NIGERIAN INSURANCE INDUSTRY OVERVIEW
Even though the Nigerian Insurance Industry is driven largely by cultural & religious beliefs, it remains resilient, recording a compounded annual growth rate (CAGR) of 10.2% in Gross Premium Income (GPI) since 2012. In 2016, the Industry’s GPI grew by an estimated 10% to ₦356 billion. Growth was upheld by the enforcement of some compulsory insurance policies, particularly in the “Group Life” and “Motor” insurance business lines. However, the Industry’s performance was dampened by thedownturn in Nigeria’s fortunes which had its roots in the declining global crude oil prices since 2014.
The insurance penetration rate in Nigeria remains at about 0.5%as against some other African countries such as Kenya and South Africa with penetration levelsof 2.9% and 14% respectively. Only 1% of the total population holds any form of insurance policy and this increase is as a result of the mandatory policies.However, most of this policyholders donot necessarily renew these policies as and when due. The reason for this lack of interest in insurance amongst Nigerians can be attributed to a lack of knowledge about the benefits of insurance.
Undisputedly, there is a considerable market prospect for insurance business in Nigeria. As with other emerging economies across the world, expansion in output willultimately lead to an increasing pool of insurable assets. Growth in wealth and improved income distribution will also expand the population of insurable individuals.In addition, Nigeria’s growing use of technology driven by the expanding and increasingly urbanized population will drive demand for insurance in the country. To be specific, the government’s enforcement of compulsory insurance and adoption of defined contribution pension schemes as well asfavourableregulatory framework aimed at building local insurance sector capacity will attract foreign insurance players to the markets. This will cause an increase in competition to the already small pool of the target market who have adopted insurance in Nigeria.
THE NEW INSURANCE CUSTOMER
The new insurance customers of today are Millennials (Gen Y) and we like to call them the “Progressive Affluent”,“Digital Customer” of today. These people, bornbetween 1981 and 1996, are the dominant population (about 2.5billion) across the world especially in developing countries. By 2025, they will make up about 75% of the global workforce.
Millennials have a lot in common which guides their way of life, decision making, jobsand in this case, insurance. Some of the similarities in behaviour include:
Millennials are highly tech-savvy
Most millennials grew up with digital technology and have known it all their lives. Marc Prensky coined the term “digital native” to describe younger millennials because they “are native speakers of the digital language of computers, video games and the internet.” According to a study by AdAge, 86% of millennials have a smartphone, spending about 25 hours per week on it. They are much more tech-savvy than their non-millennial counterparts, with their top skills involving social media, coding and software applications.
What to do
Insurance companies can create products that can help them protect what actually matters to them, make these products available for purchase without having them leave their comfort zone (their mobile devices) and possibly, get them more interested in the industry at large using innovative technology solutions.
Millennials are city dwellers
Millennials are the most urbanized cohort of young adults ever, although the same is also true for every other current age group. Young people have always had a propensity to live in cities and given that more people of all ages now live in cities than ever before, millennials are part of a broader trend.This effect is also noticeable in Nigeria, where the level of urbanization is generally high, as evident in the population, traffic and price of real estate (buy/rent) in urban states like Lagos, Abuja, Port Harcourt. More than 40% of the total millennial population is spread amongst these three (3) states.
What to do
Insurance companies can leverage on contemporary events and general lifestyle in these locations to target their marketing at millennials in these locations.
Millennials do not have enough to protect
While millennials might think they do not have enough property to protect, they fail to understand that insurance covers much more than carsand gadgets such as PS4, smart phones, laptop etc.
What to do
Insurance companies could help millennials understand that insurance covers more than just the aforementioned, this will increase the number of policy holders.
Millennials have little to no knowledge of insurance and its benefits
One of the greatest hindrances to attracting millennials to insurance is their perception of the industry itself, especially in Nigeria. They find it very one-sided and distrustful of its business model which is; buying a policy, paying premium when due and then making a claim (which is not as easy as thefirst two processes.) A large part of this is a result of little knowledge of the insurance industry, how it operates, or even basic costs of insurance policies.
What to do
Insurance companies could be a bit more transparent in their business model especially conditions that can make a claim null and void. Millennials appreciate honesty or at least an effort to help them understand how the system works outside of the mandatory policies.
