Insurance, Pension Stakeholders Commend NAIPCO on 6th National Conference

• Urges Insurance, Pension operators to design products to meet people’s needs

 

 The insurance and Pension communities in Nigeria and Diaspora were agog as the National Association of Insurance and Pension Correspondents (NAIPCO) held its 6th edition National Conference in Oriental Hotel, Victoria Island, Lagos with the theme: “Covid:19 Impact On Financial Inclusion; Opportunities For Insurance and Pension Sectors.”

In his welcome address, Chairman, NAIPCO Chuks Udo Okonta stated that the Association executive has kept the faith with the objective to embark on developmental journalism, building on the legacies they met on ground and re-tweak to add further values, participating actively in reshaping the Insurance and Pension industries and propelling them to growth.

Okonta lamented that the last two years have been extremely hard for Nigerians, Africans and the world at large following the invasion of the deadly coronavirus pandemic across the world and Nigeria inclusive.

Consequently, he said, human interfaces were limited, most operations went online and those who were not technologically savvy were left in the dustbin of the past, as the world matches on with full speed.

“Though, businesses closed shops, people died and sources of livelihood shrank as a result of the pandemic, it opened up several opportunities in other areas of businesses that may not have been explored if not for the Covid-19,” he said.

In a similar scenario, he pointed out that procuring insurance products becomes easier, while the Pension Fund Administrators (PFAs) have improved on technology to serve customers better and seamless.

According to him, “For those who had Business interruption insurance coverage and health insurance cover during the peak of the pandemic, the insurance industry came to their rescue; most of them were back on their feet again.

“Similarly, for those who lost jobs while the crisis lasted, the pension contributors were able to access 25 per cent of savings in their Retirement Savings Accounts (RSAs) courtesy of the pension industry.

“People are gradually eager to insure their lives and businesses, provided they are enlightened and convinced they are dealing with the right people… Similarly, workers are forcing companies to meet their monthly pension obligations, so as to ensure that, whatever happens in the future, they have a good retirement, ensure their family do not suffer after their demise, among others.”

The NAIPCO Chairman stressed that this current development creates an opportunity for both sectorial players to increase their awareness and widen their tentacle to capture this niche market.

He commended all members of the 2021 Conference and Editorial Committees, sponsors, resources persons and eminent personalities who made the Conference a reality.

In his opening remark, the conference Chairman and Chairman/CEO, Prestige Insurance Brokers Ltd; Prince Feyisayo Soyewo applauded NAIPCO for its effective coverage of events in both the Insurance and pension sectors.

Soyewo recalled how members of the Association assisted the Nigerian Council of Registered Insurance Brokers (NCRIB) during his tenure as the President in achieving its cardinal focus which was significantly anchored on image making and strategic engagement.

He stated that “it was also a time when the Council had to fight its legal battles with the regulator with regards to the acceptance of the NCRIB Act 2003. It is heartwarming that the Council won the various legal battles through partly the positive support and positive reportage of the media at the time. Part of the fallout of the whole episode has today helped to put our Council in the headlines and brand prominence, for which I am personally grateful.”

He noted that the theme of the conference is apt when the entire world, including the financial services of which insurance and pensions are critical players are just heaving sigh of relief from the ruinous impact of the pandemic.

Soyewo disclosed that the pandemic led the insurance industry to the need to review rates and revisit some of the policy conditions and exclusions earlier permissible for some insurance.

“It is heartwarming that many individuals and operators have taken the whole pandemic experience as an opportunity for a paradigm shift in all their undertakings. It has led to retooling of operational strategies by corporate institutions leading to higher profitability and easier ways of doing things and getting results. We must come to terms with the fact that change is the only permanent thing in life and those who are resistant to change would be changed ultimately,” he added.

In the presentation of the theme paper on “Covid:19 Impact On Financial Inclusion; Opportunities For Insurance and Pension Sectors”, Mrs. Folashade Onanuga, whose last point of call in the pension industry was spearheading the Lagos State Pension Commission(LASPEC) said that the Covid-19 pandemic has had drastic impact on lives and businesses in the country.

Onanuga explained that before the pandemic, approximately four in 10 Nigerians were living below the national poverty line, and millions more were living just above the poverty line, making them vulnerable to falling back into poverty when shocks occur.

She cited the World Bank estimates, which stated that the covid-19 crisis will result in 10.9 million Nigerians falling into poverty by January 2022.

“If we have learned anything, the pandemic and the ensuing economic crisis have highlighted the critical need for a functioning social security system to allow all Nigerians achieve an adequate standard of living,” she said.

She highlighted that the conventional wisdom that being physically present at the office was critical to productivity has been jettisoned as many statistics point to increased productivity with work-from-home arrangements via the use of technology.

