Okpor: Claims Payments are No Longer a Problem in Insurance Contracts

Mr. Alphonse Okpor is the Managing Director of African Alliance Insurance Plc. In this interview with Ebere Nwoji, he spoke on the performance of the insurance industry and other sundry issues in the sector. Excerpts:

How is Life Insurance business performing now?

Life insurance is not well embraced by Nigerians.The general opinion is that once you take life insurance,it means you are about to die but it is not true.You have so many products in life insurance that mature while you are still living.

Our duty mainly is to educate our people that life insurance is not only for death. Also they often think that life insurance is for rich people but it is not so, rather is for every body.You take life insurance according to your capacity. One thing we use to say is that an average human being takes life Insurance more than ten times in his life time. If you are a young man or lady starting a job, your first investment supposed to be life insurance because once you take life insurance and paid the first premium, the sum insured is available to the estate if anything happens to the person. If you take life insurance for instance and the monthly premium is N1000 and the sum insured N10million , once you pay the first premium and anything happens, we don’t pray for that, the insurance company will pay you N10million as agreed. So you have crated an estate for your family for N10million just for the N1,000 premium you paid. But if nothing happens ,you continue to pay if it is for 10years you survive the period, N10million plus interest pay back that is normal life insurance.If death occurs within that period of 10years the sum insured will also be paid to the beneficiary those are the things we need to educate Nigerians on the benefit of insurance.

It is not like banks, in banking, what you put in the back is what you get. If you paid in only N1,000 in your bank savings accounts, that is the only thing you will be paid at the end of the day. But our people don’t understand how insurance works.The only insurance that is more popular in Nigeria is the third party motor insurance.this is because it was made compulsory and you know that if you don’t have it, the police will arrest you. So motor insurance has become more popular and it was also the motor insurance that gave insurance bad name. Because in those days the owner managers that is the owners of the insurance firms were also the managers so when there is a claim, they try to dodge payment in order to save money. They will not pay on time or they will not pay at all but things have changed now.Insurance industry is now well regulated and run by professionals and if you don’t pay your claims,there is avenue for you to report the case and get judgement either arbitration or go to NAICOM to report and you will be paid because they will look into it and the insurance company might be sanctioned.

So claims is no longer a problem nowadays because all insurance companies act according to law and pay claims. If you don’t, as a professional it will affect you and there is nothing like Nigerian insurance, insurance is insurance any where. The same practice they do in Nigeria is what they do in UK and US so there is nothing like local insurance we are only trying as developing country to meet up with what is done internationally otherwise there is no negotiation, you don’t need to know any body for you to get your claims,gone are the days so things are changing and we are educating people more and more on the benefit of insurance.

This is what we insurers are doing now.It is not only for life also general business.

What part are you playing in Life insurance and pension business?

Even pensions under the pension reform act , we are educating Nigerians too.As an employee you suppose to be paying some percentage of your salary into your Retirement Savings Accounts(RSA). While also the employer pays some percentage so that when you retire, you have option, you do not go to the PFA to collect the money, no you refer to your RSA .The money there is available for two options , either at retirement you continue with your PFA who will give you a programme payment for 18 years or you go to an insurance company and buy life annuity when you do that we pay you till death.

So these are two options.It is not as if once you retire we pay you all the money no the spirit of the law is when you retire, you supposed to be earning at least half of the money you were earning as salary when you were in service to enable you survive. So all these are tailored that is why you have Pension Fund Administrators(PFAs).There is also what you call Pension Fund Custodians(PFCs). They are big big companies they are not many I think about five .They ensure that the invested pension fund does not fail. They will not give it to small companies so that tomorrow it will disappear no , most of them are owned by big banks. Oil companies have their own internal arrangement for that so the pension doesn’t fail any longer because now it is a funded scheme.Government is no longer keeping the money rather money is paid into people’s RSA every month. In Africa Alliance, we have over 800 pensioners, before we even pay salary , we pay pensioners .Before 20th of every month all my pensioners receive their pension pay under annuity which they bought from insurance company.most of them come to us because since 1960 Africa Alliance started,we have been doing life insurance and pension.It is not a new thing to us. We are used to it and we are managing it successfully.So people rush to Africa Alliance to buy life annuity because they know we are experienced and we have the financial muscle any time.In addition to our own personal qualities,government has established the National pension commission and the National insurance commission to monitor all the money you get from operations and how you should invest it and every month you give return this is what I receiceved this is what I invested. They even detect for you where to invest the money. They don’t want you to invest the money where it will get lost. So the fund is well funded and monitored. For us is not a new thing we have been in the business for 55 years. We have a PFA we joined FAGH we have Pension Alliance which is in UBA house here.We are representing Africa Alliance in the board we own 49 percent of the company.

How can you assess Annuity business in Nigeria?

It is a profitable business, if it is well managed because now that government monitors both the amount you receive and the amount you invest, the future is very bright. People retire happily, they don’t even need to come here for the payment you give us your account, before 20th you get an alert of your pension so the future is very bright that scheme which the federal government introduce is very good the only problem is that many states have not keyed into it because it is not compulsory.

But the new Act I mean the 2014 act has made state government participation compulsory.

That is 2014, but the act started in 2004 and I want to tell you that even now many states are not embracing the contributory pension scheme even with the amendment of the act.

So how can you compare the two I mean life annuity and and life insurance?

All are part of business portfolio the only thing with life insurance is that for life insurance, you have to manage the fund very well so that when there is claims you don’t have to go about looking for money.We even have more investment products we also have Esusu you know Nigerians love Esusu especially market women. so what we have done is to take over the Esusu business and we have attached life insurance to it. So if you are contributing to Esusu done by Africa Alliance you have life insurance cover which you have to benefitfrom.

We structured it this way,if one contributes and dies we pay back what you have contributed with interest plus life insurance Claims.Many market women have already joined us we have it here in Lagos, Onitsha, Abuja and we are this year thinking about moving to Port Harcourt.