well educated but he knows the importance of insurance. When there is claim, maybe damage in his generator (this is called machinery breakdown), we pay. For everything he has, he pays N3million. He has about 7 employees, 2 security men and 2 drivers. His employees are insured for every 24 hours because his job is like a technical job. If there is any causality, we pay. The premium is not high because the rate is low and medical expenses are added to it. For that 24 hours or 12 hours, they are covered and when there is a claim, we pay to them. He complained that the clients are not coming because the economy is bad so we had to reduce it to about N1.8million a year, from the former N3million.