Mr Tunde Mimiko is the Managing Director/Chief Executive Officer, Sanlam Life Insurance Nigeria Limited. In this conversation with CHRIS EBONG, the seasoned insurance expert bore his mind on the insurance industry in Nigeria and the larger economy in 2023 noting that the cost of operating in Nigeria has hit the roof top. Excerpts:
It has been a long year 2023 and the economy is still unsettled for obvious reasons: the removal of the fuel subsidy, high rates of inflation and forex. How have these macroeconomic indices affected insurance operation in 2023?
Thank you very much. It’s been a tough year indeed as you rightly mentioned but it is in times like this that creativity and resilience of leadership comes to bear. So as a business, the executive management has been working very hard, putting on our thinking cap and fashioning out ways to navigate through.
Responding specifically to your question on how this affects our business and not just our business, but businesses generally, I would like you to know that the cost of operating in Nigeria has gone up by over 50per cent in the last nine months. You do know that we use diesel to run our day-to-day business, cost of fueling multiple vehicles around for our sales representatives has also gone up. Think about it, anycost associated with our business has gone up. Is it to buy laptops or to buy anything that has to do with our technology? They’ve more or less tripled due to high foreign exchange rates. So it’s been very tough, the operating expenses of the business are so high.
That also put some strain in the pocket of our customers and even the prospective customers because the cost of living has increased and that has affected their disposable income. Insurance, really, wouldn’t be their priority at times like this. We also witnessed some dip in terms of the uptake of insurance products generally. Those that have not been able to meet up with their recurrent payments are surrendering their policies and in many cases, the policies are lapsing before the maturity. All these have effect on our percentage ratio and in key financial metrics.
However, as a business, as I mentioned earlier, we have been creative, putting on our thinking cap to ensure that we are able to break even.
So, we are coming up with different initiatives such as to encourage insurance populace to embrace culture of insurance at this time. It’s even at times like this that insurance is really needed. People believe that insurance is the first expenseline to cut off when things are tough but it is really when things are going wrong that we need to embrace a culture of insurance.
We’ve been very, very creative in reaching out more and expanding our market, having more representatives out there to really push the awareness of insurance and as well as our brand, Sanlam. And that has helped balance the negative effectof the economy so that we can still have our heads above water.
So, it’s been tough but we can’t complain, things are very much looking good towards the tail end of the year.
Despite all the negatives which in a way should dampen insurance growth, yet, the industry has posted impressive results this year. What do you think is responsible for the success story?
I did mention earlier that it’s to be very resilient notwithstanding the tough macroeconomic metrics. We have been reaching out there to encourage people to embrace insurance to protect their asset and ensuring that they also secure their investment and also plan and save for the future.
So, we’ve launched different products to address social and financial needs of Nigerians. We have been out there marketing and reaching out through different means above and below the line. We’ve been so aggressive in creating more awareness to let people know that it’s important to actually take insurance at tough times like this. …
Notwithstanding the tough macroeconomic environment, we are still pushing up. I have not seen the industry result so I can’t say that the industry has really moved up in terms of performance but in our group, yes, that is our story.
NAICOM recently predicted a trillion naira premium income in 2023, how realistic is this forecast?
The opportunity is there. Growth is something that the regulator has been pushingfor. So, there are different initiatives to support the operators so that the market can expand. Yes, I’m positive that it is very realistic that we can make a trillion naira income this year.
Where there are positives there would be likely negatives, in your analysis what are those things you feel didn’t go right in the industry in the outgoing year?
Like I said earlier, the National Insurance Commission has been doing a lot in terms of market expansion thus the reason we are hopeful of reaching a trillion naira threshold this year. NAICOM has also been very keen to ensure that the industry reputation is improved upon. So, a lot of initiatives around creating awareness to ensure that the standard in terms of governance is higher…that’s what the regulator has been pushing out to us, the operators. That on its own is improving the reputation of the market generally. We can do more in the area of consumer education and awareness. Yes, there are things being done in that direction but we can do more.
