Nigerian Insurers Apprehensive For New Skills To Stay Relevant

By Odimegwu Onwumere

In this report, ODIMEGWU ONWUMERE examines the concerns of stakeholders regarding the ability of Nigeria's insurance industry to adapt to the "new normal" without acquiring new skills and orientations, considering the numerous regulations and consolidations the industry has undergone. However, experts are worried about the implementation of the top five technology trends in the industry, such as smart AI chatbots like ChatGPT, blockchain technology, and open-source data, in order to remain relevant. Consequently, they are now emphasizing the importance of strategic foresight, continuous learning and development, efficient communication, and transparency. The article suggests that these changes necessitate adjustments to operating models and workflow processes to effectively conduct business in the modern world

The insurance industry in Nigeria has been striving to consolidate itself over time, causing fluctuations in the number of insurance companies and reinsurers. Despite these efforts, the industry is struggling to improve its situation and keep up with modern realities. For instance, the National Insurance Commission announced in August that the number of licensed insurance companies in Nigeria has increased from 54 to 67. Experts suggest that although the industry has implemented various guidelines and regulations to adapt to the changing landscape, it is still unsettled. To remain relevant and adapt to the current circumstances, new skills are deemed necessary.

According to them, new skills are considered essential, as a report released by the African Department of the International Monetary Fund on May 28, 2013, indicated that Nigeria underwent an evaluation of its insurance market structure and supervisory framework through the Financial Sector Assessment Program (FSAP) based on the Insurance Core Principles (ICPs) issued by the International Association of Insurance Supervisors (IAISs). Recent analysis shows that 54% of CEOs surveyed believe that investing in start-ups is the most promising way to accelerate growth, while 32% believe that Foreign Direct Investment (FDI) is necessary for technological advancements in Africa. The survey also highlights that the insurance industry, in general, has a positive outlook on emerging technologies, with over 38% of respondents seeing technology as a "great opportunity" for their businesses in the next five years. The acquisition of new skills is being driven by the rapid advancements in technology and changing customer expectations.

Checks reveal that the reforms in Nigeria's insurance industry, which began in September 2012, were influenced by Dr. Rodolfo Wehrhahn and Mrs. Mimi Ho, former employees of the International Monetary Fund (IMF), who provided advice to the National Insurance Commission (NAICOM) on expanding its objectives. These objectives were aimed at establishing a fair and stable insurance sector that benefits and protects policyholders. As a result, investigations have shown that companies are actively hiring individuals with specialized skills to keep up with the industry's advancements. Conversely, in 2011, guidelines and regulations were established for insurers, reinsurers, and intermediaries, as well as anti-money laundering (AML) regulations, know-your-client (KYC) procedures, and risk management guidelines in 2012. Insurers were also required to implement the International Financial Reporting Standards (IFRS) from 2012 onwards.

However, a recent survey conducted by Continental Re, a pan-African reinsurer, has revealed that businesses throughout the continent are expected to be significantly impacted by the adoption of advanced technologies such as Smart AI chatbots like ChatGPT, blockchain technology, and open-source data by the end of the decade. Lawrence Nazare, the Group Managing Director of Continental Reinsurance, welcomes the survey findings and emphasizes that the adoption and advancement of future technologies offer Nigeria and Africa an opportunity to reduce their reliance on aid and become a strategic partner to the rest of the world. "This is particularly crucial considering the lessons learned from the COVID-19 pandemic regarding the vulnerability of global supply chains," he said.

Why the room for further growth?
The recent 2023 Insurance Professionals' Forum in Abeokuta, Ogun State, highlighted the significance of acquiring new skills in this industry, which specialists say has been in existence since 1921, predating the industries in China, India, and Malaysia. This industry has been regulated and controlled since 1961, with the introduction of a national health insurance scheme proposal in 1962, followed by indigenization in the 1970s, openness in the 1980s, and operational health insurance in 1999. Additionally, a pension system was established in 2004.

During the conference, Mr. Edwin Igbiti, the president of the Chartered Insurance Institute of Nigeria (CIIN), discussed the theme of "Sustainability of the Insurance Industry in the VUCA Environment," highlighting the unique challenges faced by the insurance industry due to the volatility, uncertainty, complexity, and ambiguity (VUCA) of the current world.