Millennials hate brand marketing/advertising
When it comes to marketing, many millennials feel thattraditional insurance companies use too much jargon and have slow, dysfunctional websites. They don’t want to be marketed to, rather they want to be part of the conversation and expect atwo-way, mutual relationship with companies and their brands. Millennials are one of the most loyal generations, so insurance companies have a lot to gain if they can offer millennials the brand experience they want as they engage with brands far more extensively, personally and emotionally—and in entirely different ways—than other generations.
What to do
Many insurance companies need a brand makeover in order to appeal to younger generations. Insurance brands should exemplify the three things millennials want in a brand: Authenticity, Transparency and a Personalized Experience
MARKETING TO THE DIGITAL CUSTOMER OF TODAY
Majority of millennials are hitting major life milestones, such as graduating from university, entering the workforce, settling into long-term relationships/marriagesand acquiring assets. Concurrently, they are redefining what to expect from brands onand off-line, what adulthood looks like, how to spend their money (prioritizing experiences vs things), what a typical career looks like, and so on. They’re setting the pace for Gen Z (growing generation), and they’re even influencing the behaviour of their parents, the Baby Boomers.
Brands need to stop marketing to millennials in the same way they have marketed toprevious generations. Millennials have created their own set of values and priorities, and they’re looking for brands that embody them. Here are Five (5) resources that will help insurance companies better understand how to connect authentically with Gen Y.
Millennials are the first generation to be truly open to not just receiving ads but also engaging with them and sharing them, yet 45% of millennials don’t find content marketing compelling enough to share it. The opportunity is there, but many marketers have yet to understand how to create content that resonates with them.
Five (5) strategic principles for reaching millennials with branded content includes;
- Be Native (relatable), Not Deceptive
- Be an Individual
- Be Ready to Evolve
- Deliver on Emotion
- Know That Humor Rules
what you get for great content marketing
With the right communication mix, your insurance company stands to benefit hugely from content marketing. Some of these benefits includes;
- Increased visibility of your brand
- Helping you build authority and credibility
- facilitating better engagement with your audience
- Positioning your brand as an expert
- Helping your potential customer move through to a purchase decision quickly
- Educating, converting and upselling customers easily.
Deepened Customer Engagement
Results have shown that brands that consistently rank highest with millennials are those that have pushed beyond traditional advertising methods to build customer relationships representing friendships. In other words, connecting with millennials is all about “relatability” and trustworthiness. Getting millennials to see your brand as more than just a big company trying to sell them something comes down to three simple directives:
- Make them look good
- Make them feel good
- Entertain them
WHY MAKE THEM LOOK GOOD
If your brand isnot cool enough to be associated with, then millennials will not affiliate themselves with you. Making them look good simply is as simple as making your brand good enough that they want to associate with it, and feel good while at it.
Redesign your brand to be more vibrant, effective and fun. Offer a high-quality product or service that helps millennials look cool and make their lives easy. Stay true to this and theywill return the favour with their recommendations & purchase.
WHY MAKE THEM FEEL GOOD
Feeling good simply means great “Brand Experience”. Customers should not have to be frustrated anytime they encounter your brand whether it’s in laying complaints, getting clarifications, making claims or premium payments.
Ensure that all the various customer touch points are seamless,friendly, easy to use and understand.
We know this is not your job or the reason you are in business, but millennials have changed the marketing space and expectations from brands. Business is a quid pro quo; they are aware that you make profits (they are an informed generation) year in year out and as such, believe you should be ready to give back to them in form of entertainment, promotions, sponsorships and programs they can benefit from. This may seem one-sided but the brands also stand to gain a lot through these activities.
Create a periodic campaign (self-sponsored or in partnership with other brands) to help increase awareness and entertain both existing and potential clients.
Seamless Selling & Buying Process
Millennials influence the buying behaviour of their parents, whoare increasingly imitating the demands of their children for a seamless customer experience. But what exactly does seamlessness look like in insurance? According to Accenture, a seamless customer-facing retail experience will typically include the following four components:
- Customized offerings across channels in the ways millennials want, which boils down to providing better, faster, more memorable services whether it is on buying a policy, paying a premium or making a claim.
