Cornerstone Insurance Plc. is truly very strong in the industry. It won the 2015 Lagos Chamber of Commerce and Industry Award as the BEST ONLINE INSURANCE COMPANY. It made the billion revenue mark in the 2014 financial year. It is a technology-driven insurance company with a business philosophy grounded in trust, reliability, product innovation and creativity. In this Interview with Mr. Ganiyu Musa, the very articulate, erudite and highly experienced Group Managing Director/Chief Executive Officer of the company, he said it all, about the company; their achievements, on-going acquisition of Fin Insurance, efforts and
strategies. Most importantly, he spoke at length about some of the flagship products of his company and these are in the true spirit of deepening insurance business in Nigeria and indeed calling General Insurance To The Rescue.
Mr. Ganiyu Musa, GMD/CEO of Cornerstone Insurance Plc
Sir, you just held your AGM. The Cornerstone Insurance Plc under your able leadership was reported to have generated a PBT of N1.04billion for the 2014 financial year, which was an improvement over the N870.2m generated in the previous financial year. Congratulations. What strategies did you employ to achieve this?
Thank you very much. It was indeed a milestone for us. For the very first time in the history of Cornerstone, we exceeded the N1b mark in terms of profit before tax. We feel quite pleased about that, even though we did set for ourselves a loftier objective. As to how that has come to play, I don’t think we can put that to a single factor. We have been on what I will call a transformation journey for a few years and what you are seeing now from the 2014 result, is an indication that a number of these projects, a number of those initiatives, a number of those measures that we have been working on silently and quietly are now beginning to bear fruits. So, despite the challenging environment which slowed down our top-line performance, we chose to focus more on the quality of our portfolio, so that we were able to achieve that sort of growth in our bottom-line.
What are your objectives for the financial year 2015 which is already on-going?
For 2015 like I said, we are in a transformational journey, we are rebuilding. So what you will expect to see is a stronger growth both in terms of top-line and bottom-line. Yes, we understand in terms of the macroeconomic variables that we are in a very difficult situation in Nigeria. If you take what is happening at the international market, especially with the oil prices and the ripple effects on the economy because of our significant dependence on oil revenue coupled with the fact that we have a government that is just starting. Again, for the very first time in the history of Nigeria we have a successful transfer of power at the federal level from one political party to the other in a democratic election. Naturally, you will give a waiting period for the new government to find its feet and to understand the situation on ground. We have seen that happen in the first half of the year, where we spent the first three to four months doing an election and six weeks or so preparing the handing over and the transition. We are now waiting for the new government to appoint cabinet members so that things will really begin to take shape. So there are some developments against the goals of 2015 but we are quite confident that with a number of things we have done at Cornerstone, we expect a strong growth in 2015.
Your shareholders approved the acquisition of Fin Insurance. Is that part of your growth and expansion strategy Sir?
Yes. That is correct. You know I had told you that we are on a transformation agenda and that we have taken a number of initiatives. Pretty earlier on, we determined that the Nigerian insurance industry was too fragmented; we have too many fringe players. We took the position that combination is really not only desirable, it is actually inevitable. So because of that, very earlier on we started to identify credible partners that could add value to Cornerstone. We had a first start in 2013, it was very well reported. At the end, the combination did not take place. But that did not deter us. We found in Fin Insurance a very credible partner. You should remember Fin started as Yankari Insurance based in Bauchi. They still have a very strong footprint across the whole of northern Nigeria. Clearly, that complements Cornerstone, because we are stronger in the other areas of the country. Secondly, Cornerstone has established a distinct position in Islamic Insurance called Takaful, and we believe the combination with a company like Fin will complement our efforts in that area of business. If you look at the footprint we now have in Nigeria with the acquisition of Fin, we have suddenly moved from just a little over twenty points of presence to over forty. That is huge for us. We moved from a position of over N7b in shareholders’ funds to over N12b. That is a push for us. It gives us a lot of flexibility, it gives us access to now be able to write and be able to retain a lot of risks than we ordinarily would not have been able to.
At what stage of the acquisition process are you at and when will it finally be concluded?
