The Scramble for Africa Insurance Market. How beneficial?

That there is a vast market in the Nigeria’s insurance market is an understatement. While it could also be said that the big insurance companies have offices across selected states in Nigeria, it is difficult to find any of the insurance companies having offices in all the 36 states of the federation. Also, the large areas of unexplored businesses are enough to sustain any operator who chose to so dare. Yet, while these large business opportunities are waiting to be explored, Nigerian insurance companies have not relented in their scramble for Africa insurance market. Industry watchers have expressed concern over the fast rate at which these firms compete to deliver quality services to the detriment of local market is being pursued. Analysts say that the present level at which Nigeria insurers are rushing to the West Coast is alarming.  At the last count, twelve insurance companies have opened subsidiaries in some African countries.  Many more are on the verge of doing so.
Ordinarily, it is a thing of celebration for Nigerian insurance companies to be exporting insurance services to other countries. If for anything else, it would attract the much-needed foreign exchange to the country. However notwithstanding the beauty of this exercise, concerned industry watchers opined that it may not be healthy for the needed local penetration in Nigeria.
Their argument is hinged on the fact that some of these companies’ who are making waves in these African markets have not really established their foothold on the vast markets available in Nigeria.
Some see this as a mere ego trip while others tag it the scramble for the partition of African insurance market named after the historic partition of Africa.
Industry watchers believe that if the present scramble is not checked, Nigeria insurance companies may neglect the local market which needs full attention to rise to the level of the developed markets and accelerated development of   foreign markets at the expense of the local one.
The question one may ask is, are some of the companies embarking on this scramble for African market well positioned for it? Of what benefit is a local insurer who has less than ten branches nationwide setting up subsidiaries in the West Coast?
According to concerned analysts, one of the main reasons why these companies are going abroad is because they want to meet the shareholders expectations.
They stated that some of these investors are so eager for a quick return on investments that waiting on the local market alone may not be enough to meet their demands.
Anther school of though believes that insurance is about risk taking so to some of these companies, there is need to explore any available opening anywhere whether for pure or speculative reasons.
At the moment, not less than 12 insurance companies have set up offices in the West Coast.  Some have even gone as far as to the Far East and North African countries while more are exploring opportunities to join the band wagon train.  
Out of the recapitalized insurance companies in Nigeria, a sizeable number have opened subsidiaries in Ghana, Liberia, Gambia, Uganda, Sierra Leone, Algeria, Tunisia, Egypt, Tanzania, Sao Tome & Principe, Conakry, among others..
Analysts are of the opinion that the actions of these companies are merely borrowing a leaf from similar moves by banks soon after the consolidation of Nigerian banks.  However, some hold the opinion that the banks on such ego trips have good reasons to do so, having already consolidated their branch networks before embarking on it.
Industrial and General Insurance (IGI) is one of Nigeria’s biggest insurers. While acknowledging the fact that it has done so well on the local scene, the insurance giant is reputed to now have so much presence on the global scene that it has almost become a household name.  In 2005, IGI successfully acquired 60per cent government of Uganda’s stake in National Insurance Corporation, thus becoming the first insurance company in Nigeria to achieve continental outreach.
IGI also has 60per cent controlling shares in Network Assurance Limited, Ghana, 60per cent holding in Gamstar Insurance in Gambia.
In like manner, IGI became the largest shareholder with 35percetn equity holding in SONARWA S.A., Rwanda.  It also has significant presence in Sierra Leone and Tanzania.
Mr. Anthony Aletor, group managing director of Capital Express Insurance, had said at a forum that insurance companies should strive towards a good mix of their revenue base.  One of the approaches to this, he said, is found in subsidiary operations which off-shore investments provide.
Supporting the adventure, he had said that what it portends is similar to the action of European Countries in the past to scramble for the African market because of the obvious advantages they stood to gain.
His support for off-shore investment also found anchor in the pattern of such investments which are spread across the difficult regions.  The argument therefore is that it would be difficult for the investments to be uniformly plagued by adverse effects especially against the backdrop of the different socio-political and economic factors.
Another company that has also shown significant presence off-shore is Continental Reinsurance.   According to Mr. Adeyemo Adejumo, managing director of the Company, Continental Re which is based in Nairobi, Kenya, is positioned to serve as a reinsure to many other countries outside Kenya.  These countries, he said are Ethiopia, Uganda, Rwanda, Mozambique, Zimbabwe and Sudan.
As earlier said, the need to meet the companies obligations to shareholders inform some of these actions Staco Insurance Companies is among the young and dynamic ones venturing into the West Coast with a significance presence in Sierra Leone.
Mr. Fidelis Ako, managing director of Trinity Consulting Group , in a reaction challenged the local insurers to research not ways of breaking the insurance poor penetration leveling Nigeria, rather than opening subsidiaries abroad.  He argued that if the insurance culture in those countries providing gat traction to Nigeria is weak, no reasonable company would invest in them.
He particularly frowned at the situation where some of these countries are not as large as one stake in Nigeria.  “The size of some of these countries are smaller than one state in Nigeria which goes to show that it is the culture put in place by the people, the operators and the government at large” he said.  Rather than embarking on ego tripping.  Ako advised stakeholders to individually and collectively research into how to raise the aware level such that it becomes a necessity for every Nigerian to have insurance policy.
Recently, NICON Insurance opened a subsidiary in Sao Tome and Principe.  According to Barrister Jimoh Ibrahim, group chairman, the venture into the tiny Island Country was born out of business boost .Industry watchers believe that one thing that seems to give added strength to this scramble is the poor exchange rate of the naira and the sliding economy.  What do we stand to gain if our local insurers are becoming household names in other countries while they are not even known in many of the local government even in the major states of  Nigeria. As the Nigerian insurance companies take us back to the legendary scramble for partition of Africa insurance markets, stakeholders are watching with keen interest to know how the action will benefit the nation’s fragile market.