PWC, a prominent professional services firm in Nigeria, believes that although the country's insurance sector has made positive progress, there is still room for further growth when compared to other emerging markets. Experts indicate that the Nigerian insurance industry faces various challenges, including low market penetration, a lack of consumer trust, inadequate implementation of compulsory insurance, and a shortage of skilled professionals.

During the event in Ogun State, Mr. Olorundare Sunday Thomas, the commissioner for insurance and CEO of the NAICOM, emphasized the importance of the insurance industry adapting to the "new normal" by developing new skills and orientations. He emphasized the need for strategic foresight, continuous learning and development, effective communication, and transparency.

Analysts say that these changes require adjustments to operating models and workflow processes to effectively conduct business in today's world. To succeed in a volatile, uncertain, complex, and ambiguous (VUCA) environment, Mr. Thomas urged insurers to develop and quickly apply new tools and methods.

Femi Oyetunji, a former group managing director and CEO, also mentioned at Continental Re's meeting that Continental Re's strong presence and long-term vision for Africa will drive its continued growth and success as competition intensifies with the entry of new players in several markets.

According to him, “In 2017, we enabled our Tunis office to underwrite Re-Takaful business through its Re-Takaful window to consolidate our presence in the region and also have accreditation as a local reinsurer in line with the local content requirements in the Tanzanian market, which was granted to us in 2018.

“These steps are aimed at significantly increasing sales and contributing to the implementation of the Project Alpha 2020 strategy, which aims to increase brand presence, consolidate, and improve customer service to ensure sustainable growth and strengthen our already impressive multinational talent pool for the benefit of our continent."

What the industry aspires for?
Experts state that insurers and reinsurers in the country are in need of professionals who possess strong data analysis skills. These experts can assist in making sense of the vast amounts of data collected by these companies.

By identifying patterns, trends, and opportunities for improvement, these professionals contribute to the overall operations of the companies. Additionally, as more consumers turn to digital channels to purchase insurance products, insurers and reinsurers require professionals with expertise in digital marketing.

This includes skills in search engine optimization (SEO), social media marketing, and content creation.

It is widely recognized that actuaries play a critical role in the insurance industry. Professionals with strong actuarial skills are believed to be necessary to analyze and manage risk. Similarly, underwriters are essential in assessing and managing risk, making them highly sought after by insurers and reinsurers.

Due to the heavy regulation within the insurance industry, professionals with expertise in regulatory compliance are required to navigate complex legal and regulatory requirements. Stakeholders express their concerns regarding the increase in technology adoption, which has led to the development of more sophisticated cybersecurity threats.

To counter these threats, insurers and reinsurers need professionals capable of safeguarding their systems and data.

The utilization of artificial intelligence (AI) has become a significant focus for these companies, and as a result, professionals with expertise in machine learning and AI are sought after.

Their role involves automating processes, improving decision-making, and enhancing the customer experience. Furthermore, the use of blockchain technology is seen as a potential game-changer in the insurance industry.

Consequently, insurers and reinsurers are actively seeking professionals with knowledge of this technology to remain ahead of the competition. This need for expertise extends to the customer experience, where professionals who understand how to create a seamless experience across all divides are highly valued.

This includes online, mobile, and in-person interactions.

As insurers and reinsurers transition their operations to the cloud, those who know better say professionals with expertise in cloud computing are needed to effectively manage and maintain systems.

Conclusion: Getting out of the conundrum
To summarize, insurers and reinsurers in Nigeria are seeking professionals with specialized skills to remain competitive and relevant in the industry.

These skills include data analytics, digital marketing, cybersecurity, artificial intelligence, blockchain, customer experience, cloud computing, actuarial science, underwriting, and regulatory compliance, among others.

However, it was discovered that the negative perception of the insurance industry in Nigeria can be traced back to the 19th century, when Nigerians assumed control of the business from British managers.

The manner in which Nigerian managers conducted insurance transactions, particularly regarding claims payment, led the public to view insurance as fraudulent.

Conversely, university professors Taofeek Sola Afolabi and Oluwaseun Fesobi noted that a lack of emphasis on human resources development within Nigerian insurance companies resulted in poor sector growth.

They suggest that staff training and retraining should be prioritized for staff promotion in order to maximize their potential.

This approach would enhance organizational growth and development, ultimately increasing the insurance sector's contribution to the nation's economy.

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