60 years of insurance or ignorance?
Consultant Management~ Strategy~Insurance
THE STORY OF NIGERIA AND her citizens since independence to date can be better shared from an insurance perspective with the hope that it would help us envision a greater Nigeria for the next 30 or 50 years.
Considering that the insurance industry was already in existence for about four decades before Nigeria’s year of independence, it would have been necessary for those Nigerians that were returning for the reason of the independence to listen and learn from those who had been with our colonial masters.
Independence did not mean you were free to go on and operate without your teachers. They had the source of knowledge and held the key – qualification – and determined who would be declared successful or otherwise. One continuously needed huge doses of wisdom to attempt to get away from the centre of control, after all, in our reckoning at that time, Great Britain was the origin of insurance. Unknowingly, ignorance had set in, simply because we had no reason to research such information.
Meanwhile, in those many years of insurance before independence, Nigeria mostly knew Marine Insurance being the class of insurance that Royal Niger Company and its associated companies took; insurance was for them and not Nigerians who probably would have needed Life and Health Insurance given the prevalence of several diverse diseases championed by malaria fever.
Importantly too, the structure that existed was largely agency where the companies in Nigeria were merely desk offices to the parent companies back home in Great Britain. So, a year after Nigeria’s independence, the insurance industry and the laws that would guide it became the consideration of the J. C. Obande Committee set up by the government then to draft the laws that would regulate the industry. Insurance regulation was born!
Except for a few Nigerians involved in the process, many did not understand the essence of insurance while those in the public service were included in an insurance programme that they did not determine, to a large extent like what we still have today.
Mention must be made that Nigeria’s insurance industry relied on the meaning and interpretations of Insurance Laws, Rating Guides and Actuarial Tables of Great Britain, and till today, our Third Party Motor Insurance derives from a 1950 law that ought to have been revised and amended decades ago.
The Foundation Change Agents and
With the kind of foundation the insurance industry had in Nigeria, where the agency mentality and reliance on knowledge from abroad had taken root, it was no surprise that the trained insurance professionals that returned home saw the challenge and approached it with gusto.
These professionals led by the late Talabi Braithwaite did not only consider the need to have their own insurance enterprises but also worked assiduously with the government both at regional and national levels to build a formidable insurance industry.
With emphasis on character, competence and compassion, these early insurance professionals doggedly fought for the “independence” of the insurance industry and succeeded in attracting valuable partnerships. For example, Olola Bode Ogunlana invited Standard Chartered Bank to jointly set up Standard Chartered Insurance Brokers, which was later renamed SCIB Insurance Brokers after terms changed.
Late Chief Sunny Odogwu, late Chief John Akin George, Alhaji Aliko Mohammed and Professor Joseph Irukwu are some of the other Nigerian insurance professionals who gave the insurance industry the independence it needed to be able to contribute to the growth of our national economy after independence.
These professionals were not only excelling in insurance but also had deep interests in manufacturing, banking and trading, which were the pillars our economy wrested on.
However, the challenge of building on the independence they got, as we have seen regarding the independence of our country Nigeria, was enormous and overwhelming because there seem not to be any deliberate strategy and mechanism to recreate themselves or the distraction caused by the oil boom just made their efforts unattainable.
The insurance industry, interestingly, gained from the boom as the massive infrastructural projects of the ‘80s were insured, thus pooling in huge premiums and commissions for insurers and brokers respectively. Also, with pensions as part of insurance then, the industry was also in a boom.
What happened to insurance, happened to Nigeria
The indicators were there that the insurance industry would struggle, as the boom was being mismanaged, with huge unpaid premiums held by the brokers, while the insurers were expectedly unable to honour claims obligations. The brokers, as intermediaries that bore no risks, were in strong control of the market!
This ugly practice went on unabated, despite the position of the Insurance Act 2003 of “No Premium, No Cover” and it took a seemingly unpopular decision of the regulator, National Insurance Commission (NAICOM), in 2011, to save the insurance industry from collapse.
While it was increasingly clear that only corporate businesses could afford to pay premium before getting cover, individuals began to experience neglect and poor attention from insurers, as efforts to develop new suitable products were slow and payment options were limited. It was not getting attractive for individuals.
Public apathy was mostly attributed to culture and religion as it has continued to dominate the discussions on why Nigerians are not taking insurance, and nobody seems to consider that it is rather ignorance because people do not just understand how insurance works.
Today, as Nigeria celebrates her 60th anniversary, the insurance industry is facing another ugly practice of non-payment of claims and Nigerians are optimistically hoping that NAICOM will, once again, invoke the powers given to it by the same Insurance Act 2003 to ensure policyholders-turned claimants receive their full and final payments.