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The Mixer Newsletter Vol. 3 July-September 2016

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Editor’s Note

2016 has been a pivotal year for all of us. Over the last two quarters we have witnessed

the impact of social, political and economic changes in the Country and how these have

crippled many businesses. The insurance industry is not immune to the effect of all these

changes. The insurance business landscape is undergoing a rapid and unprecedented

evolution which makes sustainable profitability a huge challenge.

Sadly, this abysmal economic reality is what we have to live with and we cannot but hope that as

we move ahead in the months to come, the economic situation of the country will improve.

Amidst all this economic turbulence, we still have a reason to be thankful. As rightly said by a

pundit during our thanksgiving event; “count your blessing and you will be surprised how far God

has taken you”. We will continue to be grateful to God for his unending mercies upon our lives

and that of the company.

Every business quarter is loaded with exciting adventure, yet sometimes because of our busy

schedule we forget some of the exciting events that occurred along the way. We believe there is

value in our different experiences. The MIXER (NSIA’s Insurance Newsletter) provides a haven

where our unique moments, shared events, triumphs, challenges and experiences can be

savored.

On this note we say Welcome to the second edition of the MIXER, a newsletter for our clients

and staff alike. This edition offers readers with thought provoking articles on a wide range of

topics starting off with:

Developing a robust risk appetite statement

Agency distribution channel - An overview

Right or wrong!!

Other highlight of this edition is the social corner which covers the under-listed events We find you exciting!

Photo Album

Staff birthdays

Etc.

We want to hear from you… What features or topics would you like to see covered in future editions

Ask us! Please send us your questions and we will publish the

questions and answers for everyone’s benefit

Enjoy this edition! Thanks to all contributors

Fade

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Pages

Editor’s Note 2

Developing a robust risk appetite statement 4

Agency distribution channel an overview 8

Right or wrong 11

We find you exciting!!! 12

NSIA’S photo album 14

Staff Birthdays 15

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“

Developing a Robust

Risk Appetite Statement

Without a well-

crafted risk appetite

statement, there

will be an

insufficient basis

for managing risk

”

A clearly articulated risk appetite statement is a critical prerequisite for

implementing an effective enterprise risk management process. This represents a

relatively new area of practice as evidenced by the large number of organizations

that have yet to develop a formal risk appetite statement, and by the lack of any

clearly established best practice standard among those that have.

The risk appetite statement should include a set of core principles that reflect the

organization’s enterprise risk management objectives and risk taking philosophy. An

organization’s risk appetite defines the type and amount of risk it is willing to take on

in pursuit of its vision, mission and objectives. This suggests the following examples

of principles that might be covered in drafting a formal risk appetite statement:

Strategic Alignment

Every organization generally needs to take on and successfully manage risk in

order to achieve its strategic goals. The risk appetite statement should highlight this

linkage and identify those risks it deems to be core (intimately linked to customer

value proposition, business strategy and return prospects), non-core (not aligned

with principal strategy and, hence, little or no risk appetite reserved) or collateral

(incurred as a necessary by-product of assuming core risks and, hence, not directly

pursued and ideally mitigated to the extent that the level of residual risk is balanced

with the cost of control).

Stakeholder Interests

The risk appetite statement needs to appropriately balance the various needs,

expectations, risk/reward preferences, investment horizons, etc. of a wide range of

internal and external stakeholders. In particular, for publicly listed insurance

companies, the risk appetite should support the pursuit of shareholders value while

ensuring that the company’s ability to pay claims and fulfil long-term policyholder

commitments is not compromised. The risk appetite should also support the

maintenance of target credit and financial strength ratings, and on-going favourable

access to capital markets.

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Alignment with Corporate Values and Culture An organization’s risk appetite should appropriately reflect its core values.

The formal risk appetite statement provides an ideal platform for senior

leadership to articulate its corporate values and attitudes to risk, and to

set a clear “tone from the top” with regard to risks and brand value.

Risk Management Capacity and Capability The risk appetite should be explicitly calibrated to the financial risk taking

capacity (current as well as reasonably obtainable) as well as the organization’s

specific risk management capabilities. It should actively seek out risk taking

opportunities where these capabilities can be effectively leveraged and, conversely,

avoid those areas where it does not have the requisite risk management skills

or available financial capacity. The CRO should be prepared to assume the role

of Chief “Reality” Officer in order to ensure that the risk appetite statement appropriately

reflects this important principle.

