Insurers need to innovate capacity for bigger risks – Standard Alliance boss

Mr. Bode Akinboye is the Group Managing Director of Standard Alliance Insurance Plc. In this interview, he addressed the current restructuring going on in the company and other issues in the insurance industry.

Since your return to Standard Alliance two years ago, what have you been up to all this while?

I worked here in Standard Alliance Insurance Plc my first time for close to thirteen years and I left as the Group Managing Director at a time when I believed I had put in my best in the company and it was time for the company to have fresh ideas and I also needed to express myself in a different way.

So I resigned to go and set up my own financial consulting business and I was also doing some little investment here and there. So I did that for close to five years and part of my business plan was to also invest in financial institutions.

So I had some investment in mortgage banks, microfinance banks and five years down the line we re-strategized and felt it was time for us to also invest in an insurance company. So there was an opportunity in Standard Alliance for an investor.

Management and board control

So I put together a team that bought into the company and got a strategic stake that enabled us to have more management and board control rather than working as employees. So it was on that basis that I returned here because the club of investors insisted that I should return to manage the business, and that was how I returned on the 1st of January 2015.

When you returned, were there significant gaps that needed to be filled?

By the time I came back, there was need to transform the business. Organisations have cycles in their growth plan and at that time, the company was at a state where it needed to be transformed and restructured. Part of my mandate of coming back here is to make sure we restructure the company, refocus it to return it to the customer-friendly company that it used to be.

The mandate is also to restore it back to what an insurance company should be, which is, a company meeting its claims obligations to customers. Truly, there were lots of outstanding claims when I returned, but we were not afraid because we believe that the fundamentals of the business are right.

We have the customer base and the brand is a successful one. So what we needed was to re-jig our system, restructure our processes and get our staff to be more committed to give better service to customers. Also, at the leadership point, make sure that we institute a culture and ensure that the purpose why we are here is to pay claims and that percolates down to the system.

So for every kobo that comes into the company, the largest chunk of it goes into claims payment and to the glory of God we have paid about N7.6 billion claims in two years and five months that we came on board. About N5.6 billion is from life portfolio while N2 billion is from non-life portfolio. The bulk of this was inherited outstanding claims.

With all these successes, what position does SA occupy in the industry?

If you divide the industry into tiers, tier one is made up of the top five or six players. So SA is in tier two and aspiring to move into tier one from my own analysis of our financials with other peers. We were just on the brink of breaking into tier one before I left.

If we had sustained that drive then we would have been in tier one. So we believe that the positive things that we were doing well before, we should just go back to doing them and within a very short period of time we will return to being a tier one player in the market.

What really informed the merger of the life and non-life companies?

First, the two businesses are complimentary. So in the context of the operating environment in Nigeria, giving the complexity of our operating environment, all the approval that I talked about, the cost of running business, getting approval here and there, it is only expedient that the two businesses should be run as one. That is the model that is running very well in Nigeria today.

We have no business doing otherwise if we want to succeed. If you look at the top five companies in Nigeria, majority of them are composite. So we decided that coming together will create economy of scale, it will save cost, it will enable us to cross-sell our products, have a unified staff that market both life and non life products, providing more opportunity for our staff to succeed out there because they can now market all the products across the line. It will enable us to have only one board of directors, saving cost of executive management and related time for meetings and coordination, getting approval for accounts because it is now one account. So it is meant to unlock more values for our shareholders. And that is the reason why we have gone ahead to do the merger.

The insurance industry is transiting into a Risked Based Supervision sector, how prepared is SA for this?

The truth is that the risk-based supervision has started long ago. I think what the regulator is trying to do is to reinforce some certain aspects. Right now, if you want to take any business from Shell or LNG, it will be based on the size of your balance sheet and you cannot take more than a certain percentage.

The best practice is five per cent maximum of your shareholders fund. But where NAICOM is going is that there could be other higher risks which are highly risky, hence, you need to do proper risk assessment more than ever before in an organised manner before accepting the risk.

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