General News
What Insurance Companies Stand to Benefit from Bancassurance
The issue of whether or not bancasurance should be allowed a foothold in the industry has attracted attention in times past, especially soon after the recapitalization exercise. Many operators kicked against it, noting that if the ‘monster’ was allowed to stay, the industry would be swallowed up by banks. This was more so as the latter had made significant in-roads into the hitherto exclusive preserve of the insurers. One of those that opposed the move was the National Council of Registered Insurance Brokers (NCRIB) which expressed fear that the practice would erode public patronage of insurance brokers in preference to banks – owned insurers and brokers. The council had protested vehemently to the Central Bank of Nigeria (CBN) on what it called an unethical practice among banks in the selective ways they engaged brokers. According to the NCRIB, the practice as it then stood, was a deviation of the rules of universal banking as practiced else where. It stated that part of the prescription of universal banking was that no bank should compel its customers to do business through any particular insurance company, including those owned by the banks. Unfortunately, the council stated, this golden rule was being violated. In an interview earlier granted this writer, Biyi Otegbeye, managing director of Regency Assurance plc, allayed the fear of some insurers, especially the stand alone insurers that bancassurance was a good omen after all. He argued that notwithstanding the branch network of banks over insurance firms, the gains of the practice will not have any undue advantage over the insurers. He stated that in doing business, the insuring public would be guided by choice and in the quality service delivery of the operators. After over three years of practice, its gains have been unfolding in fascinating ways. While speaking at a recent forum, Adeyera Adeyemo, managing director of Continental Reinsurance plc, painted a glowing picture on the gains of banc assurance not only to insurance firms but also to banks.
Adeyemo explained that banc assurance was a mutually beneficial practice which should be encouraged to survive, stating that the ability to tap into banks’ huge customer bases stands it out as its major incentive. “The extensive customer base possessed by banks is considered to be ideal for the distribution of mass-market products such as individual life assurance and householders/house owners insurances. On the other hand, insurers can make use of the wide reach of bank customers to categorize potential clients in detail according to their needs and values. With increasing sophistication on bancassurance operations, some insurers can also focus on the high-net-worth segment, which offers greater potential for wealth management business”, he said.
Apart from the ability to tap into new customers groups, another area is escaping from the high cost of captive agents, prompting insurers to look into alternative channels. In some cases, teaming up with a strong bank can help to fund new business development opportunities and boost public confidence in the insurer.
He highlighted some of the benefits to the industry to include tapping into huge customer base of banks, especially as the bank’s client base may well be ‘virgin territory’ for the insurance company and so a new source of business.
Explaining further, he said that bancassurance helps in reducing reliance on traditional agents by making use of the various channels owned by banks. The reinsurance chief added that the practice also bring about shared services and cost with banks, thereby reducing the overhead cost of stand alone operators. He stressed that combining the bancassurer’s business with the other business of the insurer can produce economies of scale in administration costs (including capital expenditure). This in turn allows the insurer to improve profitability and to price future products with narrower margins, which helps to make the insurer’s products more competitive;
Adeyemo further expressed support for the practice along the line of developing new financial products more efficiently in collaboration with their bank partners. The economy of banc assurance operations allows the insurer to offer products which are not feasible through the insurer’s existing channel. For example sales cost incurred under existing channels may force premium rates for a product to be uncompetitive, so the product is not sold whereas the cost via the banc assurance channel may be low enough to make it feasible.
The insurance boss opined that if encouraged by all, the practice would significantly help in establishing market presence rapidly without the need to build up a network of agents. This is in addition to obtaining additional capital from in order to improve their solvency and expand business as well as leveraging on the bank’s brand to expand their market
He added that the concept was of mutually beneficial ways to both banks and insurance companies. He said both bank and insurer has great opportunities to learn and make improvements in their own operations. In the present disposition of global economic meltdown, the Continental Re boss explained that bancassurance was critical to making both banks and insurance firms the added opportunity of getting exposed to each other’s distinctive management styles, objectives and measures. These benefits come when either company can implement changes as a result of the learning process. However, he stated, “in the wake of the global financial crisis, the bancassurance model has been called to question and its continued relevance and benefits being challenged.”
