The most tantalizing health and life insurance packages face the assured “God forbid” rebuttal, with a sprinkling of “it’s not my portion” on top.
Insurance is future relief against unforeseen events. By paying a fixed regular amount every month or so, an individual buys an ability to start, not from scratch, but from the point of last use when something wrong happens. Insurance preserves value and removes the fear of starting over, which can be crippling at times.
So why has it been difficult to get Nigerians interested in insurance plans? Adia Sowho doesn’t think this is a complex question.
During her time at Etisalat Nigeria, she attempted to partner with insurance companies to offer insurance to the telco’s customers. Those conversations fell through for different reasons but the experience helped form her current view of the difficulty in the market.
“Insurance is a product that carries quite a bit of sophistication,” Sowho said on Digital Identity Matters, a recent live discussion on the intersection of identity technology and insurance organised by VerifyMe Nigeria.
This sophistication shows up in the value users place on their possessions. An ideal insurance buyer would be seriously disturbed by the possibility of loss that they would do anything possible to minimise the future impact of such a loss.
However, the majority of Nigerians are just “not at that level of sophistication in our thinking just yet,” Sowho says.
Bayo Adesanya, the chief digital officer at AXA Mansard, a Nigerian insurance provider, agrees with Sowho’s framing of the problem. He is convinced that growth in insurance will be driven by retail adoption by an emerging type of consumer who has high expectations for convenience and familiarity.
“That segment will not buy a lot of the products that are on offer today because those products were not designed for them,” Adesanya says.
To correct this, he believes insurance products should be tailored to meet potential customers at points of contact that they are already used to.
That would mean integrating USSD functionalities for people who use feature phones, in place of paper-based enrollment and access systems. There is also room for practitioners to learn from traditional rotational savings and credit associations (ROSCAs), like the ajo system.
It’s a train of thought that appeals to Esigie Aguele, co-founder and CEO of VerifyMe. Changing present habits around insurance is a move to influence the culture and there’s no way to do so effectively without adapting formal insurance terminologies (like “premiums”) in ways that will be familiar to people who already have various forms of alternative insurance.
However, Aguele believes there is a great opportunity for accelerating adoption by using digital identity technology of the sort VerifyMe provides.
Founded in 2013 and evolved to a Know Your Customer tech company in 2017, VerifyMe provides digital verification services that comply with the Central Bank of Nigeria’s tier-3 standards for verification as well as requirements for anti-money laundering tracking.
At the moment, VerifyMe does tens of thousands of address verifications in a month, including for about 16 banks in Nigeria. Aguele says this ‘verification engine’ has shown an optimum capacity for verifying insurance customers’ assets in every local government area in Nigeria.
“The technology is there, the APIs are there today. But with the market we have, there’s a lot of need for regulation and enforcement so we can grow that market, while we work on the economic issues that will change cultural perceptions.”
Aguele’s optimism for insurance in Nigeria borrows from the state of the market in South Africa, which is worth $50bn and contributes 17 pecent to GDP. In his view, Nigeria – which has 3 times South Africa’s population, should be doing much better than the paltry sub-one-percent contribution to GDP.
Sowho is skeptical about the view that insurance will grow in Nigeria by a reliance on more regulation. Also, it will not be possible to try to innovate by circumventing existing regulations.
But she is confident that a reimagined approach that starts small and moves gradually up the user case scale will move the needle quicker. Of course, enabled by digital identity systems for crucial insurance components like address verification.