By LOVETH AZODO, Lagos
Just as fintech has disrupted the conventional banking system in Nigeria over the last decade, leading to loss of its prominence, electronic payments, mobile banking, and online transactions have taken the center stage as the insurance industry is currently experiencing a fintech revolution on all fronts.
This transformation aims to enhance its outcomes and adapt to the changing landscape.
For years, the process of settling third-party insurance claims had earned a notorious reputation for its sluggishness. This delayed response had a cascading effect, diminishing the relevance of such insurance, especially when third parties found themselves in the aftermath of an accident.
Time was a luxury they couldn’t afford, as the urgent need to repair their vehicles pressed on. Consequently, many motorists only held third-party policies because it was a legal obligation, yet they hesitated to apply for claims when accidents struck, largely due to the intricate and drawn-out nature of the claims process.
In the ongoing battle against fake insurance certificates, the insurance industry is facing a persistent challenge. This problem has been on the rise, largely due to the fact that motorists are only required to show a piece of paper to proof they had the third party insurance policy. when they’re pulled over by the vigilant Lagos State Traffic Management Authority (LASTMA) officials. Among the slew of documents they inspect, one of the key items they check for is the third-party insurance certificate.
The challenge lies in the fact that some motorists lack a deep understanding of insurance and cannot distinguish between fake and genuine certificates.
This knowledge gap has created an opportunity for unscrupulous individuals to sell certificates from defunct insurance companies to unsuspecting drivers.
Walking into a local computer center one day, a trader who prefers to remain anonymous arrived with a stack of documents that he intended to make photocopies of. Among this assortment was a certificate for a third party motor insurance policy from an insurance company that had faded into obscurity. When asked why he had purchased a fake insurance certificate, the trader frankly admitted that he didn’t even comprehend the document’s significance. He had paid N5000 for it to a persuasive individual he had encountered at the LASTMA office while registering his vehicles. His rationale was simple: “What is my business, as long as the LASTMA official lets me go after I show it to him?”
However, as he delved further into the issue, he was educated on the benefits he could gain from possessing a legitimate policy from a reputable insurer. The revelation was startling, and he committed to discarding the counterfeit document and visiting a bona fide insurance company to secure a genuine policy. This encounter shed light on a prevailing issue in the insurance sector, where ignorance and fraudulent practices often coexist in a complex ecosystem.
The insurance brokerage companies are not left out amongst the sub sector in the insurance industry faced with one challenge or the other as executive directors of insurance brokering firm often lament of underpaid or missing commissions along with the expensive manual cost of processing revenue.
Prominent insurance industry leaders are now actively embracing fintech solutions to address their challenges, and this transformative approach is beginning to reshape the sector, making insurance transactions more streamlined and user-friendly.
Sanlam Nigerian recently launched its Code of Confidence *1056#, the first of its kind in Nigeria.
According to the company, the code allows customers access speedy resolution of third-party insurance claims in cases of road emergencies, aims to enhance the claims experience for its valued customers by eliminating needless paperwork and unnecessary delays.
Speaking on the development, the Managing Director/CEO, Sanlam General Insurance Nigeria Limited, Bode Opadokun expressed excitement and affirmed thus, “We are delighted to introduce this Code of Confidence which revolutionizes the way our customers can access third-party claims. At Sanlam, we understand the importance of convenience and speed in the claims process. With this innovative service, we aim to provide our customers with a seamless and efficient experience at any time of need.”
Sanlam General Insurance Policyholder, John Victor Ebitom who hales from Benin City, Edo State shared how his reported motor claim was settled in less than an hour.
Ebitome reported the claims with the company’s Code of Confidence *1056#, USSD enabled device.
Expressing his excitement he said “My experience with Sanlam is waoh! The best in the industry. It took me less than an hour to access my claim, as I speak the money is resting in my account. waoh! Waoh! I least expect this!
To curb fake insurance policies, the National Insurers Association (NIA) announced its dedicated platform www.askniid.org and the USSD code 56511# to verify genuineness of their policies online real-time.
The www.askniid.org is where all insurance companies and agents are expected to upload the details of any motor insurance policy issued for record keeping and authentication. Therefore, any motor insurance policy that you buy and cannot be verified on the NIID portal is not authentic, even if it was bought from an insurance company.