Adeyemo expressed the fact that the model is not entirely without fault. To buttress his point, he stressed that in Europe, there has been some developments which tended to erode public confidence. For instance, he said financial services giant, Fortis and its banking subsidiary ABN Amro recently broke up. Recently also, he added, “German insurance group Allianz sold its interests in Dresdner Bank. Across the channel, UK insurer Standard Life has also announced the sale of its banking arm to Barclays. Although not quite a bloodbath, there has certainly been some bloodletting among European bancassurance practitioners in the wake of the global financial crisis.”
Financial crisis notwithstanding, insurers continue to rely on banks as an important force to distribute their products and grow their business. The reputation of banks and financial institutions has been severely tarnished in the current financial turmoil. With so many casualties in the financial crisis, can banc assurance weather the global financial storm? What can banks and insurance companies do to boost confidence and regain trust from customers at a time when alleged cases of mis-selling of financial products over the bank counters abound?
Adeyemo stressed that in the past few years, “sales of investment-linked products have experienced significant growth, bolstered by stock market growth. But now, the global financial crisis has taken its toll on bancassurance business, particularly on sales of investment-linked products.” He mentioned the case of Hana HSBC Life Insurance Company in Korea is worth mentioning at this point which is a joint venture union between Hana Insurance of the Hana Financial Group (HFG) and HSBC Insurance (Asia-Pacific) Holdings Limited.
Pointing the way forward, he said these examples achieved remarkable progress despite the turbulence that had beset the financial industry over the intervening months. “We have seen premiums grow by 36 percent and policies by 11 percent, beating the market average,” he said. According to sources close to them, he explained, capital had been injected to fuel expansion and described Hana HSBC Life Insurance as a “stable platform whose growth had outperformed the industry.”
The global financial crisis may have done its worst but the reinsurance chief emphasized the fact that there’s light at the end of its dark tunnel. Interestingly despite this crisis insurance companies have continually identified a number of benefits arising from the concept of bancassurance.
International Trade Union Confederation, (ITUC-Africa), representing trade unions from countries in Africa, has called on Nigeria and other African governments to ensure that industrialisation translates into improved living standards for workers and ordinary citizens.
According to ITUC-Africa, economic growth must lift Nigerians and other Africans out of poverty rather than deepen inequality, frowning at Nigeria’s government plans to remove subsidy on electricity.
Delivering his opening remarks at the New Energy for Africa 11 Convening: African Workers’ Contributions to Energy Sovereignty, Green Industrialization, and a Common African for COP31, Akhator Joel Odigie, general secretary of ITUC-Africa, said, industrialisation remains central to Nigeria and Africa’s liberation and development agenda but warned that it would be meaningless if it failed to improve the welfare of the continent’s people.
He faulted the plans by the Nigerian government to remove so-called subsidy on electricity in 2027, arguing that it is aimed at satisfying the Bretton Woods institutions such as the International Monetary Fund, IMF, and the World Bank.
According to him, such removal would worsen the poverty rate in Nigeria and regress any marginal progress towards industrialisation. Subsidy removal will make electricity inaccessible to workers and the majority of the citizens.
He said, “As we speak now, Nigeria is talking of subsidy removal on electricity. The plan is not to satisfy or help Nigerians, but IMF, World Bank and other donor countries. The talk that subsidy is bad economics is a lie. All developed economies depended on public sector-driven electricity and not private sector.
“For us as Africans, industrialisation is central to our liberation and development. It is part of our aspiration to define our own identity and achieve shared prosperity through an industrialised Africa. Unfortunately, that vision has yet to be realised.
“We have also come to understand that lamenting our circumstances is not enough. Identifying the barriers to Africa’s development or pointing fingers at those who may be responsible does not move us forward. The more important question is: What next? What solutions can we pursue together?
“It is from that perspective that we confront the reality that more than 600 million Africans still lack access to electricity, while privatisation continues to deny many people affordable access to energy. This compels us to ask: What can we do differently?”
According to him, organised labour believes industrialisation can be achieved without worsening the climate crisis if governments, workers and development partners commit to energy justice.