I will say for all practical purposes that it has been finalized. We have received the necessary regulatory approvals. NAICOM has given us the no- objection approval; the SEC has also given us the no-objection approval. We have almost finalized the integration plan. We are working with one of the top three consulting firms in this country to handle the integration of the two firms. We are also going through some of the legacy issues, including the people issues, the process issues and the technology issues. So before the end of the year we will certainly be ready. By the time we are doing 2015 accounts, we would be doing a combined account. Of course, like you mentioned, we also have the necessary shareholders’ approval to conclude it.
Talking of insurance business in Nigeria, how in your opinion do we actually raise the bar in terms of quality and volume of insurance business in Nigeria?
Really, a multifaceted approach involving all the stakeholders is required. For our part as risk carriers and underwriting firms, you have the distribution segment in terms of the broking committee and the agent. You also have the government, because let’s face it; the government is still a significant participant in the country’s economic activity. And I think this is something the government has realized. Towards the end of last year, there was a major push by the government working with international consultants to try to activate the growth potential in the insurance industry. We have seen a few things that have been militating against the developments in terms of level of awareness, in terms of suitability of products, In terms of the distribution and because of that, most of the indices you look at in terms of insurance penetration show that we are terribly below the African average. Up till now we are told that Nigeria has probably less than 3million individuals with personal insurance accounts in a country of between 160 and 170 million, depending on who you talk to, in terms of our population. This gap is very wide.
How does NAICOM come in, what should it do to ensure the penetration of insurance in Nigeria?
I think we have to give kudos to NAICOM. Interestingly the former commissioner just bowed out gracefully and the commission under his leadership did a lot for the industry, in terms of sanitizing and growing the industry. You know one major incentive which had an immediate impact on the balance sheet of insurance companies is the popular ‘no premium, no cover’. Even though we have had it in the law books, the fact is that he gave a lot of bite to it. It was really good for us as operators even though we opposed it initially. It changed the face of insurance balance sheet. In the past a single most important item you find on the asset side of most insurance companies is assets receivables, the debtors, just like unproductive assets. Now you cannot have that. You have to receive cash for all the risks that you carry. That is huge. The commission has also done a lot to promote mass market insurance which is micro insurance. They have come up with the guidelines, the regulations and the licensing requirements. And now you have quite a number of companies, traditional companies doing micro insurance and you also have other specialist companies coming to apply to do micro insurance. We have talked about the Islamic insurance, which I have said the Cornerstone has established a leadership position in. The commission has also tried to bring us the regulations to guide and develop that area of business. The truth of the matter is NAICOM has really done quite a lot in the last few years. But having said that, there is still a lot more that could be done. For instance, we have the MDRI that is Market Development and Restructuring Initiative. Yes, very lofty objectives, very lofty programmes that have been put in place, but now we need to move beyond the programmes towards implementation and enforcement. We know Insurance all over the world is a grudge buy. People need a little bit of a push as well as incentives too. The implementation and enforcement of a number of those compulsory insurances will help. We as operators can also play a key role towards getting the buy-in of the regulator in the enforcement of those compulsory insurances.
Claims payment is one of the areas that deter Nigerians from insurance. There is a general opinion that insurance companies use the tiny prints to make it difficult for policy-holders to make claims. What is your take on this? How does Cornerstone behave towards Claims payment?
I will say it is one of those unfortunate legacies that for some reasons just simply refuse to go away from insurance companies. Yes, that used to be true back in the 70’s and to some extent in the 80’s, but right now I can assure you that there is no insurance company that will fail or refuse to pay a valid claim. Again, that is one of the things that NAICOM has seen to. They have the complaints bureau like an Ombudsman’s programme that is free to the insuring public. When you have any valid claim that is not paid, all you have to do is to call that number and submit the details at no cost to you. The commission will investigate the issue and make sure that it is paid, if it is a valid claim because the emphasis is that it must be valid. You know insurance fraud is rife. Part of it, in fairness to the insuring public may not be insurance fraud; it may just be lack of understanding of the cover that you have paid for. Generally it was one of the things that used to happen in the past, but right now, there is no insurance company that would not pay its claim. As for Cornerstone that is one of the things that stands us apart. We give you the guarantee that from the date you sign your Discharge Voucher for our retail claims, you get your cheque in 24 to 48hours, no questions asked. So claims payment is a key competitive advantage of Cornerstone. All our customers can attest to that. Tiny prints have again been a thing of the past. If we will have time to talk about one of our flagship products, more and more insurance companies are moving towards simplifying the contract terms. Our Airtel insurance, which I referred to, has no exclusions. The total of documentation is half a page, written in a very simple language. There are no tiny prints anywhere.
