The purpose of the study is to examine insurance as an apparatus for business subsistence. The sampled size used by the researcher for the study was 48 and the methodology adopted was the use of simple percentage, tables, Pie chart and Bar chart. After the analysis, the findings revealed that Insurance management help covers the policy holder against the loss or damage to insured property which was caused by an accidental fire. Insurance management helps to promote financial stability and security of both the banks and its employees. Insurance also provide covers for banks’ employees’ cars, houses and their contents, life and pension products. Based on the findings, it is recommended that the business organizations in Nigeria and their staff should be trained on various forms of risk that their business could be exposed to and how to manage such risks. The government regulating agency (SMEDAN) should ensure that insurance coverage to ensure business continuity, to enhance easy and cheaper accessibility to insurance products by the small business owners.
1.1 BACKGROUND OF THE STUDY
In the past two decades, digital technology has transformed the world. Digitalization has altered virtually all aspects of human endeavor, government (e-tax administration system), business (e-commerce and payment solutions), travel (online booking, visa application), publishing (e-books, e-news) and even finance (e-banking).
Today in developed world services sectors including insurance, employs different forms of digital technologies to facilitate their day to day operations. Digitalization is applied in the insurance industry for information purposes, application submission, proposal preparation and online contract conclusion, notification of claims, probable address changes, access to customer and contract data (fadun, 2013).
The insurance industry is an important sector of the economy. It is a social device for minimizing the risk of uncertainty. It is a contract that provides compensation for specific losses in exchange for a periodic payment called premium. With many policies on the bouqet list of most insurance companies and the ever rising number of customers and policy holders, it has become virtually impossible for most insurance companies to operate effectively and efficiently without the adoption and use of appropriate digitalization tools (Apampa, 2010).
The industry in Nigeria has gone through series of transformation with the introduction of information communication technology, and this has changed its process and activities such as book keeping, retrieval of customers’ information, keeping of records of customers, deposit and withdrawal among other changes. Insurance companies with the help of ICT have restructured themselves to be flexible and time conscious (Pankajaski and Shajala, 2012). Due to ICT revolution, customers are being offered solutions anytime and anywhere without having to wait for a long period.
Digital revolution is dramatically changing the business environment and the financial services industry is no exception. Although a basic assumption of technology improvement is the ability to make things simpler, from a strategic point of view, many financial institutions are facing digitalization as a conundrum. There is a wide array of alternatives that can be chosen as new services or information processing channels.
This transformation has been around in some form for decades. Information processing systems and digital-related activities have been evolving intensively since the 1980s but they are now invading almost each and every single aspect of business and in the next ten years we will probably witness more innovations in financial services than in the previous fifty years (Canbo-Valverde, 2017). According to Babalola (2017), millennial can be either a critical success or failure factor for the Nigerian insurance industry both locally and globally, depending on how proactive the sector is harnessing the positive characteristics of digitalization.
According to data on the website of the Nigerian Communications Commission (NCC), as at february 2019, mobile internet subscription in Nigeria now stands at 100.9 million (100,904,668). This number is astronomical considering the country statistics of 195, 875,23 population (internet world stat, 2018). With the current insurance penetration in Nigeria at 0.4% which is extremely low compared to South Africa’s 16.9% and Kenya’s 2.9% (Cynthia Ala, 2018), this is a great feat as connecting to the industry public becomes easier if harnessed by insurance focus.
This is a challenge to the Nigerian Insurance Industry as they seek means to deepen penetration and increase profitability. Insurers are faced with the unique opportunity to embrace and benefit from the digital wave, which offers a dynamic solution to address a lot of key issues that plague the offline world that hinders growth today.
The Nigeria Insurance Industry has never been much of a leader when it comes to technology but after decades of workingwith chunky workflows, outdated software, and lots of paper, many insurance companies are starting to get a taste of the tech bug perhaps that’s because hungry newcomer start-ups and investors saw an opportunity to do insurance smarter, faster and better, or perhaps they realized how much time, money and risk they can save by updating and automating their processes. Whatever the case, there is finally a forward movements in the insurance sector, and customers are rejoicing that companies are jumping into the digital age (Newman, 2017).
Insurers are faced with the unique opportunity to embrace and benefit from the digital wave, which offers a dynamic solution to address a lot of key issues that plague the offline world that hinders growth today. For Nigeria’s Insurance sector to remain relevant and survive in the future financial services industry and technological world at large, there is a need for operators to embrace digital transformation to unlock hidden potential of the 21st century.
