Traditional insurers risk corporate extinction, warns CBI boss

Traditional insurance companies that fail to embrace digital transformation, data-driven decision-making and changing customer expectations risk becoming irrelevant in an increasingly competitive financial services landscape, the Managing Director of Consolidated Hallmark Insurance Plc, Eddie Efekoha, has warned.

Efekoha, who also serves as Chairman of the Chartered Insurance Institute of Nigeria (CIIN), made the remarks while speaking on the future of the insurance industry and the urgent need for operators to adapt to rapid technological and market changes. He cautioned that insurers relying solely on conventional business models may face serious challenges as innovation reshapes customer behaviour and industry dynamics. (punchng.com)

According to him, the insurance sector is undergoing one of the most significant transformations in its history, driven by advances in technology, artificial intelligence, big data analytics, digital distribution channels and evolving consumer preferences. These developments, he noted, are creating new opportunities for companies willing to innovate while simultaneously threatening organisations that resist change. (punchng.com)

Efekoha stated that modern customers increasingly expect insurance services to be accessible, personalised and delivered through seamless digital platforms. Consumers now demand faster claims processing, simplified onboarding procedures and greater transparency throughout the insurance value chain. Companies unable to meet these expectations, he said, risk losing market relevance to more agile competitors.

The insurance executive explained that digital-native businesses and insurtech firms are already disrupting traditional operating models by leveraging technology to improve efficiency, reduce costs and enhance customer experiences. These emerging players are introducing innovative products and service delivery methods that challenge long-established industry practices. (punchng.com)

He noted that while traditional insurers possess advantages such as brand recognition, regulatory experience and established customer bases, these strengths alone may not guarantee future success. Sustained competitiveness, he argued, will depend on the ability to integrate technology into core operations and continuously adapt to changing market realities.

Artificial intelligence was identified as one of the technologies likely to have the greatest impact on the industry. Efekoha said AI has the potential to transform underwriting, risk assessment, fraud detection, customer service and claims management. By analysing large volumes of data more efficiently than traditional methods, AI can help insurers improve decision-making and deliver more tailored products to customers.

He also highlighted the growing importance of data analytics in understanding customer needs and identifying emerging risks. Insurance companies that effectively utilise data, he said, will be better positioned to develop innovative products, improve pricing accuracy and strengthen risk management frameworks. Those that fail to invest in these capabilities could struggle to remain competitive in the long term.

The warning comes at a time when Nigeria’s insurance industry is pursuing reforms aimed at increasing penetration, improving consumer confidence and expanding access to insurance products. Despite its significant growth potential, insurance penetration in Nigeria remains relatively low compared with global averages, prompting industry stakeholders to explore new strategies for reaching underserved populations.

Analysts believe digital technology could play a crucial role in addressing some of the barriers limiting insurance adoption. Mobile platforms, digital payments and online distribution channels have the potential to reduce costs and make insurance products more accessible to individuals and small businesses. As internet and smartphone usage continue to expand, opportunities for digital insurance solutions are expected to increase significantly.

Efekoha stressed that innovation should not be viewed solely as a technology issue but as a broader organisational transformation. He encouraged insurance companies to review their corporate cultures, operational processes and talent development strategies to ensure they are prepared for future challenges. According to him, organisations must foster environments that encourage creativity, agility and continuous learning.

The insurance leader also called for greater collaboration between traditional insurers, technology firms, regulators and other stakeholders to accelerate industry development. Partnerships, he noted, can help companies access new capabilities, improve operational efficiency and deliver better value to customers.

Industry experts largely agree that collaboration will be critical to the sector’s future. Many believe partnerships between insurers and fintech or insurtech companies can help accelerate innovation while reducing the costs and risks associated with developing new technologies independently.

Regulatory support is also expected to play an important role in enabling industry transformation. Stakeholders have called for policies that encourage innovation while maintaining appropriate consumer protection and financial stability standards. A balanced regulatory environment, they argue, can help foster competition and stimulate investment in new technologies.

Market observers note that the pace of technological change is unlikely to slow in the coming years. Emerging innovations such as artificial intelligence, machine learning, blockchain and advanced analytics are expected to continue reshaping financial services globally. For insurers, adapting to these developments may become increasingly essential rather than optional.

As competition intensifies and customer expectations evolve, industry leaders believe the distinction between traditional and technology-driven insurance companies will continue to blur. The firms that succeed, they say, will be those capable of combining industry expertise with innovation, operational efficiency and customer-centric service delivery.

Efekoha’s warning serves as a reminder that the future of insurance will be shaped not only by financial strength but also by adaptability. In a rapidly changing marketplace, companies that fail to modernize risk losing relevance, while those that embrace innovation could position themselves for sustainable growth and long-term success.