“Organizations have also realized that the cost of doing business is significantly reduced when employees work from home; in addition, their talent pools have now become much larger with fewer locational constraints. One can conclude therefore that despite the massive economic and human toll of the pandemic, there have been some real positive changes made in how we work,” she emphasized.

Onanuga recalled that sometime in 2012, the National Financial Inclusion Strategy was launched in Nigeria as a catalyst for economic recovery in the Country, adding that financial inclusion would be achieved when adult Nigerians have access to affordable financial products and services that meet their needs.

In her words: “Financial inclusion can only be achieved when financial transaction processes and documentations are transparent, simplified and seen as meeting needs of the people and at the same time being beneficial to the financial services sector.

“While the pandemic has caused severe disruptions, opportunities have also been created to grow customer base on account of the obvious fact that there is no real social security arrangement by the government in the event of sudden and unexpected events and so citizens need to make plans by themselves for wellness both in business and family life.

“Economic shocks like sudden loss of job, illness or death can send people living just above the poverty line into abject poverty.  So whether one is in the formal or informal sector, there is the need to have a safety net.  The sudden and unforeseen calamities created by the pandemic have highlighted the need to plan for unforeseen circumstances and even early retirement.

“To take advantage of these opportunities, the pensions and insurance industries must remain committed to the inclusive growth of the Nigerian economy, creating opportunities for lower income groups to be part of the broader financial system.”

She listed the five main thrusts of financial inclusion in Nigeria to include Savings, Payments, Credit, Pensions, and Insurance, stressing that increased collaboration between the private sector and government has led to the release of various guidelines guiding operations in Takaful insurance, bancassurance, micro insurance, micro pensions, pension fund investments and so on.

However, she pointed out that the Insurance penetration has remained at an average of 0.4% of Gross Domestic Product (GDP) driven largely by a general lack of understanding and awareness of the benefits of insurance products, specifically amongst low-income Nigerians.

She harped on the need to build trust, improving access to insurance and making products and services more inclusive.

Speaking on the pensions sector, she said that over the last 17 years, a tremendous amount of progress has been made in the Nigerian pension industry and regulation has enabled this growth.

However, she noted that inclusive growth in pensions must recognize the peculiarity of the population segment being addressed, adding that the recognition must have an impact on how products are designed and how lower income segments of the population interact with pension funds.

The former DG LASPEC revealed that there also exists a trust gap to be bridged in the pensions industry despite the potential benefits of the product and urged the National Pension Commission to take more advantage of digitization in pension operations to make transactions easier and more accessible.

“Structures must be in place before the release of pension laws to ensure that all aspects of the Law are implementable,” she added.

The contributory pension scheme in Nigeria, according to Onanuga, was designed to address the problem of inadequate or no preparation for retirement.

However, she said, the scheme has done much more – it has allowed incredible mobility for employees in the formal sector; it has simplified the administrative processes, has reduced drastically the fraudulent practices in pension scheme administration but is yet to fully address the issue of ensuring that retirement benefits are paid as at when due most especially where benefits accrue to workers under the defined benefit plan.

She opined that the pension benefits as received by many in the CPS dispensation have been considered very inadequate to give comfort in old age.

“We must consider the basic needs of our clients when they indeed retire – food, shelter, healthcare and transportation. These needs must be considered in conjunction with inflation so that consumers can get the intended benefit that this scheme was created to provide.

“Today, because of the economic pressures, a lot of people are more open to the possibility of withdrawing their full pensions’ savings. Is there a way to accommodate this request? If for instance, employees with RSA balances of less than a certain amount are allowed to withdraw their full pension savings, then what is the rationale for locking some others in?  For example, can we include penalties for early withdrawal?  Can incentives like basic levels of healthcare be offered as incentives to encourage clients to remain with their pension provider after they retire? Are there opportunities to offer clients more within the ambit of the law?” she asked.

She noted that such flexible options will give clients of Pension funds more control over their future while also catering to the profit motive of operators.

She stated that when pensions’ products are demanded by the average Nigerian worker either in the formal or informal sector and not impressed by them, a major milestone in financial inclusion would have been achieved.

She announced that currently, pension funds under management is 13 trillion Naira with enrollment less than 10 million registered over contributors, adding that with the inclusion of the informal sector under the micro pension plan, this can be much higher.

Onanuga posited that the opportunities which exist for increased financial inclusion in both the Insurance and pension sectors will only be achieved if we design products that are perceived to meet the people’s needs and could be seen as improving their welfare rather than impoverishing them.

She therefore charged the operators to constantly be engaged in strategic thinking; have a broad understanding of the economic situation of the country, understand the mindset and ways of life of different ethnic groups and then have a variety of products from which the people can make a choice from.

High point of the conference is the presentation of the 2021 NAIPCO Excellence Award to WAICA Reinsurance Plc (WAICA Re).