1.2 STATEMENT OF THE PROBLEM
Unlike the past, most insurance products in developed countries are nowadays delivered via internet, mobile applications and other digital applications (ET, 2018). The Nigeria insurance companies are lagging behind in transacting business especially; they still transact businesses mainly via traditional approach. It is no surprise that approximately only 1.5% of all Nigerian adults are covered by insurance today (PWC, 2015). More interestingly, almost all insurance companies in Nigeria use the internet, have a website as well as online real time e-insurance facilities which have improved the scope of insurance practice in Nigeria (Fadun, 2013). Yet a complete use of digital technologies to facilitate all their process and possible online coverage is yet to be effected.
Among others, the following problems motivated this study, inability of insurance companies in Nigeria to:
- Increase insurance penetration
- Promote the lack of trust and confidence of the public
- Change the perception of the insuring public towards insurance
- Increase revenue, transparency and better marketing using digital technologies.
1.3 AIMS AND OBJECTIVES
This research study will examine the effect of digitalization on the marketing of insurance in the Nigeria Insurance Industry.
1.4 SCOPE OF THE STUDY
Specifically, the scope of the study include:
- To establish what constitute digitalization
- To explore various theories on digitalization
- To explore tasks to which digital technologies can be applied in insurance operations.
1.5 RESEARCH QUESTIONS
This study intends to address the main questions which is ‘the effect of digitalization on the marketing of insurance in Nigeria’.
The following are the research questions relevant to the study:
- Has the usage and adoption of digitalization contributed to the penetration of insurance in Nigeria?
- Has digitalization improved the quality of services rendered insurers in Nigeria?
- Has digital marketing contribute to increased sales of insurance policies?
H0: The usage and adoption of digitalization does not contribute to penetration of insurance in Nigeria.
H1: The usage and adoption of digitalization contributes to penetration of insurance in Nigeria.
H0: Digitalization does not improve the quality of service rendered by insurers in Nigeria.
H1: Digitalization improves the quality of service rendered by insurers in Nigeria.
H0: Digital marketing does not contribute positively to sales of insurance policiesin Nigeria.
H1: Digital marketing contributes positively to sales of insurance policies in Nigeria.
1.7 JUSTIFICATION OF THE STUDY
This research study will focus on the impacts of digitalization on the Nigeria Insurance industry as well as the prospects and problems they may face in complete digitalization applications.
1.8 LIMITATIONS OF THE STUDY
Limitations to the study bothers essentially on scarcity and strict protection of information by insurance companies, the time assigned to complete this research, combination of research with lecture period, and writing of assignments among other factors.
This study was conducted in view of the following limitations:
- Cost and time constraint
- Inadequate literature on digitalization with focus on Nigeria Insurance Industry
- Limited literature on the effect if digitalization on the marketing of insurance in Nigeria.
1.9 SIGNIFICANCE OF THE STUDY
From the long list of literatures that exists regarding digitalization, only few works have been done on the insurance industry and only a handful of publications on the Nigeria insurance industry. Hence, this study therefore contributes to knowledge on the effect of digitalization on the marketing of insurance in Nigeria.
1.10 OPERATIONAL DEFINITION OF TERMS
INSURANCE: Insurance is a social device for minimizing risk of uncertainty. It is a contract that provides compensation for specific losses in exchange for a periodic payment.
DIGITALIZATION: It is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business i.e. shifting the fundamental business model to support electronic channels, contents and transactions.
DIGITAL TECHNOLOGIES: These are electronic tools, systems, devices and resources that generates, store or process data. These include social media, online applications, multimedia, productivity applications cloud computing and mobile devices.
DIGITIZATION: Conversion of analog information in any form (text, photographs, voice, etc) to digital form with suitable electronic devices (such as scanner or special computer chips) so that the information can be processed, stored and transmitted through digital circuits, equipment and networks.
INFORMATION COMMUNICATION TECHNOLOGY:This is an electronic means of capturing, processing, storing and communicating information.
SOFTWARE: This is a general term for various kinds of programs used to operate computers and related devices.
E-TAX: This is the process of submitting tax returns over the internet using tax preparation software that has been pre-approved by the relevant authority.
E-COMMERCE:This is the buying and selling of goods and services or the transmitting of funds or data, over an electronic network, primarily the internet.
DATA: This is information that has been translated into form that supports efficient movements or processing.
DIGITAL MARKETING: The marketing of products or services using digital channels such as social media to reach consumers.
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