Among Underserved Nigerians, Awareness of Health Insurance Remains Poor but Insurtech Offers Hope

Signing up to a microinsurance plan could save many vulnerable and low-income earners, but they are mostly unaware of the programmes.

The man facing a barrage of criticisms from purple-uniformed midwives had the person on the other end of the phone line give his word that he would help find the money.

The man would later abscond after he was told the huge amount he needed to pay besides the deposit of N27,000 he was trying to source for his wife to be wheeled to surgery.

Abandoned to heat and noise in a ward on one side of the hallway, where a line of crowded gatch beds pushed close to the wall made it impossible for two people to pass at a go and made the air sticky, the wife told the doctor she had not eaten since the previous day. She was later allowed to undergo a surgical procedure on compassionate grounds, in which the child was prematurely delivered. They agreed the mother and child would only be discharged once their bills were settled.

When the husband showed up later at the hospital, Orile Agege General Hospital Lagos, without the cash, he got more tongue-lashing.

Barely a hundred metres away, to the immediate right of the hospital gate upon entry, some enrollees to the Lagos State Health Scheme popularly called Ilera Eko, sat in a shade, awaiting medical attention.

In a country where a yawning knowledge gap conceals awareness of availability of health insurance plans catering to the needs of low-income earners from a majority of them, scenarios like this are common even where such services are right on the doorstep of the target population.

According to EFInA Access to Financial Services in Nigeria 2020 Survey, "lack of awareness and suitability of products are main barriers to non-bank formal financial services," with 83 per cent of respondents saying they were not aware of microinsurance.

Signing up to a microinsurance plan, the protection of vulnerable, low-income earners from emergencies related to health, job loss and the likes in exchange for affordable periodic premium payments, could save many.

Nigeria's public hospitals are uninviting at the best of times, with decrepit equipment and facilities, paramedics notorious for treating patients discourteously, and few doctors, many of whom, for the lure of more favourable jobs abroad, are deserting medical service in droves. These are sometimes putt-offs for potential microinsurance users.

Wole Adeyefa, a medical doctor at Orile Agege General Hospital, told PREMIUM TIMES he has been receiving positive testimonials from his patients who use the Ilera Eko health plan, saying it has helped them cover expenses like treatment and surgical procedures.

Mr Adeyefa admitted that most of the people he spoke to about the scheme in the past were hearing for the first time and added that the government has not done much in creating awareness, which he feels could be done using social media and healthcare workers in primary health care facilities across the state.

"The package is supposed to cover more than it's actually covering now. By the time people get to the hospital, they believe everything is supposed to be free. Ilera Eko should go beyond the border of government facilities," he said.

Olasumbo Okunlola, one of about 15 of his patients enrolled on the scheme, paid N13,000 to undergo a Caesarean section that typically costs 10 times more when she last had her baby, an experience she called "a big relief." That did not cover the costs of drugs and injections though.

"I registered for this standard package including my family but for now, I'm the only one that is benefitting from it," said Mrs Okunlola who told PREMIUM TIMES she first heard of the scheme from her sister last year and later on the radio.

She identified the fact that she is only allowed to use one hospital at the moment as a drawback she has spotted in the scheme.

Nigeria accounted for the third highest out-of-pocket spending on health globally for 2018, 76.6 per cent of the total healthcare expenditure for that year directly settled from the disposable income of households, tipping many into poverty.

It only improved in 2020, when the figure stood at 72 per cent, compared to sub-Saharan Africa's average of 35 per cent.

The implications of such spending on livelihoods are dire. Francis Ukwuije, a technical officer on health financing at Nigeria's country office of the World Health Organisation said in Abuja in July out-of-pocket healthcare expenses were plunging as many as 80 per cent of Nigerians in some states into poverty.

Ilera Eko subscribers pay N8,500 ($19.1) annually in premium to get a 12-month cover as individuals or N40,000 ($89.9) for a family package covering six people (enrolee, spouse and four dependants aged 23 or below) over the same period.

There are other higher plans based on how much enrollees can afford, while there are also lower plans tailored to the needs of people like tertiary institution students as well as day/boarding school students.

Healthcare providers now number 250 serving subscribers fewer than 700,000 as of 13 November, 2022, according to its website, seven years after the scheme set sail.

The figure compares with a target of 3 million enrollees for last year alone in a state where residents are at least five times more, and a lean public knowledge is generally cited for its underwhelming patronage like other social insurance plans in the rest of the country.

For instance, in a survey report released in June 2022, the Nigerian Institute of Medical Research (NIMR) Partner found 70.4 per cent of the respondents said they had never heard of the Lagos State health insurance programme, while only 2.5 per cent had signed up.

Health insurance penetration is only skin-deep in Nigeria, with just 3 per cent of the 216 million people having coverage, little surprising in an economy where the overall insurance penetration rate, at 0.5 per cent, is one of Africa's worst.

