Marketing insurance with empathy

For as long as I can remember, the insurance subsector has been regarded by many as the underachiever of the financial sector. The reasons are legion. The banking sector contributes more to the Gross Domestic Product (GDP) than the insurance sector, the banks are also better capitalized and have bigger asset base than the insurance companies. In Europe and America, insurance companies own banks, but here the banks owned insurance companies until the CBN policy forced them to divest. Generally the banks are perceived to be contributing more to the Nigerian economy than the insurance companies.

However, the enormous potentials of the insurance subsector as a driver of economic stability and growth have never been lost on practitioners and the government. This was partly why the federal government in 2013 identified the insurance sub-sector as a one of the vehicles Nigeria will use to achieve its vision 20: 2020.

Among the challenges hindering the growth of insurance in Nigeria, which the former coordinating minister of the economy, Dr. Ngozi Okonjo-Iweala, rightly pointed out is lack of consumer trust. In an era where the customer’s kingship is being deified, lack of trust can deal a severe blow on the premium receipts of insurance companies.

In fact, take away premium income accruing from compulsory insurances and insurances made compulsory by certain sectors of the economy and what is left is negligible. The number of policy holders who voluntarily take up policies is much lower than those forced to take up insurance. This makes it imperative for a new paradigm in selling insurance: marketing insurance with empathy. Many marketers who go out there are mainly interested in meeting their targets and earning commissions when possible. As a result of this mindset, the interest of the insured takes the backseat. Insurance professionals must realize that even friends or family members who procure insurance policies through them do so because they want peace of mind; targets or commissions are incidental or secondary. They also expect some professional guidance. Beyond transferring the risks, they also want to transfer the “headache” associated with insurance documentation and the details of the insurance contracts.

Many of the reasons for distrust of insurance can be solved at the proposer form stage. Let us use motor, the commonest form of insurance. Like an “all risks” policy, many people who purchase comprehensive motor insurance policy ASSUME that all the risks associated with the ownership and usage of the vehicle have been taken care of. I capitalized ASSUME because many policy holders do not read the contract contained in the policy document. It the duty of the contact person (broker or marketer) to draw the attention of the policy holder to the potential landmines (exclusions and exceptions), so that he knows his limitations.

The policy holder should, for instance, be informed that in the event of a claim, even for a comprehensive motor policy, he will bear a portion of the claim, known as excess. He also needs to be told why after paying “so much” as premium for a comprehensive motor policy, he will still bear a portion of the loss. The contact person should let him know that the clause is inserted in the insurance contract to ensure that the policy holder takes reasonable care in maintaining and safe guarding the vehicle. The policy holder also needs to be further informed that he has the option of buying back the excess usually at one per cent of the insured value. The implication of the excess buyback is that in the event of a claim, the policy holder bears no part of the claim.

Another essential clause the insurance contact person should draw the attention of the proposer to is the Fidelity Guarantee Clause in the motor insurance contract. What this clause simply says is that if the vehicle is stolen by the driver or other domestic staff, the insurance company is not liable to indemnify (pay claim to the policy holder). Why? It is because there is a more appropriate policy, Fidelity Guarantee Insurance, which covers the dishonesty of employees. Insurance is like a relay race; where one policy stops, another takes off.

Having drawn the attention of the proposer to the clause, you can now advise him on the available options. One, he can take a separate fidelity guarantee policy or extend the motor policy to cover fidelity guarantee. Alternatively, he should do due diligence and police profiling before engaging a driver or other domestic staff. He should also ensure such domestic staff has at least one identifiable and reliable guarantor.

To some extent the attention of the proposer should be drawn to the usage part of the policy. If the policy covers private and domestic use only, he cannot go and do kabukabu with the vehicle on a weekend simply because he is being owed salary in the office or he is broke. In advising clients on this, the contact person needs to exercise some wisdom. For instance, you cannot advise an insured with a car valued at N40m not to use it for Kabukabu; that is an insult. The owner of a N40m vehicle is a high net worth client and unlikely to do kabukabu. Nobody in Nigeria uses a N40m vehicle for kabukabu, anyway. This is partly why the KYC (know your customer) form is very important. It helps in profiling clients and knowing who is who.

Empathy (putting yourself in the shoes of your client) is a very important ingredient in marketing. Empathy enables you to get into the mind of the client and anticipate his needs and expectations. For instance, how would you feel if after coughing out millions of naira in premium, your claim is avoided (not paid) because of an avoidable breach of a policy condition? Will you listen to that insensitive marketer who will tell you: “but sir, it is in the policy documents I gave to you?

This is why I strongly believe that marketing insurance ( especially for individuals) with empathy is very crucial in our drive to disabuse the minds of the insuring public, increase insurance appreciation, create more awareness and deepen insurance penetration. Relying on by-force insurance (compulsory insurances) is not good enough; the insurance industry will explode when more Nigerians voluntarily embrace insurance both for protection and as an investment instrument.

Francis Ewherido is the chief executive officer of Titan Insurance Brokers Limited