Unlocking hidden potential of Nigeria insurance industry
Studies reveal that a positive correlation between a high insurance penetration and higher economic development thus the supporting role insurance plays in stimulating economic growth. Bearing this in mind, one can only imagine what effect an increase in insurance penetration even by the slightest margin will have on the overall Nigerian economy. A number of challenges including; inappropriate pricing and risk profiling, poor product-market fit, inadequate distribution channels and low public confidence currently plague the Nigerian insurance industry. Prior to the COVID-19 pandemic, the industry players were already exploring a range of options to help militate against these challenges.
The regulator, the National Insurance Commission (NAICOM) in 2019 reviewed and increased the capital requirements for various classes of insurers in Nigeria. This was part of its on-going industry reform efforts to help to restore public confidence in the industry and boost international competitiveness of local operators thus shape the future and development of the Nigerian insurance industry.
Besides the regulators, leading Nigerian insurers were already rethinking their processes and business models. Faced with a changing global business environment and evolving customer preferences and seeking to enable efficiency and cost savings, many sort to adjust their investments priorities towards critical technologies and refocus their efforts toward transforming or modernizing their core technology systems. A year and a half into the pandemic, these technology leaders have emerged with better results making the possession of core technology systems a great differentiator between those who were able to ride-the-wave of the pandemic and those who are still struggling.
According to Deloitte and Accenture, digitally mature organizations were able to cope with the challenges triggered by the pandemic.
They were “more resilient, better able to navigate change and perform significantly better financially as compared to the businesses without a cohesive digital strategy.” Modern core technology platforms are the foundations of digital maturity and the answer to unlocking the hidden potential of Nigeria’s insurance industry. Such platforms have the inbuilt scalability; resilience and adaptability that enable insurers to not only survive but also thrive during disruptive times as we are currently in.
A strong foundation enables insurers to quickly adapt and continue delivering insurance solutions including instant policy underwriting and faster claims processing that build customer confidence and loyalty. Modern core platforms like TurnQuest Insurance Suite support the critical core operational functions of an insurance business forming the foundation for new technology integration that enable deeper customer and market insights and faster speed-to-market for products.
Insurers are also able to go further in leveraging new technologies and tools like APIs, digital platforms, cloud computing and cyber security tools that have become so critical in this post-pandemic ‘new normal’ era. With a strong core, insurers are able to consolidate insurance operations leading to immeasurable efficiency gains through lowered cost of doing business and affordable products thus increased insurance penetration.
Kizito Makatiani is the chief executive officer, Turnkey Africa Limited.
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