Nearly 50 years ago at the UN Conference on Trade and Development, it was agreed that a solid national insurance sector is a vital tool in enabling economic growth and generating employment. Even though Nigeria has unquestionably enjoyed strong growth of late, its insurance sector has remained stagnant. The National Insurance Commission (NAICOM), the industry’s regulating body, is making huge efforts to increase awareness and penetration, with the certainty that a larger insurance industry will facilitate more sustainable and widespread development.
Five years ago, NAICOM launched the Nigeria Insurance Market Development and Restructuring Initiative (MDRI), a medium-term plan to reform the areas of industrial capacity, market efficiency and consumer protection. The desired result was that by 2012, the insurance industry’s gross premium income would rise to N1 trillion (£4.1 billion), from a base of N164.5 billion in 2008. At the end of the MDRI period, it stood at a mere N300 billion.
Adetola Adegbayi, Executive Director of General Business at Leadway Assurance Co Ltd, explains why the initiative fell short.
“The MDRI focused on compulsory insurances basically in order to improve insurance penetration within Nigeria,” she says. “As the commission, you would consider that if all these compulsory policies – for example, motor third-party insurance, builder’s liability insurance and compulsory group life – were effected, then there should not be any reason why we could not hit the set target.
“The problem is that when it comes to compulsory liability policies, there’s the question of enforcement. Because enforcement drives legal compliance, if there’s no compliance and if nobody is enforcing it, then you’re not going to have anybody really wanting to buy these products.”
Ms Adegbayi is optimistic, however, adding that thanks to NAICOM’s efforts, the insurance industry has definitely been improving.
Leadway is one of Nigeria’s oldest insurance companies, having been established in 1970. As the majority of insurance firms, Leadway is well diversified in all types of life and non-life products. What makes it stand out from the competition, however, is its focus on claims payments over profits – an aspect that has made it a favourite among brokers.
“In the 1980s, Leadway presented itself to brokers,” says Ms Adegbayi. “When it comes to brokers, they judge you on how quickly you settle your claims and provide services and what other value additions you put in the policy to make it worthwhile for the insured. Because of our claims paying ability, we have been able to establish ourselves in the minds of brokers that we’re a company they can depend on.”
With the largest branch network in Nigeria and under the guidance of CEO Oye Hassan-Odukale, Leadway is reaching out to the uninsured markets – especially in rural areas where it has to come up with “ingenious new ways of doing things”. It is also targeting private-sector power companies, who are contributing to the creation of a more dynamic and self-reliant economy throughout the country.
Leadway is also positioned as an excellent partner for British clients, offering highly personalised services. “We offer our views of the economic and business environment, and on what you need to do. People are more comfortable with that because when you come into a new country you want someone to talk to you confidently,” says Ms Adegbayi.