The local insurance industry has recently been undergoing changes and attracting new investors from the region and globally. The new players in the sector are attracted by the huge opportunity the sector holds. Currently, penetration of insurance in the country is under two per cent. With the growing middle class and investments being made, it is expected that the industry will grow in coming years. The New Times’ Collins Mwai caught up with John Bugunya, the chief executive of Prime Insurance Limited for insights on the local insurance sector and the company’s future plans.

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Prime Insurance is the newest entrant on the local insurance industry, but word has it that the firm has been around under a different name, right?

Prime Insurance, until five months ago, was known as Cogear Limited, a local insurance company with majority local shareholding, which had been in the market for over 20 years. The re-branding from Cogear to Prime Insurance Limited arose from an acquisition in April, last year, by a strategic investor, Greenoaks Global, who purchased a majority shareholding of the company.

The company decided to rebrand the business as one entity partly through the parallel acquisition of Prime Life Assurance Limited, the Life Insurance Company and the need to align the businesses under common visions, values and mission."Last year we had Cogear, which was undertaking general insurance and we had Prime Life which was undertaking life insurance.

We felt that from a customer perspective there were two brands that were in the market but in real sense it is one firm and it was essential that we should communicate that relationship to the clients so that they know they can find all insurance services they require under one roof.

After the re-branding we have also renewed our customer service promise and also made a few changes such as opening up a new pivotal branch opposite EcoleBelge in addition to aligning our distribution and branches model.

What is the Greennoaks Global profile?

Greennoaks Global is based in London; it has been in insurance for a long time and has investments in other emerging markets in countries like Nigeria and Pakistan. They are also looking at other acquisitions within Africa, in order to drive insurance penetration within the region and continent. Their plan is to look at countries that have sound governance, development potential, a thrivingeconomy and room for growth.

These are countries where insurance is the next big thing. Essentially, they are looking to invest in countries with a growing middle class where the levels of disposable incomes are increasing.

These are some of the factors that drive their investment decision. We are optimistic that with the investments they have done in Rwanda, in the next two or three years you are going to see a significant presence from Prime Insurance.

The rebranding was viewed by some people as an attempt to run away from a past image, was it?

The re-branding was not meant to run away from any previous reputation. It was meant to align our value proposition to the customers and launch a strong brand that will drive the expected growth. Therefore, the view held that the re-branding was an attempt to change perception or run from a reputation is not true. It’s meant to improve customer experience, access and insurance knowledge for our clients.

Statistics show that the level of insurance penetration is below 2 per cent, what do you think ails the industry?

From a customer perspective there is a belief that the levels of insurance services in the country have not improved much when compared to other financial services. This could be partly because customers have little understanding of the products being offered and few know what they are insured against.

The access points of these products have also been a challenge. At Prime Insurance, we are looking at how we can make products simple, accessible and understandable to clients.

The additional challenge is that those who have previously tried to purchase insurance had a less than perfect experience. The industry has not faired very well in the past in aspects like restoring the previous financial position of the clients as soon as the risk they are insured against occurs.

There is a feeling by some clients that some insurance companies are not doing what they should be doing. We have reviewed all this feedback and are working to align our policies to compensate as fast and as soon as a claim is made; we currently pay easy claims in as little as 30 minutes and have a turnaround claims processing time of three days.

Some players in the insurance sector claim that there is a problem of low skills in the markets and hence the sluggish performance by the sector, have you had the same problem and what are you doing about it?

The industry is relatively young in the country as compared to other countries in the region. Human resource capacity in the insurance sector can be a challenge.

What we have done is embarking on a training programme where every year, we bring in a selected number of rigorously interviewed and selected top performing graduates from the top Rwandan Universities. We have designed a training programme where we put them through insurance related training as well as other leadership and business programmes.

Additionally, we have just completed the first training programme with our sister company in Nigeria where four of our top performers have just returned from a six- week training course.

The reason for this huge capital investment is driven by the objective to build the next generation of leaders and players in the sector. In the short term while we effect this top talent training and growth, we have looked through the region to bring in skills that are not presently available locally.

It would be expected that with the growing middle class, increase of disposable incomes and more investments, the sector would develop further. However, that has not been the case, what would you recommend as the way forward?

You would ideally expect that as the GDP is growing; the level of disposable income is increasing, meaning that there should be an increase in the number of insurable assets resulting in growth of the insurance sector.

If you look at the report released last year by the World Bank on the insurance sector in the country, there has been growth in the sector but not to the extent expected. If you look at penetration of the service in the country, it is less than 2 per cent – based on the study by the World Bank – which is fairly low.

That could explain the challenges that customers have in understanding the role of insurance and the level of confidence people have in the sector. As a company it is the reason why we want to simplify our products and reach out to clients to inform them more about need for insurance.

We are looking at alternative distribution channels in addition to physical distribution points. A big stumbling block in the process is that few people know the role of insurance. We have a role to communicate to members of the public to raise their awareness.

Wouldn’t the government, by making more insurance products mandatory, increase the penetration of insurance?

There has been discussion around this issue and adding on the requirement to have mandatory car insurance, what addition assets should become mandatory? This could be an additional good initiative from a government perspective to ensure that the public’s assets and status can be restored in case of perils.

But I think from a customer perspective, the regulation may force me to buy insurance to be compliant but what I would want more than that is to be able to understand the products I am buying. The regulation may force me to comply but it will not force the insurer to provide quality service.

What could improve the insurance sector is improvement of the level of confidence that clients have in the sector as opposed to forcing clients to buy policies. That can be done by the whole industry improving their services and relationship with clients.

Local insurers have been accused of lacking innovation, what do you make of the accusation?

Innovation in insurance like in every other sector is critical. People’s desires and preference change and so do their level of expectation. The level of innovation in this sector has been behind other sectors. Looking ahead, if we are to have meaningful impact on communities around us and increase the level of penetration, we need to innovate.

By innovation, it doesn’t mean introducing European products, instead we need to look at the local market and try to identify what is missing and introduce ‘fit for purpose products’. An example is the population in our informal sector who do not have pension schemes or any form of insurance.

We have witnessed entrance of multiple firms to the local sector; can that be an indicator that better days are ahead?

From a customer perspective, competition is always good. It forces people to rethink the lack of innovation in the sector partly due to the few number of players in the sector who were probably able to get by without necessarily having to compete for clients.

With competition, we expect to see significant innovation as insurers are forced to rethink and see how they can reach out to potential clients better and work at maintaining their clients. At Prime Insurance, competition is good for us as an institution because an industry that is not growing has a problem. Where we are as an industry, there still exists a huge opportunity for all the players

What is the role of insurance in an economy like Rwanda’s?

Insurance plays a great role in economies that are trying to get ahead. If you look at countries that have been able to move from emerging markets to developed status, insurance has played a role as they have access to long-term funds. We have seen insurance companies make long-term funds accessible to banks.

Insurance companies also tend to make numerous investments across sectors with their long-term funds, which further helps to progress the economy. They are a vehicle that can mobilise money from the citizens with interest, invest them in a country and market improving the economy in the process.

editorial@newtimes.co.rw