Nigeria is a country battling dearth of data in all sphere of its endeavour. In situation where there are data, it is either they are too old or were not processed at all.
Of all the sectors in the financial service space, insurance industry is one of the most affected. Although, things seems to have improved over time, the banking, ICT, pension, capital market, among other sectors are still in the forefront of deepening their operations with data.
This is affecting product pricing and appropriate projections for the industry. There is no data to give a proper perspective on who needs certain services, at what time, hence, drawing back the industry.
For instance, the current complete data for the entire industry now is 2020 financial reports, 2021 reports are just emerging at the end of 2022 when indeed, the sector globally have moved several years forward from happenings in 2020 and now, especially, with the disruption that comes with the pandemic.
So, when the reinsurers came up with a new rate earlier in the year, it was seen as over 400 per cent higher than what they were charging prior to now.
However, market observers said, if there are adequate and current data and are processed, the industry could have worked out a template prior to now and would have projected an increase, hence, would have prepared for this, and when it came, it won’t be sudden to them.
For instance, the last time the National Bureau of Statistics(NBS) released any report on the number of vehicles on Nigerian roads was in 2019 and so, insurance industry has been working with this figure in the area of motor Insurance , three years after.
Similarly, the latest industry report on the insurance industry regulator’s website, hat is the National Insurance Commission(NAICOM) was 2019 reports of the industry.
The umbrella body of the insurance companies in Nigeria, which is, the Nigerian Insurers Association(NIA), just released the 2020 financial reports for the industry in the current year.
Till now, the industry has no data on; the accurate number of policyholders in Nigeria, the total number of women with insurance policies, age brackets of the current policyholders, the number of public buildings in Nigeria, and so on.
EXPERTS’ REACTIONS
The managing director/CEO, Confiance Insurance Brokers, Mr. Bayo Yusuf in an exclusive interview, said, he came from a pension industry that has lots of data that were daily processed by the regulator of that industry, which is, the National Pension Commission(PenCom), hence, able to make public monthly, quarterly and annual reports of the performance and operationality of the pension industry.
Bayo, who was the former managing director of UBA Pension, said, this assisted a lot pension fund operators to make critical operational and investment decisions that has kept on growing the pension fund assets to N14.5 trillion from a deficit of N3trillion it started with in 2004.
Now an insurance broker, he felt the pension industry is miles away from insurance industry, stating that, while the pension industry already has 2021 industry reports, insurance industry is still celebrating 2020 and a substantial 2021 financial reports.
To him, 2020 reports is already obsolete in 2022 considering the speed at which the world moved during the pandemic, ‘so, working with 2020 reports now, will take no one anywhere.’
“In the last two years, the whole world moved 10 years forward, there was and is still dramatic change in business dynamic caused mainly by the disruption that came with Covid-19 pandemic as most operations are currently driven by Information Technology(IT).
“Insurance business too has so much changed. A lot of new products are evolving and some of the existing products are no longer relevant. So, you need current data to work with to survive actively in this market now,” he stated.
On his part, the managing director/CEO, SCIB Nigeria Limited, Mr. Shola Tinubu said, dearth of data in the Nigerian insurance industry is undermining the growth of actuarial services in the sector, leading to under-pricing of risks.
Tinubu had said the dearth of data in the sector also contributed to the migration of many actuarial scientists to overseas where their services are highly needed.
“The insurance industry is supposed to deal more on statistics, data and figure analytics. In essence, actuaries are meant to assist the operators in pricing. Unfortunately, the industry has been totally uninterested in statistics and keeping of data as well as bringing forth the data to determine prices and claims, and plan for the future,” he stressed.
Tinubu pointed out that, “I read Actuarial Science in the University of Lagos and had many course mates who had first class in the course. Many of them wanted to practice the profession after school but had to travel out of the country because the only industry(insurance) where they could have served was not interested in their services.”
He, however, said, there is a reawakening of the knowledge that data and statistics are the bedrock of the insurance industry, adding that, operators are beginning to realize that they need the services of actuaries.
A management consultant, Ekerete Olawoye Gam-Ikon, stated that the marketing executives of insurance companies hit the roads daily in search of premiums to take back to their companies, which is because premium is what the insurer presumably requires to meet expectations of investors, shareholders, employees, policyholders, regulators and other statutory authorities.
“Interestingly, the gamechanger for the insurance sector in Nigeria lies in the form, shape, colour or context of the population of Nigerians that have or do not have insurance policies,” he noted.
