As the pension and insurance sectors of the economy aggressively begin the process of enhancing their services to meet the 40 per cent financial inclusion target by 2020, experts are rooting for various strategies to achieve the goal
The overall target of the revised strategy is to reduce the percentage of adult Nigerians excluded from access to financial services from 46.3 per cent in 2010 to 20 per cent by 2020, representing a target of 80 per cent inclusion.
In a manner that is unprecedented in the history of both sectors, they appear to be on equal pace while racing to garner more subscribers for their products.
Of recent, activities around micro segment of both sectors have taken a turn for the best as plans to reach the hitherto uninsured, as well as provide pension plans for those in the informal sector gain traction, all in a bid to meet the financial inclusion target.
Financial inclusion plan
The Financial Inclusion Strategy (NFIS) which was launched in 2012 by the Central Bank of Nigeria (CBN) was meant to improve access to financial services and products by the Nigerian adult population.
The strategy aimed at achieving a 34 per cent increased access to financial services and products by the year 2020, which means attaining 70 per cent inclusion rate.
Through the micro insurance and micro pension plans, it is expected that more Nigerians are set to be dragged into the nation’s financial security net.
Achieving this, according to experts, is no longer a tall task if only the operators leverage the relevant technology for the purpose. Since the advent of improved telecommunication model in the country, financial transactions have become easier for all classes of Nigerians.
Observers believe that similar technology can also be extended to the micro segment as pension and insurance operators continue to design products for potential consumers.
Of recent, a number of underwriters have imbibed some aspects of technology through deployment of Unstructured Supplementary Service Data (USSD) that enables members of the public transact business with them.
Stakeholders’ support
Giving credence to the need for technology in Lagos last week, a former Director General, National Pension Commission (PenCom), Mohammed Ahmad, said that operators and regulators of the two sectors should leverage on technology, especially telcos to reach the masses with financial inclusion message in order to improve the level of financial literacy in Nigeria.
The advice is coming long before stakeholders in the insurance sector also called on practitioners to add value to their operations by embracing relevant technology.
According to the Chairman, Chartered Insurance Institute of Nigeria (CIIN), Eddie Efekoha, “as operators, we must begin now and not later to address our minds to the following questions: How do we maximize the use of the additional capital to generate superior returns to investors? How does technology help the industry to deliver superior service and deepen insurance penetration?
“How do we develop a data pool that supports improved pricing of risks underwritten and innovative products driven by consumer insights? What do we do to develop and attract the right skills and talents that can match the fast pace of technology revolution?
“How do we harness the values inherent in partnering with other industries like telecoms and banks to deepen insurance penetration? How do we partner with various arms of government like the NPF, Customs, Fire Service to ensure compulsory insurances are enforced? Above all, how can we cooperate better than we currently do for the good of all stakeholders?”
Sometime ago, a topnotch member of PWC Nigeria, Mr. Andrew Nevin, had reminded the local underwriters of the need to start thinking ahead as the future of the industry would only favour technology savvy investors.
He said: “By 2030, banks will be invisible. Asset management will be almost completely customized. Insurance will become co-creation on risk and not loss mitigation. Create your ethical issues. There will be massive change in insurance as insurance companies will work with individuals to reduce the level of risks due to accumulation of data.
“Ninety per cent of transactions would be via mobile, 99.99 per cent transaction would be electronic. People will own their own data. If you are not the best in analytic, you are not in business.”
Challenges/obstacles
Developments in the past years have revealed that the underwriters have been very eager to grow the sector to an enviable height over the years. The efforts have, however, been frustrated by circumstances within and outside their control.
The outcome of this is reflected annually on the gross premium income of the sector, which currently stands at N400 billion going by recent revelation by the Nigerian Insurers Association (NIA).
Factors responsible for the shortcomings are quite obvious. While some of the operators have taken capacity development and adoption of certain technology as priorities, public apathy and non-payment of premium by government that is considered as the biggest client, has grossly affected the finances of the operators.
This challenge appears not to be giving up, as the current shape of the economy is also making it difficult for operators in the industry to be in tune with technology, especially software that will drive their programmes and sustain them in future.
Experts’ opinions
Put succinctly in an earlier chat with New Telegraph, the Chief Executive Officer of ATB Techsoft, a multiple business software solution provider, Abiodun Atobatele, said the current downturn having drastically affected the premium and general business of underwriting business had tactically put a halt to the acquisition of modern software that will simplify, enhance operation and boost penetration.
Nevin’s account is similar to that of insurance head at Wipro in South Africa, Jaqueline Van Eeden, who observed that technology ‘disruption’ in the traditional ways of doing things has become necessary for maintaining pace in a fast changing, always-on and connected world.
According to her, there are typically four main aspects of insurance: product design, pricing and underwriting, distribution and admin, and claims management. This model has been the same for decades and, despite of the increase in product complexity, the insurance business is essentially relying on policy premium income and asset management to function.
However, the rise of disruptive technologies is changing this model, and insurance companies are forced to change from product centric model to customer centric approach.
She said: “Quick, easy, instant, flexible insurance is very attractive to the African market. An example of such an initiative is currently being investigated by a South African insurer who is moving into the Nigerian market.
“Insurers are moving towards customised, usage based, real time coverage models and moving away from risk based underwriting approach to risk management approach. From the beginning insurance companies have captured lot of data and advancements in big data and analytics helping insurers in right risk selection, enabling more accuracy than ever before.
“Legacy interaction methods and distribution channels using call centres and one-on-one visits are being replaced anywhere any-time response to customers is taking top priority. The ‘virtual technology’ is providing easier and instantaneous ways for clients and insurers to obtain and update information, even enabling seamless and accurate billing via mobile applications.
“There are several trends currently disrupting the insurance industry across the globe, many of which are either technology related or technology driven, which are enabling insurance companies to remain relevant and competitive. African insurance companies are following suit and embracing many of these global trends in the face of a challenging and complex market environment.
“Some of the key trends that have been identified are an increased use of Internet of Things (IoT) by insurance companies, the use of Big Data to improve claims processing, an increasing demand on cyber insurance, the emergence of Peer-to-Peer insurance, and a growing focus on mobile applications for interaction between insurers and their customers.”
She said that today’s customer used the Internet to source quotes and research insurance companies to check for the best deals, yet research shows that most insurance purchases are still happening telephonically or through in-person interaction.
“Insurers are coming around to the fact that customers prefer online interaction, and are realising the need to adapt their systems accordingly. We will be seeing the progressive simplification of legacy systems to remove the barriers that hinder them from offering a consistent and seamless customer experience.
Last line
With more Nigerians becoming tech savvy on a daily basis, the onus is on operators in both pension and insurance sectors to move along, follow up the process, and design products that will ease transactions for Nigerians so as to make the targeted date for financial inclusion possible
https://www.newtelegraphng.com/2019/09/financial-inclusion-leveraging-technology-to-drive-micro-finance-plans/
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