I was coming to the issue of your area of clear advantage. In which area of insurance does Cornerstone have a clear advantage over other competitors?
There are few areas, but there are ones that are of real importance to us. You see, first, insurance is based on trust. That is a core principle of insurance on both sides and that is one of the areas that Cornerstone has been able to carve out a niche. We are a trusted brand, because for us our word is our bond. We take integrity very seriously. It runs through our DNA right from the top. So we commit to all our promises, no stories. Then what we have also done is to simplify the access to insurance. From the various studies that we have seen, the issues militating against development of insurance center around trust, credibility, affordability of insurance, the ease(talk about the small print and the big fonts). And of course we talk about the price which essentially is the affordability. What we have been able to do as Cornerstone is to look at all these ingredients and come up with products that will address the concerns of the insuring public. Right now on our website, on our online platform, you can sit at the comfort of your home and initiate and conclude your insurance a transaction, be it the basic Third Party Motor, Comprehensive Motor, insurance link savings programme; you don’t need to talk to an agent. There was an interesting experience a few months ago. A lady took delivery of a car on a Friday, by 5pm. Based on her recent experience because her first car was stolen, she was really uncomfortable, thinking she could not keep the new car without insurance for 3-4 days before Monday. Which offices would still be open? She was told that she did not need to visit any office, but just to go online. She was extremely excited. Within minutes, she was able to complete the insurance and she had the certificate. You could pay with your Verve, Interswitch Master or Visa cards. Interestingly, we have just been recognized at the recently held Lagos Chambers of Commerce and Industry Awards as the Best Online Insurance Company. This lends credence to the fact that our customers appreciate the value we give to them.
So certificate could be printed there and then?
Yes, right there and then. The certificate is sent to your email address. So if you have a printer you can print it. If not you receive confirmation on your phone, so you know instantly you are on course. If you need certain underwriting parameters, if it requires a tracker, if it requires an inspection within 24hours,our agent will contact you, you don’t need to call anybody. Our agent will make the necessary arrangements to install the tracker or inspect. Right from the time you conclude it, 5 minutes you are on a cover. That is one way of trying to make insurance easier and faster for the insuring public. I told you about Takaful, right now we understand that insurance penetration is very low in Nigeria but within the Muslim population, it is even lower because certain aspects of the conventional insurance are not in line with the tenets of Islam. So today Cornerstone is the only insurance company that has products on Islamic insurance for life and General business that is approved by NAICOM. Again, that is one way we are trying to make insurance available to all the segments of the society, irrespective of where you are, your religious belief, we have a product that will be suitable for you.
The overdependence of Nigeria on Oil causes a lot of shocks because of the volatility of the industry.
When the prices go down everyone suffers as we are currently experiencing. How does insurance ensure that some of the emerging risks are covered?
The interesting thing is that the oil industry is probably one of the most insured sectors in the country, because the oil sector is dominated by multinationals and big companies where they have very high standards of risk management including the use of insurance as a veritable risk management tool. I can assure you that the level of investment we have seen in the oil sector will not be anywhere near where we are because there are many risks and these are transferred to the insurance sector right from the exploration stage to the drilling, production, post production and transportation, there is a significant use of insurance. Obviously, there is a strong correlation between the level of activity and the level of oil price which we are seeing now because the oil prices have basically gone down from the peak that we have seen it about the third quarter of last year. We have also witnessed a pullback in terms of some of the planned investment in the oil sector and this would naturally have an impact on the insurances that would have been generated in that sector.