Odigie noted that “When we speak about sustainable industrialisation, we are asking how Africa can industrialise without increasing environmental degradation or worsening the climate challenges our people already experience every day.
“We know this is possible. But it will require negotiation, compromise and genuine partnerships. It demands serious discussions on technology transfer, skills development and financing.”
He stressed that developing technical skills and mobilising investment for energy infrastructure are essential if Africa is to industrialise sustainably, saying “These are not impossible skills to acquire. With the right investment and commitment, Africa can build them. Equally important is access to finance and the resources needed to develop the infrastructure that will support sustainable industrialisation.
“An industrialised Africa has little meaning if it does not improve the lives of our people. Our vision is an Africa where prosperity is shared.
“We must reverse the growing phenomenon of the working poor. We must end the situation where women, children and older persons bear the greatest burden whenever governments attempt to balance national budgets.
“What does prosperity mean if ordinary people cannot enjoy a decent quality of life? A worker who returns home after a long day’s work should be able to switch on a fan during hot weather, watch television, listen to the news and spend meaningful time with family because electricity is available, reliable and affordable.
“If our people cannot enjoy these basic necessities, then what kind of prosperity are we really talking about?
“Energy justice means energy that is accessible, affordable and capable of improving people’s lives.”
Odigie also renewed ITUC-Africa’s campaign for stronger public participation in Africa’s energy sector, citing Finland as an example of how governments can ensure affordable electricity while working with private investors.
“Recently, we visited Finland, where we observed a successful model that combines public and private participation, with strong public leadership. Energy there is affordable. In fact, electricity costs less in Finland than it does here in Nairobi.
“Our hosts explained that this is possible because the state retains an important role in the energy sector, including the ability to influence pricing to ensure affordability for everyone.”
Ahead of the COP31 climate negotiations, he called for closer collaboration between organised labour and the African Group of Negotiators (AGN), saying trade unions are partners in governance rather than adversaries.
“Trade unions are not antagonistic to governments, even though we are sometimes misunderstood.
“Our responsibility is to strengthen accountability and help governments perform better because, from time to time, leaders can become too comfortable.”
Using a metaphor that drew applause from participants, Odigie likened the role of trade unions to keeping leaders “close to the fire.”
“Our responsibility is to keep the feet of our leaders close to the fire so that their heads do not become too cold. We want them to continue thinking clearly, making sound decisions and remaining connected to the realities faced by ordinary people.
“That is why we are not in opposition. We are not enemies.”
He said organised labour’s partnership with the AGN is intended to ensure African governments enter international climate negotiations with the full backing of workers across the continent.
Speaking, Dr Nana Amoah, chair of the African Group of Negotiators, AGN, said Africa’s energy transition presents both an urgent challenge and a historic opportunity, lamenting that “More than 600 million Africans still lack access to electricity, even though our continent possesses exceptional solar, wind, hydro and geothermal resources. Yet Africa continues to receive only a very small share of global clean-energy investment.”
Represented by Dr George Manful, AGN Senior Advisor, Amoah, said: “This imbalance must be corrected if the transition is to support Africa’s development rather than reproduce existing patterns of dependence, extraction and inequality.
“For the African Group of Negotiators, a just transition cannot be measured solely by installed megawatts, emissions reductions or new electricity connections. It must also be measured by the quality of jobs created, affordability of energy, protection of workers, participation of women and young people, development of local industries, and the capacity of African countries to retain value from their natural resources.
“Initiatives such as Mission 300 must therefore go beyond expanding access. They must strengthen public institutions, mobilise affordable and debt-sensitive finance, support local manufacturing and skills development, and guarantee that no worker, community or vulnerable group is left behind.
“Africa’s critical minerals must similarly become a foundation for green industrialisation—not another chapter of raw-material extraction. Our policies must promote local processing, technology transfer, decent work, environmental integrity and equitable participation in global value chains.”
Allen Onyema, vice chairman, Airline Operators of Nigeria (AON) and chairman, Air Peace, has warned that several domestic airlines could cease operations within the next 30 days unless the federal government urgently intervenes in the challenges confronting the aviation industry.