- Single “conversation” with customers – one that stays the sameacross smartphones, desktop, and in-store.
- IT platforms integrated to unify their data sources and boost cross-channel transparency. (See our e-business solution)
- Collaboration with technology, data, analytics, and process partners to provide the service performance millennials want.
The advantages here are endless, some of which includes faster conversion time, increased sales, top of mind awareness,brand loyalty and advocacy.
Improve service delivery
The digital customer of today has increasing demands from businesses; this is not a problem because change is inevitable. Companies need to modify the way they do business, improve efficiency, speed up processes and most importantly, improvethe way they treat customers, to achieve the level of success they desire. Some ways to achieve better service delivery whilecreating great experiences for your customer when they interact with your brand includes:
- Provide remote/mobile access that simplifies their task e.g. USSD codes to renew premium or pay directly from their bank without having to visit any insurance branch. Payment should be confirmed and reflected in their policy and be notified in a couple of minutes.
- Take responsibility for your business and its actions such as employee errors, miscommunication and oversights.
- Stay ahead with innovative solutions to make doing business with you easy, simple and convenient.
- Adopt tailored andflexible solutions. Make insurance products and flexible as possible for potential customers, allowing them to choose products add-ons/extension based on their perceived needs.
Care about society just as much as they do or more
Deloitte reveals that millennials are optimistic about corporations, more than 73% believe businesses have a positive impact on wider society. Also, they believe that companies still have some work to do when it comes to improving the well-being of individuals or providing a general social benefit. Some of their expectations from brands they would rather be affiliated with includes;
- Treatment of its employees
- Overall impact on society and causes
- Record for creating innovative products or services
They expect an organization to benefit individuals by offering employment, and to have a positive impact on wider society.
THE ROLE OF TECHNOLOGY IN REACHING THE DIGITAL INSURANCE CUSTOMER OF TODAY
The traditional boundaries between brokers, insurers and reinsurers have become very blurred. Today, virtually all insurance companies are offering ‘direct’ products, not only targeting individuals but also the less complex risks. However, there is the concern that direct insurers are not generally geared to render bespoke advice and solutions, which represents a challenge to the new and unsophisticated buyers (millennials) of insurance with price invariably being the differentiator.
If insurance companies want to prioritize millennials as a customer group, they will need to get a solid understanding of what needs to be done to guide them to purchase. Prioritizing meeting millennials in their marketplace (online) andunderstanding & selling them the products they need, is a great step in the right direction. Innovators and disruptors are emerging daily (especially in fin-tech) and they are without the burden of legacy systems. These disruptors are flooding the market with the same core products currently offered but in newly imagined and accessible ways. How would you operate differently if you started afresh tomorrow? Here’s how:
A well designed and functional website reflects that you do what you do well. The ability to break insurance policy/products into non-complex and granular products reflects that you are transparent and have a bouquet of products tailored to fit various audience needs. With so many of your potential customers researching online before purchase, you need to make sure your first impression is a good one.
When a customer comes to your website and easily finds the information and customised policies to match their need, they are more likely to stick around and reach out to you and in best cases,make an instant purchase. This means that your website needs to have appropriate information for new users, and it needs to be intuitive to use.
Seamless buying Process
Nothing beats being able to complete a transaction in threeminutes or less, whether it is in paying bills, shopping, ordering for food or buying an insurance policy. Patience isnot one of the best virtues of the millennials, hence; getting things done in an instant is always a great pull. Ever wondered why USSD codes are such a big deal (you’re welcome)?
The user journey for insurance requires selecting a product, filling a form (designed to look like you will fill with pen and paper), then an agent gets in touch with you or if it is the basic 3rd party motor insurance policy, you get a N5,000.00 quote and proceed to payment. Other complex insurance will require transferring the transaction offline.
A Customer Onboarding Application
This is a simple, effective and engaging way of easing thecustomer buying process. In other words, user onboarding helps prospective customers find their way within the pool of insurance policies available (selected from a fully functional website). It simplifies, yet accurately describes all the requirements needed to buy a policy in a smooth, personalized and engaging way, easing consumers into the buying process starting with the basic Know Your Customer (KYC) requirements. A customer who has all the documents needed at hand can easily finish the on-boarding process, get a quote (based on preferences and add-ons/extensions) and proceed to pay in three minutes or less, depending on their internet speed.