The Cornerstone is believed to be making a huge impact in the sector. How many products do you have? You mentioned some earlier on.
Yes, that is correct. We have key products in almost all the classes. Of course, as Cornerstone, we are licensed to underwrite all classes of insurance. I reckon the ones that will be of interest to the public are the ones on retail, i.e. personalized products. We have for the past few years, been doing our homework in trying to come up with products that address the day to day needs of the insuring public. We carry mobile phones, tablets; we carry everything that is electronics and these things may fall, break, water and coffee could spill on them. The replacement cost is expensive. One of the greatest products that we just launched is called GADGET PROTECTION PLAN. It is essentially aimed at repairing or replacing equipment; mobile phones, smart phones, tablets, if they are damaged, by paying just a small premium at the time you are buying it. If you have an I-phone for instance, the new generation of I-phone, it may cost you N30,000 to N35,000 to replace the screen, but by paying a premium that is a fraction of that, we will repair it; If it cannot be repaired we replace it for you. The beauty of it is that the bundle is handled with one of the biggest online retailers in the country, Konga.com. You can go to their website and have insurance products bundled with equipment. About this time last year we launched Nigeria’s first truly revolutionary insurance product in the sense that for the first time we forged a partnership between an insurance company, a major Telco and a specialist micro insurance provider to deliver a value-rich product to the insuring public for free. That is our Airtel insurance, where you can get up to N500,000 life cover and up to N50,000 for hospital cash if you are a subscriber to Airtel and spend a minimum amount on your monthly recharge. If you are hospitalized for any reason anywhere in Nigeria for up to three nights or more; you then qualify for payment from Cornerstone. The outcome has been phenomenal.
What is the patronage like?
In 1year, we have had more than two million people registering their interest to subscribe to the product. Out of this, over 1 million people succeeded in subscribing. In our bid to make the product easy to subscribe to, we made it totally paperless. It is done on the back of technology; once you have an Airtel line all you need to do is to dial *259# and then you just have three simple steps to register. As of today, we have more than 1million people that have successfully registered for that product. It has never happened in the history of Nigeria for you to have a single insurance product that is offered, not a compulsory product, not a government sponsored product, but a commercial insurance product to attract that number in a year in the insurance sector. Over 1million subscribers? It has never happened before. These are the sort of thing we stand for in Cornerstone. Our commitment to innovation, commitment to doing things differently and commitment to creativity is unrivaled. So that is the flagship product that we launched last year. Obviously we have others in other departments which we will be coming up soon.
Talking about your products, which of them do you think is the most highly patronized? Oh, you just talked about it….
Which of them is then the least patronized?
You know, the least patronized in terms of the personal line products for us I would say are certain investment-linked products. Insurance is really about mobilizing long term funds. Most of us in Nigeria are short-term oriented. So it is a much harder sell to convince people to commit to a long-term savings programme; where you can really create value. That is the area that is taking a lot longer to really develop.
You have talked about using technology to actualize insurance transaction, does it entail that the brokers are no more on the line. Does it knock off the brokers?
On the contrary, it actually makes it easier for us to collaborate with brokers. One of the places we have creatively used technology is the enhancement of collaboration with the brokers. The brokers control 75 to 80% of the Nigerian market. So clearly this represents a very significant distribution channel and we have very good rapport with a number of brokers. Part of the things we use technology for is to enhance our collaboration with insurance brokers.
Finally is there any kind of special benefit the general public may experience when they patronize Cornerstone Insurance Plc? In other words, what should come to a potential client when he comes to Cornerstone for transaction?
What I say is that when you come to us, you are going into a partnership with a trusted partner. We will be there when you need us, because insurance is all about promise for the future, you are paying a premium today when nothing has happened. So you need a trusted partner that when there are twists and turns of life which are bound to happen, you will find a trusted partner in Cornerstone Insurance Plc. We will not be able to draw back the hands of the time, but we will provide the comfort, the soothing that is required at such times when those things happen. So for us, we say our word is our bond whatever promises we have made, no hassles, no questions; with Cornerstone, Your Future is Assured.