Let’s get this out of the way first: insurance is not always fair. And users are always demanding some changes. Also, before we go too deep into this discussion, remember that because money is tight for many young Nigerians, it is quite tough to sell them insurance, which some of them see a costly luxury. So, if you’re an insurance company and you want these folks to see the light, should you be peddling the same didactic talking points that for many years have not worked for traditional insurance companies? Of course, you shouldn’t. You should try a different approach, no matter how hard your school training resists that.
Now, you ask: why don’t people want to buy insurance, despite how obviously good insurance is for them? Well, many Nigerians see insurance as stealing. Sorry, but they truly do. They think insurance is legalised money snatching by the private citizens who own those insurance companies.
And how is this belief bolstered? It’s by making customers watch their premiums vanish into thin air. Besides, I’ve spoken to at least 12 insurance salespeople and they all agree that it’s insanely difficult to sell insurance to Nigerians. This is not just because Nigerians believe nothing bad will ever happen to them (“God forbid bad thing… blood of Jesus! Tufiakwa!”). It is more about the reality of our widespread, crushing poverty.
The National Bureau of Statistics said in 2020 that 83 million Nigerians lived below the poverty line. So, those ones won’t buy insurance, will they? They’re still struggling to eat. Now, move to the next batch of Nigerians, those who live above the poverty line. To live above the poverty line doesn’t mean you’re rich or that you’ve got money to put away in case something bad happens. You may likely be living on the edge of destitution.
For this reason, pouring money into insurance could seem like an expensive joke, particularly if the contract is in accordance with the old ways of doing things. For decades, traditional insurance has been like this: if you insure yourself or your company against some risk and the event you fear never happens, you have to say bye-bye to all the premiums you’ve paid to the insurer.
Which is why, more often than not, buying instance feels like gambling in a casino… the house will always win — and why, going by a 2018 survey by the Chartered Insurance Institute of Nigeria, nine out 10 Nigerians do not have any form of insurance. Insurance is bought mostly by employers and vehicle owners because they’re compelled by law to do so.
But, can something be done about this lopsided advantage that insurance companies are perceived to have? Well, yes. In fact, looking at insurtech (digital insurance carriers), you’d see that customer discontent in insurance has become their bread and butter. It’s why the global insurtech market is estimated to reach $5.45 billion in size in 2022, according to projections by Grand View Research, a market research and consulting firm operating out of India and the United States.
To convince more people to buy insurance, insurtech companies are promising to bring two main revolutions into to the insurance game: business transparency and creative products. The top insurtech start-ups in the world — Oscar Health, ZhongAn, Gusto, Bright Health, Clover Health, Root Insurance, American Aid, Lemonade — not only have easy-to-navigate user interfaces on their mobile applications and websites; they also advertise previously unheard-of policies that may be… “personalised”.
Here in Nigeria, insurtech firms like Casava, Curacel, and Paddy Cover are doing things in similar fashion. On Casava’s website, the c tout phrases like “hassle-free” and boldly declare: “We pay claims. Period.” Oh, how nice.
Indeed, the promise of progress that insurtech brings makes it catnip for investors. Although Casava isn’t near Oscar Health’s $1.5 billion private investment, it has so far raised $4 million pre-seed, and, of course, Oscar was founded in 2012, nine years before Bode Pedro launched Casava.
Back to the matter of vanishing money, some of the most modern insurance firms around the world have designed products to make consumers get something out, no matter what happens. In South Africa, for instance, there’s a company that’s literally named itself Outsurance. Why? Because with them, “you always get something out.”
In the US, there’s Liberty Mutual and Geico which present simplified combo coverage under such concepts as coverage bundling (insure house plus car in one policy) and chose how much you’d like to pay in premium. These are not particularly new ideas, yes, but the language and presentation have become less mysterious.
Among Nigerian legacy insurance firms, Leadway appears to be the most visible business to have noticed this fresh thinking and is giving it a shot. A senior manager at the company confirms to me that Leadway does have its own combo insurance. “We call them LHAPPY and LBOSS,” he says. “LHAPPY covers the home, belongings, cars, individuals at home, as well as any risk happening to your guests. On the other hand, LBOSS covers your business assets, buildings, equipment, cars and staff — in the case they pass on, there’s a life insurance pay-out.”
Leadway’s products are varied and there are a number of them which double as savings plans. Which means, if nothing happens to trigger a claim, the policyholder may get their money back, with interest. As if they’d put their money in a savings account.
The implication of all of this then is, for insurtech and legacy companies, the time has come to tweak their messages to consumers. They need to stop trying to force it into people’s heads that insurance is great and that it’s foolish to not be covered. Everyone knows that. Instead, they should tell riveting stories about their simplified processes, personalised services, trustworthy systems, and how it’s now more likely to not lose money even if you never make a claim.
It’s possible to argue that, at this moment, there are regulatory conditions clipping the wings of local insurance companies. But, at the end of the day, this rising wave of creativity and innovation cannot be stopped. Technology will continue to disrupt outmoded systems — look at the banking market — and you, the consumer will ultimately have good things.