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Rate cutting undermining patronage for mobile insurance — Operators

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By Rosemary Iwunze

The expected increase in the sale of third party motor insurance through the Unstructured Supplementary Service Data, USSD, channel, otherwise known as mobile insurance, is being undermined by the reoccurring menace of rate cutting.

This, according to insurance practitioners, is due to the fact that some insurance companies still sell third party motor policy below the standard price of N5,000.

Consequently, most customers would rather buy at the reduced rate than through the USSD channel.

This was confirmed by some insurance companies that have embraced the USSD platform in selling their products. They complained about decline in patronage for that line of business due to the unethical practice of other companies.

The USSD is a simple self-service solution which enables car owners/users to purchase authentic third party motor insurance with the use of their mobile phones. The application is meant to be available to all customers, regardless of their GSM network, type of phone, or internet access.

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Speaking to Vanguard on the development, Managing Director of Sunu Assurances Nigeria Plc, Mr. Samuel Ogbodu said they are getting low patronage due to the activities of those that are selling below the standard rate.

Ogbodu said: “The use of USSD platform to sell motor insurance is a flagship initiative of Sunu in the industry. Unfortunately, some companies are not selling at the rate of N5000 at which we are selling, as a result of that, we are getting low patronage, that is why the product is performing below expectation.”

According to Ogbodu, rather than cut rates, insurance operators should be innovative by building good relationships with their customers while emphasising efficient service delivery.

Another chief executive who spoke on condition of anonymity said that the USSD application which ordinarily should serve as a platform for customer engagement, claims payment and other after-purchase services is not being utilised optimally.

It is being undermined by customers seeking to buy cheap motor insurance.

He said: “The USSD platform guarantees customer convenience, easy and secure access, real-time interaction and speedy service. Unfortunately, patronage has been below expectation.”

Vanguard News Nigeria

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