Improved customer service
The concept of opening hours being 8 – 5 PM is outdated. One of the advantages technology offers is doing business outside of offline/physical closing hours. The need for an insurance policy might come up at any time such as in last-minute travel plans. Users should be able to buy from your platform directly and seek help from a customer service agent if need be. “Do I need a 24/7 customer service team” you might ask, the answeris No, you need a “Chat-bot”.
Chat-bot, short for chat robot, is a computer programme that simulates human conversation, or chat, through artificial intelligence. Typically, a chat-bot will communicate with a real person potentially solving their issue if it is within its knowledgebase. If it is not, it will redirect to a live customer service. Thislets the customer service team focus on more important tasksand it also provides a 24-hour solution for customers that are not in the same time zone as the business. Chatbots are typically limited to conversations regarding a specialized purpose which, in this case,is insurance and not the entire range of human communication.
Personalization (User Dashboard)
There is a positive relationship between personalized communications and brand loyalty — the more you connect with a customer on an individualized basis, the more likely theyare to continue patronizing you. And because acquiring a new customer can cost anywhere between 5 to 25 times more than retaining a current customer, according to Harvard Business Review, it is financially logical to prioritize and encourage brandloyalty. On an e-commerce site, there are wish lists and carts;this data is used to create a more custom product display for a returning customer. A personalized insurance dashboard for a customer means a digital “insurance file” for a user to:
- Renew Policy
- Add more policy/Buy New Policy
- Lodge a claim/Check the status of a lodge claim
- View/Print Certificate
What about the Brokers?
Brokers remain a very important component in the industry; undermining them and the business they bring will mean a failed strategy from the word ‘go’. If a broker finds it easier to sell insurance from your company rather than the traditional way, chances are higher that he will bring more business to you than your competition.
The Broker's Portal
A broker, just like a customer should be able to make an end-to-end insurance transaction online. With a Broker's Access they can log in to their dashboard to;
- Sell new policies
- Renew customer policy
- Track their commissions
- Lodge/Track a Claim on behalf of his customers
- Print/Download Insurance Certificates/Policy Documents.
Who is the Digital Customer of Today?
Millennials!!! Born between 1981 & 1996. They are entrepreneurs, innovators and disrupters.
- They make very informed decisions especially when it comes tospending their hard-earned money.
- Millennials are buying, they just buy differently i.e they only buy if they see the need of the product or service.
- The Nigerian economy has forced a lot of them to be entrepreneurs, underpaid and some without jobs. This means that asset acquisition is not an equal opportunity for all.
- They are very tech-savvy. Over 70% of the Nigerians that fall in this category own one or more smart devices.
- They find insurance rather boring, unclear and not trustworthy
- They hate being marketed to or find regular advertising intrusive and unbelievable.
How do you Market to the Millennials?
Many brands see the millennial as elusive and donot quite understand how to communicate with them.Brands are sceptical about millennials willingness to spend like their parents have. However, they just need a brand that;
- Is relatable, innovative and helpful
- Can deliver experiences rather than just a product or service
- Can deliver a seamless buying and selling process through the use of technology
- Cares about the society and the causes they care about
What is the role of technology in reaching to Millennials?
The link between technology and millennials is undoubtedly strong and this has shaped the world we live in including businesses and organizations. Technology has to be implemented with the target audience in mind to create a competitive advantage.How do we know what technology is going to achieve that?
- Digitizing products and policies
- Digitizing service delivery (Lodging claims, paying a premium)
- Digitizing user transaction and making it accessible
- Personalization and 24-hour Customer Service
How we help Insurance Companies at Amplify Digital
- We Understand your Business
- We know the 'Digital Customer of Today'
- We are tried, tested and trusted
Let's Have Coffee
Say Hello to us at firstname.lastname@example.org or stop by at Suite 305, 3rd Floor Meridian Towers, 56, Opebiroad, Ikeja, Lagos and let’s map out your journey to Digital together.