Executive Vice Chairman of IBN Insurance Brokers, Mr. Prosper Okpue, in this interview states that the small businesses which are the engine room of any economy have been neglected for too long in Nigeria.
By Rosemary Onuoha
THE general notion is that insurance brokers are too many, do you agree with that?
It is wrong to say that brokers are too many. In the business of insurance, there are too many structures. There are the heavy industries like the Dangotes and the oil companies as well as the small businesses that supply to the heavy industries.
The man who does a sack takes the tread from a small business. The small business man brings the nuts and bolts that they use in constructing the factories. The small businesses in this environment have been very much ignored by the insurance broking market. But those small businesses are the engine room of every economy.
If you go to Europe, America and our neighbours like Ghana and South Africa or Egypt and those countries that are used to insurance, commercial industrial insurances account for less than 40 per cent of their revenue.
The private insurances of the man who wants to insure his family, health, funeral for parents, his expensive or cheap wrist watches , his personal effects, and life insurances account for over 70 per cent of the global insurance market revenue.
Why do brokers concentrate on big ticket businesses?
Nigeria is a reverse in everything because when you see an opportunity to make money and you don’t need a ladder to climb to get it, you just pick it and go. That is exactly the kind of syndrome that our industry is facing. One time when the government was deeply involved in insurance, there was a national insurance company called NICON that had the monopoly of insuring all federal government assets. Some states government took the initiative to establish their own insurance companies like the Odua Group that had Great Nigeria, the easterners had Universal Insurance, and the northerners had Yankari Insurance with the sole purpose of insuring state owned facilities.
At that time brokers were not involved because by law you must present any federal entity to federal government and state entity to the state owned insurance companies. Then commercial brokers were working but were not that many. The remaining brokers who were not in the league of commercial insurance business were doing the small businesses and the private insurances. What went wrong? When you have liberalization of an economy, you also have liberalization of supply chain. So as soon as NICON was privatized and sold out and everybody can do whatever, a lot of companies came to bid. Opportunities opened to start-ups, insurance companies and brokers were licensed to do business. 80 per cent of the brokers licensed to do business were and are focused on the big ticket businesses of government and with the big ticket they will not be interested in private personal insurances. So that is the challenge that the industry has. So if you are involved in government companies and there is a lot of money involved, why should you be interested in the small businesses?
Is it proper for insurers to do direct marketing?
The world does not allow vacuum. If the intermediaries are not there to talk to the farmer, trader or businessman in the remote places, insurance companies must go there to get the business. I don’t see anything wrong with direct retail business of insurance companies because the brokers themselves are lazy. What does it take to do personal insurances? It requires a lot of critical mass and high level of technology.
The reason why brokers are not maximizing that opportunity is apathy because they are satisfied with what they are getting from government business. You find some brokers who are dealing with one government cooperation getting about N50 million. So they will not bother about the small insurer. But in IBN, we have the software that helps individuals to assess insurances online. When you log into our system, you get the rates of major insurance companies and the system will allow you to choose rather than an insurance company dominating you, you have the handle on how to manage your choice.
How can a broker thrive in the highly competitive insurance market?
You have to choose your turf, the area you have to specialise in. For you to mange individual insurances, you have to be technologically driven because it is critical mass. The man who lives in the village, his risk is different from the girl who lives in the city. So where you have the ability to determine where you will play, then develop your knowledge of the business, then you will be able to recommend the appropriate kind of insurance.