We can also do more to ensure that bad eggs among the operators are made to either fulfill their obligations as at when due or be pushed out because theirunethical practice is rubbing off negatively on the industry as a whole. So, there are some companies out there that are not fulfilling their obligations to policyholders, I think we have to do more by ensuring that they address their insolvency and also make sure that they clean out all their outstanding claims as well. Don’t get me wrong, the regulator has been doing a lot to ensure that we all as operators are made to fulfill our obligations but there are some companies out there we know shouldn’t be operating at this time because of their financial status but yet they are still out there.
Sanlam Nigeria recently launched a new product, Family Love, can you tell us more about it?
We launched this product effectively on the 3rd of October but before we had that official launch we went to market on 1st October, because for us, it’s a gift to the nation for our 63rd Independence anniversary. Family Love is a Plan that enables you and I give our loved ones a befitting funeral when the unthinkable happens. It gives you that opportunity to give a very good farewell to those we love should unthinkable happens.
What does this Plan entail? The benefit of the Plan is that it provides a lump sum in the event of demise of our loved one. That lump sum is also called funeral benefit. There’s also a first anniversary benefits which offers a 50per cent of that lump sum, that can be collected a year after, it can also be collected during the funeral. Aside providing for benefits during the funeral the Plan also caters for the dependents of the deceased left behind. This provides them with the cost forrunning their lives when the loved one is gone. So the Plan does not only focus on the burial, it also caters for those left behind so that various commitments like school fees, the cost of running their lives and so on, are paid for from that family income benefits.
It also has a benefit called burial repatriation. When someone passes there is usually a cost associated with moving the remains of the deceased from one point to the other. This policy also provides the benefit of the cost associated with that. There is also a waiver of premium benefits in the sense that when the premium payer or the policyholder passes on the premium that is supposed to be paid on the lives of those who are on the policy will be waived while the policy continues to run.
Part of the unique features of this product; you will agree with me that people always say they pay premium and they don’t get anything back, so we factor in the Cash Back as a unique feature of this product. This means that after every anniversary of the product, six months premium is refunded.
Another feature is that you can be a premium payer; you can be the main life and necessarily not insured in the policy, this policy allows you to insure ten family members that are defined in the policy without necessarily insuring yourself. Those are the unique features of the Plan.
Who are the beneficiaries of the Family Love Policy?
As I mentioned you can insure the lives of ten members of a family including your parents and/or in-laws.
Most insurance products have a limited year of entry; does it apply to Family Love Plan?
The entry limit for a typical insurance policy is 65 years but we factor in the fact that there are people that are above 65 that also require life insurance policy so we allow the policy to cover our parents so long they are still below the age of 80.
What’s the age limit of the policyholder himself?
Before age 65.
Who are the 10 family members in the policy?
The extended family members in the policy are defined as his spouse, uncles, aunties, in-laws, your mother and the father, siblings.
Can I take this policy without the consent of the insured?
If you have an insurable interest in their life, you need not necessarily seek theirconsent before taking up the policy.
What’s the sum assured limit and cost of premium?
There are three different variants; we have the classic which is in-between; we have the prestige which is the highest plan; we also have inclusive which everybody can afford. The inclusive limits sum assured to one million naira while you can get as high as five million naira on the prestige variant.
With as little as five thousand naira per month, you can buy a Family Love plan. Age and sum assured are actually the primary determinants of the premium. At some point you may get as low as two thousand naira premium for a dependantdepending on the age
As a business what’s your projection for 2024? And as a player in the industry, what are expectations of the market in terms of regulations going into 2024?
In 2024 we expect that the economy will improve maybe not significantly but we expect a certain change based on the policy changes we are seeing from the federal government. So, as a result we expect that there will be more disposable income, more stability in terms of the naira and that should also impact our operating expenses positively, at least stable and not going up and down.
