Ascertaining the real growth and contributions by the insurance sector to the nation’s Gross Domestic Product (GDP) has remained a puzzle, as pundits have continued to juggle different figures due to dearth of data. Chuks Udo Okonta, in this report examines the importance of data and effects of insufficient data to the development of the insurance industry.
Over a decade, the belief that less than one million Nigerians have insurance policies and that the insurance industry contributes less than one per cent to the nation’s Gross Domestic Product (GDP) has remained unchanged in spite the efforts by the National Insurance Commission (NAICOM) and underwriting operators to growth the sector. This belief, whether true or false has remained due to dearth of data to show the real state of the industry.
Harvesting accurate data, has remained an albatross clogging the authentication of the real position of the industry. As accurate and exact data are not readily available, experts and analysts often rely on insufficient figures generated two to three years behind to make projections. The situation has continued to declined, as findings revealed that as the year 2019 is left with just few days to go, the exact position of the industry’s 2018 businesses are still being expected.
According to experts who decried the dearth of data in the industry, the sector can only finds its bearing when there are accurate data which would be analyzed, interpreted and secured to make informed decisions.
Former President, Nigerian Council of Registered Insurance Brokers (NCRIB) and Managing Director SCIB Nigeria Limited, Shola Tinubu, said insurance operators have raw data perishing in their files which are not worked on. According to him, harnessing robust data remains the panacea for the sector operators to achieve their set objectives.
He wondered how most operators develop their products, when they do not know the number of people that would like the products and possible claims ratio from such product.
“When I was in the University, I thought when I enter into the insurance industry, we would be playing games of statistics. I thought, I would be able to work on prices so that people would know the prices they will charge for the various insurance products. When I came, I observed that the practitioners are not interested in statistics.
“When they have the statistics, they leave them in the files and send it to the archives. If you asked them what is the claims experience of female drivers in their companies they do not know. The industry does not care about statistics, but now care about rates.
“They are interested in the money that comes out of rate not knowing that you must have the statistics to be able to get the rates right and get the money. That is why I believe we must educate ourselves on data,” he said.
Managing Director Leadway Assurance Limited/Chairman, Sub-Committee on Publicity and Communication, Insurers Committee, Oye Hassan-Odukale, believes the industry needs robust data to thrive. According to him, the sector just like the banking sector, stores a lot of data and data remains the sector’s raw material for growth.
He also canvassed the need to secure the available data from cyber crimes. “If you have a life policy, we may keep your data for 20 to 30 years. The security of data is important to us, therefore, all institutions that hold data, must protect it,” he posited.
Drawbacks to data collation
Over the years, the industry has continued to present estimated figures as gross premium; net premium and claims. It has been difficult for the industry to publish the total number of policyholders which would help put to rest the assumption that there is less than one million policyholders.
According to the Nigerian Insurers Association (NIA) 2017 Nigeria Insurance Digest, which helps to warehoused the sectors’ annual data, out of the 59 underwriting and reinsurance firms operating in the industry, data of nine firms were not captured owing to failure of the companies to submit their reports. The issue of submission of operating reports, has continued to distort the generation of accurate data for the industry.
Investigations have also revealed that most companies deliberately refuse to present their reports due to the unhealthy competition in the industry.
Development of Nigerian Insurance Industry Database
In 2010 the NIA took a major step towards eliminating fake insurance certificates in the market through the development of the Nigerian Insurance Industry Database (NIID), which went live in 2011. With the database, insurance policies obtained by motorists were checked real time online on the internet and through dedicated hand held devices.
According to the NIA, the objective of the NIID is to serve as an authentic database of the Nigerian insurance industry data providing qualitative statistics/analysis of the industry data! as well as a vehicle for easy verification of genuine insurance certificates by all stakeholders and to reduce incidences of fraudulent insurance transactions especially for motor and marine policies.
Good as the NIID platform is, the refusal of some operators to upload their data has remained a challenge to the deployment of the system.
To ensure operators comply with the directives issued by the NIA, to operators for them to upload their date on the NIID, the Director-General of the NIA, Mrs Yetunde Ilori, said the association has being moving from one insurance company to another to implore and drum the need for operators to upload their sold motor policies on the NIID.
According to Mrs. Ilori, only 2.5 million vehicles out of over 13 million vehicles in the country have so far been captured on the NIID.
Investigations revealed that the NIA generated N153.10 million in 2017, from data uploads on the NIID.
The association said interest accrued on the NIID accounts was N3.06 million; disbursement during the year, N102.07 million; transfer to the association’s account, N43.40 million, while the balance at the end of the year stood at N79.97 million.
The Director-General of the association, said the implementation of the NIID has transformed the motor insurance policy landscape of Nigerian insurance industry, stressing that the NIID has become a household name among stakeholders across the federation.
KPMG in its Insurtect 10: Trends for 2019, stated that data is expected to power connectivity with customers, generate insights into customer behavior, driving risk pricing and customer engagement, hence insurers that do not have control of data will likely be in trouble and are likely to get left behind.
It posited that insurers need data for the insights that analytics can provide them to assess risk from the individual up to macro trends. “But, like oil, it is getting hard to extract, particularly if you are using inappropriate or suboptimal processes, that any lack of data can create gaps and cause integration and process flow issues, so it needs to be assessed as an end-to-end process,” it said.
To underscore the need for robust data in taking the industry to lofty heights, the Acting Commissioner for Insurance and helmsnan, NAICOM, Sunday Thomas, said as parts of the commission’s strategic agenda, it would continue to focus on the industry data gathering, integrity and mining.
Experts believe that the multi-billion Naira to be raised in the ongoing recapitalisation can only change the industry when operators refocus their attention on data analytics, which would help them evolves people oriented products, understand customer behaviors and act on them even before they occur — without the need of a crystal ball!
They also opined that for the sector to have a robust data to drive its operations, all the various arms must give priority to data generation, processing and usage.
As data has remained one of the best tools for planning, insurance sector can never achieve formidable plans amid insufficient data. Therefore, operators who hitherto, allow raw data to perish in their archives should rise to the challenge by engaging in full processing and analysing of available data to evolve people friendly products, measure claims ratio, policyholders demography thereby showcasing the real number of policyholders and contributions of the sector to the economy.