Total Portfolio Perspective Adopting an enterprise risk management framework requires that risks and opportunities are not just considered based on their

intrinsic merits, but also based on their marginal contribution to the organization’s aggregate risk position. In particular, the risk

appetite should explicitly provide for the recognition and management of diversification and concentration effects across the enterprise

risk portfolio.

Returns Commensurate with Risks

An organization must establish a risk appetite that is commensurate with its target return expectations. The risk appetite statement

should facilitate the effective iteration and ultimate reconciliation between these two fundamental elements. This is particularly true of

insurance entities where, by definition, risk management is very much at the core of their customer value proposition. This generally

requires that the risk appetite framework should incorporate some form of risk budgeting process whereby risk capacity and capital

can be allocated, on a total portfolio basis, across opportunities that collectively optimize the organization’s overall risk adjusted

returns.

Tips for Successful Implementation

• Make sure your risk appetite statement reflects the “tone at the top”. Modern enterprise risk management starts with

company risk culture that is established by the Board and executed by senior management.

• Buy-in will need to be achieved at all levels within the organization. People will need to understand and believe in the merits

of the risk appetite that has been set at the top.

• Be sure to capture all key risks, desired and undesired, including risks that are chosen to achieve business objectives

through risk/reward and risks that are inherent to business activities.

• Monitoring and reporting mechanisms must be in place in order to ensure daily business activities are reflective of the

adopted appetite. The best risk appetite statement does nothing if it is simply filed away and forgotten

Conclusion

A well-crafted risk appetite statement can be an invaluable tool for helping organizations navigate through the myriad of issues and

opportunities characterized by today’s challenging business environment. Accordingly, without a risk appetite statement, there will be

an insufficient basis for managing risk. Developing a risk appetite statement, although straightforward in concept, requires significant

knowledge of the business and specific expertise in the disciplines of risk management. The big question is- Do I use NSIA’s risk

appetite statement as a guide in making decisions?

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Agency Distribution Channel-an overview

“I am prepared for the worst, but

hope for the best.” ~ Benjamin

Disraeli

Insurance helps us to do exactly what

this quote suggests. We all face many

kinds of risks: risk of meeting with an

accident, falling sick, being a victim of a

natural disaster or fire, and above all risk

of life. All these risks not only come with

pain and suffering but also hurt

financially. Insurance is one way of

being prepared for the worst; it offers the

surety that the economic part of the pain

will be taken care of. In this article, we

take a look at Agency Distribution

channel in NSIA and the Insurance

industry at large.

The word Agency stands for an

establishment or person engaged in doing

business for another. We can see different

forms of agency across the society. In

Insurance, the term agency refers to a

long standing business model which exists

ever since insurance became an

organized sector.

Nigeria presents long-term growth

opportunities for insurance agency, with

current insurance penetration of less than

1%. Given a population of 174 million, this

presents a long-term strategic opportunity

for insurance service providers to add

value to the lives of customers and also

enhance shareholders value.

There are different types of insurance

agencies like Tied Agency, Corporate

Agency etc. A tied agency is one which

where an individual act on behalf of

insurance firm, where as in corporate

agency it is an entity which act as the

agent. In a tied agency, agents are

allowed to sell only one insurers product

where as a corporate agency is allowed to

sell products of multiple insurers.

An Agent is remunerated through

commission, which is based on the

Premium collected. The usual Practice is

to give higher percentage in first year and

a trailing commission the following years.

Insurance agency provides an Insurer with

broad spectrum of avenues to market its

products and services. Since Insurance is

all about a promise, a human touch adds

value to the customer. One of the primary

features of Agency is people to people

contact and networking. Thus it provides the

insurer with access to many markets that

has its unique needs and buying cycles.

With proper servicing and relation building

an agent can repeatedly tap into same

customer, which gives agency its

uniqueness of repeat business from

customers.

On Customer side, Customer gets an

opportunity to discuss in detail about his

needs, dreams and aspiration which an

agent would relate better because of his

personal knowledge about the customer. An

agent provides his personalised touch and

expertise in dealing with the customers. He

gathers information about the needs of his

customer by asking the right questions,

listening to customers’ needs carefully and

then making his recommendation. Once the

customer agrees to implement the

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recommendations, the agent take the

responsibility to ensure that plan devised

to meet his long term needs are on track

and protection is continued throughout as

per customer requirement.

