NAICOM Lists Measures To Revitalise Insurance Sector For $1tr Economy

 

 Harboursandport.com: Lagos – October 1, 2024: The Commissioner for Insurance, Mr. Olusegun Omosehin, has said that challenges such as low insurance penetration, lack of public trust, market fragmentation, regulatory reforms, as well as digital transformation and adaptation must be addressed to revitalize the insurance industry to risk-manage Nigeria’s one-trillion-dollar economic aspiration.

Omosehin stated this during his keynote address at the Insurance Meets Tech, IMT, 2024 Conference in Lagos.

Segun Omosehin, Commissioner For Insurance

While presenting a Keynote address on the theme: “Revitalising the Insurance Industry to Risk-Manage Nigeria’s One-Trillion-Dollar Economic Aspiration” Omosehin noted that the Commission plays a vital role in fostering innovative business solutions that address pressing economic and social issues in Nigeria's insurance sector.

He said: “This commitment extends to ensuring prompt settlement of legitimate claims, promoting market growth through innovation, and driving commercial value within the industry. In achieving this objective of revitalising the insurance industry, we must of necessity address the following fundamental issues plaguing the sector, which include among others; low insurance penetration, lack of public trust, market fragmentation, regulatory reforms, as well as digital transformation and adaptation.”

According to the Commissioner, essentially, revitalizing the Nigerian insurance industry to risk-manage Nigeria’s One Trillion Dollar Economy literally speaks to the insurance industry’s readiness and preparedness to de-risk the activities that is projected to galvanize productivity, innovations, economic growth and development.

He said: “With the rapid changes in technology and economic/business environment, this discuss is not just timely but also topical to reawaken the need for our dear industry to rise up to the current realities of what is expected of us as an industry. This will lead us ask the question; are we where we should be as an Industry? And your answers may definitely not be different from mine – No. A further question will now be; how do we intend to get to where we should be?”

Omosehin said that to remain competitive, “It is crucial that we proactively incorporate innovative Insurtech solutions that will change our conventional business models, thereby safeguarding our continued relevance in addressing customer needs and market position. The Commission had since understood this reality and issued the Regulatory Sandbox Guideline to accommodate the testing and refinement of innovative products. Consequently, we established a Directorate for Innovation and Regulation, recognizing that change requires new approaches.

“The Commission has also completed a draft Insurtech Operation Guidelines which shall be released very soon. The current realities of economic instability, climate change, rapid technological advancement, changing behaviour of consumers, soaring inflation and forex instability on global financial markets have disrupted ways financial services are carried out. Hence, we must imbibe technology in order for us to have a one-stop shop for insurance products and services. Innovation and sustainability are some of the major emerging issues today.

“The insurance sector must embrace innovation to meet up with the rapid market changes, changes in consumers’ preferences, tastes and lifestyle. We must develop products that meets the demands of our market as innovation have taken the driving force in the financial services sector. More critical to the theme is the issue of financial soundness and stability of insurance institutions, as a strong financial base is key to our success as an industry. Having sufficient capital that is commensurate to the risk of an insurer has become inevitable if the industry is to meet up with up with the consequential effect of a growing economy, managing a one trillion economy and compete with our counterparts across the globe in management of risks.

“As I recently mentioned in my address to professionals in the industry, to achieve the aforementioned the insurance industry must develop a wide range of new skill sets and orientation, attract and retain talents, diversify our products spectrum, improve our adaptability and agility, improve on transparency and openness, and importantly, invest in technology. These and many more factors are to be considered if we must de-risk the economy.

“In conclusion, it is critical to note that navigating the current macroeconomic realities successfully would be a natural precursor and building blocks for the revitalization of the insurance industry and this must of necessity prioritize; Inflation Impact: This has been a major concern for the insurance sector. Rising prices affect both insurers and policyholders. For insurance companies, it can make it difficult to operate profitably, especially if claims costs increase due to inflation. To mitigate this, insurers must carefully manage their investment portfolios, adapt pricing strategies, and maintain adequate reserves.

“Digitalization and Adaptation: The need to embrace digitalization is critical. Insurers must modernize their processes, enhance customer experiences through digital channels, and invest in technology to streamline operations. Adapting to changing consumer behaviours and preferences is equally important. Offering online policy purchase, claims processing, and customer service can attract tech-savvy customers.”