The reason policyholders must ensure the authenticity of their policies is that when claims occur, they can be compensated adequately. Claims compensation cannot be paid to those with fake motor insurance certificate whose status cannot be ascertained on the NIID platform.
According Yetunde Ilori, Director General, NIA, “Verifying the authenticity of your vehicle insurance policy on the NIID gives you peace of mind and assurance that your claim will be paid”
Afriglobal Insurance Brokers Ltd, a provider of insurance risk advisory and intermediary services recently launched an insurtech digital platform that enables customers buy insurance via mobile devices without human intervention. The move is not unconnected to how the rising use of insurance technology as operators come to the realisation of the untapped goldmine in the industry.
Azubuike, MD/CEO of the company said, at the app presentation in Lagos, that the smart application in addition to allowing a complete transaction within the comfort of customers, is also designed to provide seamless experience and enable reporting of claims , processing of payment of claims and easy calculation and documentation of commissions.
While fintech’s entrance into the insurance sector is transforming the landscape, the regulator, National Insurance Commission (NAICOM), is acutely aware of the dual need to encourage innovation while maintaining financial stability and consumer protection.
The commission has established a dedicated department to focus on insurtech and has been actively engaging with industry stakeholders, including fintech startups and traditional insurers.
One of NAICOM’s notable initiatives is the Regulatory Sandbox. The move seek to provide insurance institutions, other firms and persons the opportunity to test business models, products and services that will enhance efficiency in meeting consumers’ needs; encourage innovation that will drive financial inclusion and positive competition as well as promote and deliver economic benefits, by lowering the cost of business operations.
Moreover, NAICOM is exploring the use of blockchain and artificial intelligence (AI) to enhance regulatory processes and reduce fraud. These technologies can create more transparent and efficient operations across the insurance value chain, from underwriting to claims management.
While witnessing positive strides, the insurance sector remains challenged due to insufficient fintech integration. Lapses persist in customer onboarding, claims processing inefficiencies, limited data analytics, and a dearth of innovative products. Fintech’s shallow impact hampers the industry’s growth, signaling the need for deeper technological adoption.
The Chairman of Heirs Holdings, Tony Elumelu, recently called on the insurance industry’s practitioners to embrace technology in their operations to drive market penetration.
Insurance penetration in the nation’s GDP has for donkey years remained at less than one percent, Elumelu attributed the low penetration to technology deficiency in the practice of the operators.
According to him, insurance penetration in Nigeria is still very low, compared with other countries like South Africa, which has the highest penetration on the continent.
He said: “Opportunities are huge in the Nigerian market and I strongly believe that technology is about to disrupt the status quo. It is the only way that penetration can increase.”
One notable lapse is the persistent challenge in the customer onboarding process. The traditional methods employed by insurance companies often involve cumbersome paperwork and prolonged verification processes. The limited integration of fintech solutions results in a slow and less user-friendly experience for potential policyholders.
To enhance insurance penetration, operators must shift from merely proclaiming “we pay claims” to the more compelling commitment of “we pay claims promptly.” This transition is pivotal for fostering trust and elevating the industry’s relevance.
Claims processing, a critical aspect of insurance operations, faces inefficiencies due to outdated systems. The absence of robust fintech applications leads to manual and time-consuming procedures, impacting the prompt settlement of claims. The delayed claims processing contributes to a loss of trust among policyholders and inhibits the industry’s overall growth.
Moreover, the inadequate utilization of data analytics hampers risk assessment and pricing strategies. Fintech solutions can enhance the industry’s analytical capabilities, enabling more accurate risk evaluation and personalized pricing models. The lack of technological integration leaves insurers relying on traditional and generalized approaches, potentially resulting in suboptimal risk management.
Additionally, the dearth of Insurtech platforms leads to a limited range of innovative insurance products. Fintech-driven advancements could facilitate the development of tailored policies, catering to diverse needs and preferences. The industry’s slow adoption of technological innovations stifles creativity in product offerings, limiting its appeal to a broader market.
The Nigerian insurance sector faces notable lapses stemming from the shallow penetration of fintech. Embracing technological advancements in customer onboarding, claims processing, data analytics, and product development is imperative for the industry’s growth and relevance in an increasingly digital world.