Challenges faced by the Agency

Variable Remuneration: Agents in

most insurance firms across the world

are paid only in commission and do not

have a fixed component.

Retention of Agents: majority of the

agents can be classified as part time

agents, as they double up in some

other vocation in addition to Insurance.

This reduces the commitment level of

the agents. Under these circumstances

retention of agents becomes one of the

major challenges of the organisation.

Skill Levels: Since agents are

constituted from various walks of life,

the skill levels are observed to be

varied, in line with the diversity of the

agency.

Ways to Overcome the Challenge

Methods used to counter these

challenges are varied from market to

market. Most commonly observed

means are by developing a career

progression for agents, training and

coaching go a long way in building the

skill set of the agents, making them

more confident in their area of work.

Another important measure that keeps

these challenges away is different kind

of programs and avenues to recognise

the good performance of agents.

These could include right from a

certificate signed by a dignitary, gifts,

and trips.

Leading insurance companies in

the world

There are many criteria on the basis of

which such a list can be prepared:

premium collections, market

capitalization, revenue, profit,

geographical coverage, asset based

and many more.

The list below shows the Top 10

Insurers in the world by revenues.

(Source: Insurance Information Institute.

Data as of 31st March 2015)

Name Ranking

Berkshire Hathaway

(US)

1

Axa (France) 2

Allianz Se Germany 3

Japan Post Holding Co.

Ltd.

4

Assicurazioni General

(Italy)

5

Prudential Plc (UK) 6

China Life Insurance 7

Ping An Insurance

(China)

8

Legal and General group

(UK)

9

Munich Re (Germany) 10

The top Insurance companies world over

have agency as one of their pillars of their

business model. It is very cost effective

and gives a great spread to the

organisation and helps to reach the target

segment of the population. A highly

trained and motivated agency force will be

a game changer for any insurance

company. In the years to come, insurance

industry in Nigeria will witness emergence

of a strong and vibrant agency distribution

channel contributing notable revenue to

the industry.

We, at NSIA are venturing into agency

distribution this year and we have our

agency office at Ikeja, Lagos to kick start

the operation. With this new channel,

NSIA will have more foot soldiers in the

field creating brand awareness, catering

to the needs of different segments of the

market and generating more revenue to

the organization. We will give more thrust

towards a trained sales force that will be

able to do the right financial planning for

customers.

Given the continuously growing

population with more disposable income

and continuous management support, the

agency distribution channel will become

an important line of distribution for NSIA.

By: Damodaran Harish

(Retail Development manager)

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In RELIGION, Christians got Christ, Muslims got Mohammed and other

religions has got their various own medium to GOD. Each claims hers to be

the only true path. Who holds the LIGHT of truth?

In POLITICS, Party A promised to stabilize our liberation from the Military but

eventually confined us to the insatiability nature of the unfair economic divide.

They went through an internal CHANGE of name and evolved as Party B

promising us of a liberation from Party A as an emancipation from self-inflicted

decadence through the acclaimed CORRUPT-free quest invariably delivering

us into the hands of the old dictatorship we applauded Party A of liberating. If

corruption grows old is it more corrupt or less? Is this CHANGE or are we

blindly awake?

In THE ECONOMY, The rich keeps getting richer and the poor keeps getting

screwed, the middle class slowly disintegrating into the lower class and only a

few percentage ascending with ceaseless struggle to the higher class

reforming our strata into a two-level rich and poor class showing the

inevitability of the erosion that would break the whole system down to the

extent that the poor would be so hungry that they wouldn’t have any other

thing to eat but the rich. Can you taste the BLOOD?

In INSURANCE, it’s unethical to give ORC but if you don’t give it, you don’t get

business and if you don’t have business you don’t have the bragging right to

contest in the industry. Would you rather sink or sail?

In MAN, there is a constant struggle of two lions in him, the GOOD and BAD

lion. Who decides which wins? The one you feed the most I guess?

It all boils down to one thing. In Life there are always two perspectives,

Positive or negative, quiet or aggressive, older or younger, cool or hot

tempered, beauty or beast, slay or nay, hustle or lazy, smile or frown, tell-

up or shut-up, belong or be-alone, now or then, hate or love, live or die,

heaven or hell, write or wrong? Who can truly tell?