The National Financial Inclusion Strategy had set its sights on upping the percentage of the adult population that is covered by a regulated insurance EFinA policy from 40 per cent by 2020 but ended up achieving 2 per cent, according to Access to Financial Services in Nigeria 2020 Survey.

Nigeria's unwieldy social insurance structure

On switching to civil rule in 1999, the government of Africa's biggest economy launched the Nigerian Health Insurance Scheme, allowing contributors to save up little but regular cash in a pool from which health maintenance organisations (HMOs) will be able to dip to settle enrolees' medical bills when occasion demands.

It never took off until half a dozen years later and the journey has been tumultuous ever since, complicated by a wide infrastructural gap, inadequate manpower, low awareness and absence of political will to pivot the initiative amid other drawbacks.

The federal scheme changed name to the National Health Insurance Authority (NHIA) in May 2022, and Director General Mohammed Sambo has said subscribers are now 15 million spread across the country.

When President Muhammadu Buhari signed into law the National Health Insurance Act in May, the government announced its grand ambition to launch a universal health coverage that would cater to the health needs of 83 million vulnerable Nigerians.

It expects funding to be provided by what it called "Vulnerable Group Fund" to be financed by the basic healthcare provision fund, health insurance levy, special intervention fund and any investment proceeds, donations and gifts to the NHIA.

But a legacy of failed promises and similar experiences of introducing social initiatives in the past that took years to materialise have bred public distrust in government and many of its programmes, giving the impression that Nigeria is not yet set up for a robust social insurance scheme that works.

That Nigeria's current health expenditure, an indicator of the value of resources channelled to health compared to other sectors, was just 3 per cent of its GDP in 2019, the lowest in 17 years, means sustainable universal health coverage could be pretty difficult to attain.

Financial sector and related professional services advocacy group EnterpriseNGR observed in its State of Enterprise Report 2022 that health insurance constituted 1.6 per cent of Nigeria's N4.3 trillion current health expenditure. That compares with directly incurred health expenses, which accounted for 76.6 per cent.

When contacted for comments by PREMIUM TIMES, the public affairs manager of NHIA, Emmanuel Ononokpono, directed that the queries be sent to him via WhatsApp. Not responding to the questions sent to him via the medium, he would later advise that the NHIA website or NHIA Nigeria TV on Youtube channel be visited for answers.

The country's humongous annual budget allocation for fuel subsidy spending, often criticised for favouring the powerful and the well-connected at the expense of ordinary Nigerians could mark the turning point for the country's dysfunctional social health insurance structure should the government begin to shift the subsidies to health.

More than 8 out of every 10 jobs in Nigeria, according to the World Bank, is provided by the informal sector, which also contributes around 65 per cent of all the country's economic activities.

By implication, Nigeria's overall productivity is bound to be severely affected by informal workers' poor access to affordable healthcare, and that also could stand in the way of the central bank's move to deepen financial inclusion.

While a great number of workers in the employ of the formal sector have health insurance coverage as part of their remuneration package, the informal sector has been disadvantaged in this regard, a factor that prompted the government to introduce universal health coverage this year.

The Nigerian government said in August it is considering adding microinsurance cover to its micropension scheme package as an incentive to drive micropension penetration in Africa's largest economy. That happened a few weeks after PREMIUM TIMES recommended the action in a report.

Apart from Lagos, states like Delta, Sokoto, and Kano have seen varying degrees of progress since their contributory healthcare schemes launched. Delta said around 1.1 million people signed up for its scheme between inception in February 2016 and February 2022.

According to PWC's Insurance Industry Survey 2015, "NAICOM recognises that the current insurance distribution network appears to be highly concentrated in a few cities focused on corporate accounts and mandatory insurance and that microinsurance cannot be effectively accessed through conventional intermediaries - brokers and agents."

That has necessitated the need to use alternative intermediaries and channels like "cooperatives, non-governmental organisations, Nigerian Postal Service, Esusu Groups, Community Based Organizations and Religious groups, third party administrators, touchpoints such as post offices, branches of banks, airtime dealers and agents, fertilizer distributors and other distributors such as dairies and bread distributors, and retail outlets that are patronized and trusted by the local population to act as microinsurance intermediaries."

A health insurance scheme like Ilera Eko restricts subscribers of its standard plan to using a single facility whereas private insurance schemes often allow enrollees to use more than one.

"I feel the scheme has not been as effective as the way they projected it because the people that are involved (the service providers) are not enjoying it the way they should be enjoying it," said John Femi Omonayin, who works as a medical doctor at Orile Agege General Hospital.

A couple of his patients complain most of the drugs they get are either insufficient or too basic. Omonayin told PREMIUM TIMES most of the service providers are not getting enough money from it because enrolment has been pretty low.

He said, "A lot of people have not yet accessed it apart from those people that work for the state government" and "the capitation is not good enough" for service providers.

He said the plan has been particularly favourable to those requiring surgical services.

"Some of these private sector (companies) ... have insurance schemes that are much better. The artisans, the less educated, the low-income people, they've not been able to drive (the plan) among them," Mr Omonayin said.

