Top 5
With a thriving middle class and a population of over 168 million growing at 2.5 percent per annum, Nigeria possesses demographics no investor can ignore.
The huge population presents countless opportunities for insurers, particularly in the retail space, as the National Insurance Commission (NAICOM) continues to seek viable means of improving insurance penetration, which remains below one percent. Although NAICOM has made notable progress in the restructuring and revamping of the Nigerian insurance industry since the financial market turbulence between 2008-2010, the operating environment still presents perennial challenges. These include major concerns such as security, infrastructural limitations, underemployment and unemployment, among others.
Despite such concerns, the Nigerian economy has remained resilient, delivering an estimated GDP growth of 6.8 percent, consolidating its position as the largest economy in Africa and one of the top 30 in the world, after the GDP rebasing in 2014.
Income levels and consumer behaviour will continue to shape the attractiveness of Nigeria’s retail market
While insurance penetration remains low, Nigeria’s population is growing rapidly and is forecast to reach 209 million by 2021. Half of that population will be younger than 25 years old. This presents an opportunity for underwriters in Nigeria to explore the untapped potential of a larger retail market with the largest population in Africa and the eighth-largest in the world.
Retail market
Income levels and consumer behaviour will continue to shape the attractiveness of the country’s retail market because economic growth will translate into rising disposable income for many Nigerians, which will strongly influence social classification. Nigerian consumers are becoming increasingly sophisticated and since 2000 real private consumption has grown by an average of 9.3 percent per year. While the Nigerian consumer market is growing, government efforts to improve the business environment and reduce inflation are expected to result in stronger growth in the insurance sector.
Terrorism and insurgency in the north has remained a key priority of the Nigerian Government. The security challenges, which have resulted in the destruction of key infrastructure, have the potential to disrupt business operations and reduce foreign direct investments, particularly in the affected states. The government is expected to continue in its efforts to explore all viable options in curtailing these security issues. The implication of this societal unrest for insurers in the medium- to long-term is the creation of specialised products and services that can help governments and communities minimise losses due to terrorism.
The level of competitiveness within the insurance industry is expected to increase, especially as foreign insurers have caught wind of the gaps in the Nigerian insurance space, particularly within the retail segment. They have expressed keen interest and made strides to own investing stakes in the sector, this emergence in this sector is a testament to the vast potential within the Nigerian market.
Based on the identified trends and opportunities, FBN Insurance’s go-to-market strategy is hinged on deepening our footprints in the retail insurance space and expansion into the non-life insurance segment. Our key objective is to stabilise and sustain our growth through our disciplined approach to underwriting and conservative investment strategy; this means we maintain a focused approach in the execution of our long-term strategy, while positioning ourselves to exploit emerging opportunities in the insurance industry.
Continental knowledge
We have set industry records by proffering attractive insurance packages for all Nigerians irrespective of factors such as age, occupation, income and location. Despite the sustained apathy and cautiousness of customers to the insurance industry in Nigeria, our gross premium grew by 35 percent over a period of 12 months. Our corporate, retail, credit life and alternative business lines contributed 19 percent, 59 percent, 20 percent and one percent respectively, to premium income for the year 2013 and our profit before tax grew by 22 percent. This growth is attributed to our disciplined underwriting practices, cost optimisation initiatives and improved returns on strategic investments.
FBN Insurance leverages on the knowledge of its local partner FBN Holdings and the international expertise of its foreign partner, Sanlam Emerging Markets (Sanlam EM), one of the largest financial institutions in South Africa. Sanlam EM, a subsidiary of Sanlam Group, is one of Africa’s foremost insurance providers, with over nine decades of experience managing life insurance businesses in a number of Sub-Saharan African countries, as well as Europe, Asia and the US. These partners provide technical implementation assistance and ongoing management support to the company’s operations.
Our enduring commitment to our core values, coupled with the overwhelming support of our shareholders, experienced board members, competent management team and professional employees has propelled us towards ensuring best practices are implemented and sustained across the organisation.
Furthermore, we conduct regular extensive market research that guides our business strategy and policy direction. This provides distilled insights from macroeconomic and industry trends, helps estimate the size of emerging opportunities and understand customer buying patterns and motivations; our customer centricity influences our approach to innovative product development and drives tailoring services to the key customer segments. The launch of our mobile insurance product – the first of its kind in the Nigerian Insurance Industry – is a testimony to our commitment to championing innovation in the industry and the promotion of insurance penetration through efficient and low-cost channels. We are convinced this will gradually drive financial inclusion by granting access to simple, affordable and convenient life protection plans through mobile phones.
In a highly competitive sector, such as the insurance industry, the tendency exists for key players to appear very similar in terms of product and service delivery. At FBN Insurance, we ensure that we focus on and exploit our competitive advantages in the industry. We are convinced that the brand strength of our owners and commitment to excellence and innovation are key factors that differentiate us from the rest. Particularly in an industry plagued by a persistent lack of trust and confidence from customers, the reputation of an insurer in Nigeria is critical to its success. We are proud that the brand strength of our owners echoes stability, financial strength, expertise and reliability. Consequently, we believe customers who truly want to protect the people they love will put their trust in the reliability we offer. Our products and services are competitively priced without sacrificing quality. As we design products we ensure flexibility by carefully considering the unique needs of our customers to develop fit-for-purpose products. As the pioneers of mobile insurance in Nigeria, we will continue championing innovation in the industry.
In line with our expansion strategy, FBN Insurance is finalising the acquisition of a general insurance license. This will stretch our product range to include insurance services such as household, motor, marine, oil and gas.
Consumer needs
The organisation’s existing products, which include group and individual policies, are designed to accommodate differing consumer needs. These products are categorised as risks, savings and hybrid plans.
These products are in consonance with our commitment to deepen market penetration by providing low cost insurance products through multiple distribution channels that would benefit the mass market in Nigeria.
We are particularly concerned about what happens after a death and the continuity of the living standards of a family when the breadwinner is gone. In many homes in Nigeria, the death of the breadwinner has brought about a total decline in the living standards of the dependants. Even critical illness or the permanent disability of the breadwinner has led to children dropping out of school and engaging in anti-social activities because there were no funds to continue their education or lead their once normal life.
Celebrities, as well as ordinary citizens, have had to turn to the government or the general public when hit by an unexpected illness such as stroke or a permanent disability, because they were not covered by insurance policies that could have borne such unexpected costs.
It is therefore essential that high-net-worth individuals, the political class, schools, religious organisations, professional bodies, affinity groups, open markets and market associations, cooperative societies and government institutions, embrace insurance to avoid financial upheavals and the potential disruption of lives and businesses in the wake of the unexpected.
We are carving a niche in the retail insurance market through the provision of innovative and solution-driven products that create value for all stakeholders, despite the many challenges brimming in the macro environment and the unique demands of doing business in today’s evolving economy. We will continue to stay true to our aspiration, as bastions of stability, delivering high-standard and fit-for-purpose offerings that will address every Nigerian’s insurance needs.
