African Alliance Insurance Plc is the oldest Life insurance specialist in the country yet it has weathered the storm through the years and still flourishingÂ at 50 years.
The Managing director of the company, Mr Alphonse Okpor in this interview with Patience Saghana relays the challenges and prospects in life insurance business, touches onÂ topical issues such as the industry market agreement, the 2010 guidelines released by NAICOM among others including the driving force behind the company’s success of over five decades.
What are the challenges to life insurance business in this country?
Life insurance would have received a lot of boost but because of the Pension Reform Act, the Pension Reform Act has made the group life compulsory for both the government and private sector though some states are yet to implement the group life even the federal government has not fully obeyed the compulsory group life.
The state governments are already implementing the group life in stages.Â The private sectors are also complying with it to some extent but not all have fully complied. I think because there are no stiff penalties yet against defaulter otherwise it would have actually gone a long way to speed up compliance.
That would have given life (insurance) offices a good lift. I must say that individuals are now more conscious of life insurance than ever before. And that has awakened the consciousness which is a right step in the right direction.
The attitude of Nigerians towards insurance particularly life insurance is fast changing for the better. Under the Pension Reform Act, even when an employee contributes to his retirement, at retirement, he cannot collect his retirement benefit en_bloc as it used to be, he must buy annuity. Annuity is a payment of income until the person dies and African Alliance is also into annuity. We guarantee the payment until the person dies and under such arrangement, a life company cannot afford to tinker with its income. There is need for prudency in order to meet clients expectations as at when due.
How can life (insurance) offices key in to the opportunitiesÂ in the group life insurance?
It is not group life insurance that is boosting the life business in South Africa. The group Life is not made compulsory in South Africa but it is compulsory in Nigeria. It is the individual life insurance that is boosting the life business in South Africa. In Nigeria, people are of afraid of death.
The word ‘Obituary’ scare them off whereas if a company beautifies the name, Nigerians will embrace it with open handsÂ but anything that has to do with death is like a taboo. When a breadwinner dies, there is always need for money before the family or relation could stand on their own. Instead of calling it ‘obituary insurance’ insurers can give it a name that will appeal to Nigerians.
The prospects for life business this year is very bright.Â For instance, Federal Government has directed that all ministries and parastatals to package their insurance in their budget so as to make it easier. It used to be lumped up together under the control of Head of Service of government. Government is also trying to make sure that each company complied with the group life. The prospects for life insurance business this year is very bright.
How long do you think operators will obey the industry’s market agreement?
The aim of the market agreement is to curtail corruption in the insurance industry and the sector as you know, is part of the economy. We hope that the Nigeria insurance industry will pioneer the change that we need to move the nation’s economy forward.
If we all insurance companies conform to the market agreement, there will be some level of sanity in the way and manner we conduct our businesses which will by extension inculcate discipline in the market.Â Â The market agreement is already checkmating some operators thus reminding them now and then that it is no longer business as usual.
What are the sanctions against defaulters?
Yes. A company can incur the wrath of the National Insurance Commission to the extent of having its license withdrawn. It is not a toothless bull_dog agreement. The penalties are there and practitioners know the consequences of disobeying the rules.
What are the challenges in the 2010 insurance guidelines released by NAICOM?
Life insurance companies have always had tight_rule guidelines as related to investment. We at African Alliance Insurance always follow the guidelines such as it concerns property or real estate. We have always complied with investment laws and guidelines.
Why pick Ghana from among the African countries?
We are looking beyond Ghana though we are familiar with Ghana’s business environment hence we decided to start from a familiar terrain before going into other countries. We have also acquired a company in Sierra Leone. We might even go beyond Africa with time but for now, we are focusing on English speaking countries.
How many Nigeria Life offices did the company acquired in the last recapitalization exercise?
We did not buy into any life company here in Nigeria only in Ghana. We do not blow our trumpet because of the nature of our business, we are a life company. We insure human beings and insurance by nature, is a conservative business. Again, we are not flamboyant the way we do things like the banks do and that has put them into trouble. What any financial institution should concentrate on is making sure that the organization is well run and not be seen everywhere unnecessarily.
Last year, we paid out claims of over N1billion. It is only our clients that advertise us because of the way we conduct our business. They always stick to us because they know that they cannot get a better deal, treatment and services that we rendered them in any other place. We cannot afford to jeopardise the trust of our clients because lives are involved. Staying alive and thriving at 50 is not a child’s play. Our paid up capital is N10.2billion. We are not in the business to make noise but we are well known for what we do best, life business.
What has African Alliance fared?
African Alliance has fared well in the last fifty years. It is an old company in the market and still thriving since 1960 to date. We shall be Fifty years by the grace of God, in May this year. The company became a Plc on September 17, 2009. And African Alliance has grown in leaps and bounds over the years and has also maintained its status of a specialist life company.
The capital base required to run or operate a life company is N2billion but we have over N10 billion already. In terms of assets, we are one of the highest in the industry. Many people are depending on the company for their pensions, we have paid pensions to so many organizations and individuals respectively. The company has done very well.
What are the major accounts of the company?
I cannot name all the major schemes we have been participating in but l can tell you that we are in the civil service scheme, Shell, Agip, Chevron, Guinness, Cadbury etc. We have participated in the group life scheme of all major companies in the country.
We also sell to individuals.Â In terms of Government schemes under the Pension Reform act, we are one of the participants for Lagos State, Ogun and Bauchi States and the Federal Government. There are so many other schemes coming up as the states and federal government implement the Pension Reform Act. Apart from that, there are some big parastatals that the company is also managing their schemes, like the Ajaokuta Steel, the Nigerian Oil Mining Company and a lot of others that l cannot remember now.
With all these accounts and a lot more to your credit, why is the company not blowing its trumpet?
African Alliance has so many buildings andÂ the building we are occupying presently is a temporary one because of the collapse of Bank of Industry building on Broad Street that caused business within that axis to be at standstill for several months.
We had to leave our own building on Broad Street down to where l am speaking to you now as an emergency relief for the mean time but we are already renovating our building on Broad Street and we hope to celebrate our 50th anniversary in our own building.