Mr. Gbenga Olawoyin is the General Manager/Chief Executive Officer of Wema Insurance Brokers Ltd. In this interview with ROSEMARY ONUOHA, he spoke on the challenges confronting the insurance sector since the commencement of the ‘No premium no cover’ policy.

No premium no cover mandate

Recall that the National Insurance Commission (NAICOM) recently embarked on enforcement of the ‘No premium no cover’ section of the Nigeria Insurance Act of 2003, section 50. In that section, the Act says that if you are buying insurance, the premium must have been paid in advance or agreed to be paid. But over the years, the regulator found out that we are having huge amount of receivable debtors.

Now if the Act says that the premium must have been paid before the contract of insurance is considered or the amount is agreed to be paid by the insured, there shouldn’t be huge receivables. But instead of the receivables coming down, it was just going up continuously. So the regulator now said ‘you know what, I think we are going to be strict with this aspect of the Act.’ So the ‘No premium no cover’ policy started. Everybody was aware of the direction that NAICOM is going. And by December last year, it took effect. So now the question will be ‘where are we? because that is what set the tone for 2013.

Insurance is not part of our culture, when we talk about insurance penetration and we say it is low, the first question should be why? So the reason why insurance penetration is low in this part of the world is because it is alien to our culture. It is very alien to our culture but is not actually alien to us. I will come back to explain that but let us concentrate on the fact that it is alien to our culture.

When you are selling a product that is alien, the issue is that it is not on the front burner of everybody’s needs. When you are checking your needs list it can’t be number one, it wont even be number two. So people that are managing to buy are just buying on the basis of ‘I will buy and pay later’ or ‘ok, ok, I will buy just give me, you know I will pay you later.’ This is what has been going on over time.

So by January 1st, NAICOM said ‘No premium, no cover.’ The reaction of some insurance consumers when they got wind of the new development was to laugh and say “We were only helping you before by patronising you, now you come up with this, ok, don’t worry too, when I have money, I will come to you.” So some consumers have not come back and that has slowed down activities a bit in the insurance sector.

But the question is ‘Is insurance really about, we are helping you?’ It is not. Insurance should be number one on the priority list of everyone.

Recall that I said earlier that one of the challenges of low penetration is that insurance is alien to our culture but it is not. Our culture is a social net and that social net is what I call affiliation, family ties and many others. Before now, if anything happens to a family member, the other family members will gather and contribute money to solve that issue.

If somebody’s child is sick to the point of death, a family meeting will be called and they will take it up from there. If somebody is ejected from his house, a family meeting will be called and the issue will be resolved. So that is family ties or affiliation. I mean community associations. You see this kind of meeting coming up and people just put hands together, put resources together to build people up and provide support, so that is our own way of meeting challenges, fortunes and misadventure. That is what insurance is all about.

So sometimes when we take matters as if they are alien to us, it is probably because we decided not to look at it critically. But we should put it side by side our culture and see whether it is actually alien to us.

Why insurance is important

Now what insurance is telling you is that you really don’t need your family members to bail you out. Also, you don’t really need your community members to sort you out when misfortunes arise or spread. What insurance is saying is that ‘This misfortune can be calculated, measured and can be planned for. All you needed to do is the payment of a token premium and that burden will be taken off your community members.

Besides, not even all of them are wishing you well anyway. You might have offended them so it will be time for them to take a pound of flesh. So insurance is saying ‘nobody needs to take a pound of flesh against you.’ Just come, walk into any insurance company or brokerage outfit as the case may be, sit down with them; they profile you, look at your issues and provide advice. So any broker working with you is providing advisory service. So we will profile and could say ‘look, this is what you bought, you have a house, what’s the value?

For some time now, the Nigerian Meteorological Center has been giving warnings of expected flood this year. So when we heard all the warnings, what did we do with it? Well, I think Lagos State Government has been encouraging people living in flood areas to move.