One thing I can tell you: in all your choices, always find time to Read and

Travel, Tu Comprends?

By: Ikenna Onuoha (Corporate Marketing)

Right or wrong??

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WE FIND YOU EXCITING!!!

Q: What’s your story Bernadette?

Answer: I’m Bernadette. The name

means “to be bold as a dear!” I am

proudly Leo, born 30th July. I’m the

second child of my mother, the third of

my father. Growing up was beautiful,

you can refer to me as a “good in transit”

(I was moving around a lot) … LOL. I

learnt a lot growing up with different

people which explains my ability to fit

into any group and get along with a lot of

people. From a very young age, I have

learnt the value of financial

independence, hard work and

industriousness.

The last five years of my work life has

been full of ups and downs. It has

presented me with an opportunity to

laugh and reflect, meet people and as

well part with them but most importantly,

I have grown (certainly not my height) as

a result of my experiences. Spiritually,

mentally and intellectually. NSIA to me is

my family.

One of the best things that can happen

to anyone is to have a vision, an

environment in which it can be nurtured

and an individual who believes strongly

in you. I have dedicated my life to

uplifting and empowering individuals but

most importantly to give others the belief

to tenaciously chase their dreams. We

all have a lot to offer the world!!

Q: How long have you been at

NSIA insurance?

A: 4 years post NYSC!

Q: Tell us about one of your

proudest moments at work

A: My first promotion!! For me it was a

reward for hard work and dedication,

and it encouraged me to do better than I

am currently doing. As a person with a

need for achievement, it meant a lot to

my career.

Q: How do you recharge?

A: By exercising!! Yoga to be specific!

Q: What’s the most important

lesson you’ve learnt in the last

years?

A: The most important lesson I have

learnt over the years is that “when life

throw stones at you, you can decide to

let them hit you or build a bridge with the

stones”

Q: How do you act when you are

stressed out?

A: In the past I used to overreact but I

realized it’s not the best to do, so now I

just take a walk while counting 1-50, LOL

and keep mute while speaking to the

inner person to “farabale” afterwards…!!

Q: How do you act under

pressure?

A: -" Rather than overreact and create a

scene ....I prefer to leave the scene.

Q: If you were to start a company

from scratch, what values would

you build it on?

A: Integrity and Zeal!!!

Q: What is the toughest thing

you’ve had to do professionally?

A: I faked a tear to get a business from a

client…LOL. And it worked…

Q: If you could choose 1 amenity to add

to the workplace, what would it be?

A: A gym

Q: What would you be doing if you

weren’t at your current job?

A: Acting or OAP (On Air Personality)

OPTIONAL

Q: What’s your superpower?

A: Hyperactivity, (Too much adrenaline

must have been deposited by God from

creation) LOL

Q: If you were a Game of Thrones

character, who would you like to be and

why?

A: Arya stark, she is very tenacious.

Q: Which of your 5 senses is the

strongest? How about the weakest

A: Smell and weakest- Hearing as I think a

parrot resides inside of me (roll eyes)

Staff

Birthdays July August

Bolanle Shobanke, Vivian Madu 1 Clara Ezurike, Igho Okechukwu, Adedamola Adeoba 2

Frances Nwogbe, Odochi Francis, Ronke Oyetoyan 2 Olayinka Ebenezer, Temitayo Somoye 6

Emeka Onwuchuruba 3 Mayowa Akinkuotu 7

Ijeoma Igiri 4 Ajibola Ogundele 8

Linda Ikoku, Sunmisola Akerele 11 Yetunde Fagbohunka 16

Akinola Oluwole, Funmilayo Wright 12 David Nwachukwu 15

Chuks Ukperi 20 Sogunle Jelili 21

Samuel Ehirim 25 Njideka Okoli 22

Nojeem Orekan 29 Roberts Akinya 26

Souza Bernadette 30 Chinyere Akachukwu 4

Anozie Chiagozie B. 30

September September

Banjo Olusola 1 Ojukemi Olumide, Stella Eziefule 8

Ifeoma Okoli, Udo Okeke 17 Samkoko George, Ronke Adekunle 21

Yusuf Omotayo 26 Joy Nwachukwu 27