"Those are even the ones that will benefit more because most of those people in the private sector, where they have better insurance, will not leave their scheme for Ilera Eko," he added.

Digital insurance boom

A number of private health insurance providers are identifying pain points and gaps in the services of government-run health insurance schemes, and some are leveraging technology to disrupt the sector and drive enrollment.

Digitising access among a population that lacks confidence in traditional insurance services has been pretty problematic, given the lack of access to internet-enabled devices in a country where only 44 per cent of the population have access to a smartphone. Yet, the market has never before been more promising.

"The use of such (mobile) devices to distribute insurance, in particular micro-insurance, allows insurers (in Nigeria) to leverage off an established mobile device, tablets and smartphone industry which could potentially reduce trust issues in the insurance market," PWC said.

Of course, other attractions beyond tech-related benefits, which bestow many competitive advantages on private health insurers, also exist.

Benefits like extended in-patient care, air ambulance services and infertility treatment are some luxuries provided by private health insurance providers which public health insurers cannot afford. Generally, the health insurance packages of private insurers are often more comprehensive than those of government-run schemes.

Private health maintenance organisations are gaining public confidence with their relatively seamless processes compared to those of the NHIS, for instance, which tend to be unwieldy and bureaucratic.

Emerging markets-focused insurtech startup Turaco, which launched in Nigeria this March, is building its business model around embedded finance and has partnered with heavyweight underwriter AXA Mansard to provide a range of products within the country with medical insurance as its biggest offering.

With a clientele of 1.5 million across various markets, Turaco is leveraging its synergy with tech-powered underwriters with big subscriber bases like APA, Prudential, Sanlam and ACEA as well as agent networks to drive patronage.

The company is able to attract more users by including its services among those provided by fintech and ride-hailing apps whose platforms also help Turaco connect with clients. Such collaborations aid cost-cutting and increase the insurer's touchpoints through access to partners' platforms.

For Lagos-based microinsurance start-up, Casava, one of the surest ways of winning users over is running an app, a website and WhatsApp account that allow insurance products to be bought within 90 seconds.

Licensed in February 2019, the company has health insurance in the works but provides telemedicine services, which offers enrollees access to more than 1,000 doctors by consulting them over the phone as well as access to 900 hospitals across Nigeria.

Casava enrolled 66,000 users in less than one year of operation with $16 million in insurance coverage.

Through technology, private microinsurance firms are fast gaining entry into territories that government-run insurance schemes are finding hard to enter.

For instance, Casava is utilising embedded insurance to deepen penetration and financial inclusion by including its services in the offerings of digital and fintech partners. This puts the company on track to access more than half a million financial services agents spread across Nigeria.

This way, such agents get a chance to earn a commission by offering insurance services from their current customers as an additional income source.

"We have built a vertically integrated company with a wholly-owned microinsurance carrier in Nigeria and a full technology stack to power it CEO Bode Pedro said after his company was named "InsurTech of the Year" at the 2022 Business Day BAFI Awards.

There are myriad other microinsurance providers including WellaHealth whose competitive edge derives from incredibly low premium and link up with pharmacies across Nigeria's 36 states) and Paddy Cover which provides users with typically expensive services like accident & emergency care, primary dental care, minor surgery as well as diagnostics & imaging for as low as a N1,500 ($3.4) premium monthly.

The flourish in the tech-driven underwriting market and the prospects the sub-sector offers have become a charm that even a telecom powerhouse like MTN cannot resist. The telco

said it's targeting Nigeria's microinsurance market for expansion of its insurtech arm aYo, which already has 15 million subscribers in Zambia, Ghana and Uganda.

MTN is looking to use its mobile money prowess to deepen penetration of insurance services among which is health insurance.

Meanwhile, Abuja-based Soso Care is pushing the boundaries of what microinsurance is known to be in Africa's largest economy with inclusive insurance solutions and flexible premium options that challenge conventional thinking.

It calls its model "micro mobile health insurance," allowing those who find premium payment unaffordable to exchange recyclable waste, especially in cities where tons of waste are generated every day for health insurance services. These it sells to local waste managers and also exports. Those who have the cash to pay for premium are also provided cover.

Intriguingly, the waste could be traded for food to give the needy access to nutritious food.

It currently serves 7,500 families and has received invitations to replicate the model in other African countries and Asia. The small underwriter says it is nursing the lofty hope of reaching half of Nigeria's population in the next five years. Hospitals in its nexus number 1,170, operating in four Nigerian cities.

"Waste as a problem affects the public health of millions living in slums, our climate and even our oceans. We figured out that it is best to use a problem to create a solution. So we decided to link waste to health and food stamps," it said.

"By linking garbage to healthcare access and food stamps we are killing 3 birds with 1 stone as the solution addresses the needs through... access to healthcare to reduce infant and maternal mortality in these regions, improving sanitation & environment in slums and creating Jobs for the distribution network and waste collectors."