For us we will continue to push, we will continue to expand our market, we will continue to enhance our core, we will continue to be creative and innovative in meeting the needs of the Nigerian populace. As a result we are looking forward to a very promising 2024 from a business point of view.
In terms of regulations, I expect that the regulator would continue to build on the good works that they are doing. We as an industry and the regulator at the insurerscommittee level have engaged the services of a consultant to provide for the industry, a five-year strategic plan. That means that the strategic plan will commence in 2024 with different pillars of market development strategies, overall industry reputation, creating more awareness, and being more efficient as an industry. We do expect that these will bring about positive changes on the outlook of the industry in 2024 and beyond.
Still on the economy sir, the foreign exchanges keep on rising by the day. Where does the hope lie? Do we foresee a situation a dollar will return to at most five hundred naira to one dollar or Pounds sterling coming to affordable level for the people doing business in that currency in 2024?
I can’t say for sure that the exchange rate will go back to 500/$1. What I see happening is that from the reforms that the federal government is introducing, as a commitment to meet up with the obligations by clearing some backlogs, if that continues it will bring about confidence and more stability. We pray that should continue.
I also foresee a situation where we will be able to attract investors, foreign direct investments levels will increase and that will come with better liquidity and there will be stability. I am a believer of market forces determining what the rates should be. This government has been very vocal about unifying the exchange rates and I believe that with the steps they are taking, in the year 2024, we will witness some changes in liquidity and bring back confidence.
Recently someone advocated increases in capital base to N20bn for life companies, N30bn for general and N50bn for composites respectively, what’s your take on this?
I believe in raising capital base, however, I think risk based is the way to go. For different insurance companies in Nigeria, we do have different portfoliosassociated with the risks we carry. So, I will advocate more for risk based capital rather than it just being a fixed amount because the portfolio of each company varies and differs.
What should we expect from Sanlam Nigeria in 2024?
We will continue to empower Nigerians, many generations yet unborn to be financially confident, secure and prosperous. That is our purpose. With that in mind, everything we do is at the core of this. Going into 2024 and beyond, we will continue to be empathetic, care for customers, care for the environment, care for our employees who are our greatest assets and we shall be socially responsible as an organization. We will continue to be innovative and be the best when it comes to creative products that proffer solutions to the needs of Nigerians.
We will continue to live our worth, continue to build trust and engender financial inclusiveness by making sure that insurance is affordable and accessible to all and sundry. Nigerians should rest assured that dealing with Sanlam they can go to bed with both eyes closed. And you our partners should watch out for new things that we will be introducing into the market going forward.
We belong to a truly pan-African group and that gives us the opportunity to leverage the experiences that we get from different markets and bring to bear in Nigeria those positives that we gather from different parts of the world.
Can you tell us about your corporate social responsibility that you have been embarking on?
We were in Jos sometimes in the year and we touched the lives of so many childrenacross various foster homes in the city. We made some donations, financially and materially, and as you know, that has been our way. Also this year, we supported various Non-governmentals in achieving their set goals: the Down Syndrome Foundation, the Handicapped Society to mention a few.
Not just that, you will recall that during the covid era we were forerunners in donating an ambulance to the Lagos State government. We had also given out some materials and food to the less privileged. As an institution, we will assert ourselves to do more in that space as we go into 2024. We are always looking for opportunities to impact the communities that we operate in. When it comes to CSR we have been very big on it for years. It’s something we will continue to build and expand upon.
Is the training programme for journalists in South Africa part of it?
Oh that was the Sanlam Journalism School for young journalists. As for us it’s not CSR per se, but our way of building the capacity of our media partners, the insurance journalists, in this case.
Why selective in terms of age?
I think the segment we are trying to look at is the upcoming journalists to catch them young and increase their capacity and ensure that they are well positioned for the future. It is not that we have anything against the veterans, far from it, but the group’s focus segment is -and has been- young journalists from all over Africa.
Source Daily Independent