Attributing dearth of data in the industry to limited number of actuaries in the industry, the commissioner for Insurance/CEO, National Insurance Commission(NAICOM), Mr Sunday Thomas, whose commission is currently sponsoring 60 professionals to be trained as actuaries in partnership with the College of Insurance and Financial Management (CIFM), Nigeria, said, the issue of measuring and taking necessary steps for effective pricing have made the Actuarial profession to be more pertinent more than ever before.
“There is need to develop young professionals and give them a future in the insurance industry and we are determined to develop their potential and make them relevance to the sector,” he said.
To him, only a couple of insurance companies have in-house actuaries and this is why the commission has intervened to stem the tide.
Thomas said actuaries were also needed to manage the Annuity business which was becoming quite significance and almost accounting for 35 to 40 per cent of the industry portfolio.
A content consultant at WinPure, Darren Wall said, the more accurate insurance data is, the more specific policies and pricing will be, adding that, “data visualisation for insurance agents becomes easier. This means policies will, in theory, become more cost-effective in the long run. It also will not hurt a company’s reputation.”
“Ultimately, inaccurate records and poor data collation can lead to more time and effort spent putting together policies.
Policyholders require quick action when they need to make claims. If insurance carrier data is poorly organized or is unclear in any way, time piles up,” he pointed out.
SOLUTIONS
The CEO of B.A Adedipe Associate Limited, Dr. ‘Biodun Adedipe said, the future of insurance industry is going to be driven by data, big data and digital channels, stating that, the industry must, as a matter of urgency, begin to harvest data, process it for use in product design and pricing as well as projections for the insurance industry in the country.
Gam-Ikon, who had earlier said, though there is dearth of data, noted that, the industry can process the data from the National Bureau of Statistics(NBS), the Central Bank of Nigeria(CBN), Independent National Electoral Commission(INEC), National Information Management Company(NIMC), Federal Roads Safety Corps(FRSC), National Communications Commission (NCC), Nigerian Immigration Service(NIS), Nigerians in Diaspora Commission (NIDCOM), among others, to determine which products or services suit each category of people.
To Gam-Ikon, “given the available data from the aforementioned reliable sources, promoting and marketing insurance products in a data-driven approach will require new and innovative ways by insurance companies.
“For example, offering existing 24-hour Personal Accident Insurance and Individual Life Assurance to registered voters with their PVCs and licensed drivers through a deliberate campaign in liaison with INEC and FRSC respectively could change the response of Nigerians to insurance.
“The pains to families every time accidents occur or lives are lost during general elections could be cushioned by the compensations from insurance companies to policyholders or their beneficiaries. Something needs to change about the way insurance companies promote and sell their products in this digital era.”
He pointed out that, indeed, the end result of the performance of the insurance sector in Nigeria by December 2022 will reveal how much the players depended on data-driven marketing rather than the traditional approach, which has kept the contribution of insurance to Nigeria’s GDP at 0.3 percent over the last 14 years.
A specialist in Insurance Technology, Faheem Shakeel, stated that, the insurance industry will always revolve around data. ‘”Without it, companies could lose billions of dollars and policyholders could receive inadequate coverage for their needs. The importance of clean data is obvious to all in the industry.
“Data insurance trends show that clean data collation (from multiple sources) could speed up claims. More importantly, clearer data automatically pulling from numerous banks and resources is likely to be more accurate. Manual underwriting could be making the insurance process more tedious for holders and agents alike,” he pointed out.
An actuarial scientist and chairman/CEO of Anchor Actuarial Services Limited, Mr. Pius Apere, said, the industry regulator should be responsible for providing most of the data needed for the industry, even though, the industry, through the Nigerian Insurers Association(NIA) can partner other agencies FRSC, NCC, NIMC, Fire Service, among others, to harvest usable and current data for the industry.
Apere, who was the former managing director/CEO, Linkage Assurance Plc, frown at a uniform pricing of N5,000, especially, for third party motor insurance, noting that, rate on Insurances ought to be flexible, if there are data to work with.
“Actuaries play a role in the design, marketing and management of products for life insurers – what lessons can be learnt from the past product failures. It also involve fixing premium rates and surrender values for policies and designing new types of policies. Actuaries have to make calculations also such as what funds will be needed to cover the company’s long- term liabilities and advice on how profits should be distributed to policyholders and shareholders. So, they are critical in data generation analysis and interpretation for the good of the insurance industry,” he stressed.