Allen Onyema
Onyema, gave the warning on Wednesday at the launch of the book, Pathways, Pilgrimage & Destiny: The Biography of Alhaji Muneer Bankole, held in Lagos.
He described the aviation industry as capital-intensive but less rewarding, warning that airlines are facing serious threats to their survival.
“Going into aviation is not a piece of cake. It is an industry that is not very rewarding. It is capital-intensive, yet less rewarding. Today, we are facing a phase that has existential threats. Except something drastic is done very quickly within the next 30 days, a lot of airlines might go extinct,” Onyema said.
The Air Peace chairman also cautioned aviation unions against their planned picketing of airlines over the non-remittance of the five per cent Ticket Sales Charge.
He warned that if any airline is picketed, other domestic carriers would suspend operations in solidarity.
“If they picket any airline, others will go because there’s no need for that. There is nowhere in the world that government agencies use unions to talk about issues of debt,” he said.
Onyema lamented the harsh operating environment for Nigerian airlines, noting that more than 50 airlines have shut down over the years.
“Everybody pities Nigerian airlines, yet nobody wants to do anything about their situation. Over 50 airlines have come and gone. The owners of these airlines succeeded in other businesses, yet they failed in airline business,” he said.
He stressed that airlines were not opposed to helping the government generate revenue but called for a more sustainable approach.
“The airlines are not against helping government generate revenue. But no airline in the world is taxed directly for revenue. The airlines indirectly provide revenue for government,” Onyema added.
General News
QNET Denies Links to Ignite, Backs Nigeria Immigration Service Crackdown on Alleged Fraud Syndicate
QNET has denied any association with Ignite following the arrest of 12 individuals by the Nigeria Immigration Service (NIS) over alleged fraudulent recruitment, irregular migration and other unlawful activities.
QNET
In a statement issued on Tuesday, the direct-selling company described reports referring to the suspects as belonging to a “QNET/IGNITE network” as inaccurate, stressing that Ignite is an entirely separate entity with no relationship to QNET.
The company stated that Ignite is neither part of QNET nor authorised to conduct any business or activities on its behalf.
QNET urged media organisations, commentators and members of the public to avoid linking the two organisations, warning that such reports could mislead the public and unfairly associate the company with alleged criminal activities beyond its control.
According to the company, it has fully cooperated with the Nigeria Immigration Service and will continue to provide any relevant information required as investigations progress.
It reaffirmed its commitment to supporting law enforcement agencies in identifying and prosecuting individuals who misuse the QNET name to facilitate fraudulent recruitment, human trafficking, irregular migration or other criminal acts.
The company also clarified the use of the term “Model Q,” explaining that law enforcement agencies increasingly use it to describe criminal schemes in which fraudsters exploit the names of legitimate direct-selling companies and established brands to lure victims with false promises of employment, overseas travel, migration opportunities or guaranteed income.
It stressed that “Model Q” does not refer to QNET’s legitimate business operations but rather to criminal activities carried out through the unauthorised use of recognised brand names.
QNET maintained that it does not offer employment opportunities, visas, overseas travel or guaranteed financial returns through its independent distributors.
It explained that its business model is based solely on the direct sale of wellness and lifestyle products.
The company warned that anyone soliciting money for jobs, migration, travel or guaranteed investment returns in QNET’s name is acting without its authorisation.
According to the statement, criminal groups have repeatedly impersonated the company’s brand to deceive unsuspecting members of the public.
QNET said it considers itself a victim of such brand impersonation and has been working with law enforcement agencies in Nigeria and other countries to share intelligence, support investigations and protect potential victims.
The company commended the Nigeria Immigration Service for what it described as an intelligence-led operation that resulted in the rescue of victims and efforts to dismantle transnational criminal networks.
It reaffirmed its readiness to continue collaborating with the Service and other relevant authorities to ensure that those exploiting its name for criminal purposes are brought to justice.
QNET also advised members of the public to verify any claims involving the company through its official communication channels and to report suspicious offers relating to employment, travel, migration or investment made in its name.
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