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Nigerians are not insurance
friendly– Mrs Catherine Okpaleke, GMD, NICON Group
By EMEKA OKOROANYANWU
Monday, March 16, 2009
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•Dr
Okpaleke
Photo: Sun News Publishing |
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Since assuming office as the Group Managing Director of the NICON
Group of Companies, Dr. (Mrs) Catherine Okpaleke, a former President
of the Institute of Chartered Accountants of Nigeria (ICAN), has
not hidden her desire to put the Group on the continental map as
one of the conglomerates that would shape the economy in the years
ahead.
Sitting atop eleven companies, Dr Okpaleke, a one time Commissioner
of Finance in Imo State, regrets that there are no enough laws to
compel Nigerians to patronize insurance business as there are in
other countries. Hear her: “In Nigeria, people are not insurance
friendly. In the developed world you don’t need anybody to
tell you. You have to insure your life, you have to ensure your
property, insure every risk of life so that in the case of any unforeseen
eventuality, the insurance company comes in to bail you out. Apart
from suffering the pain of the loss, you don’t have to be
deprived.
If it is a house that got burnt, you have to be put back in a place
where you were before the house got burnt. Insurance company does
that. But here, it is not like that.”
Mrs Okpaleke, who brings her wealth of experience to the NICON Group
is our Chief Executive Officer of the week. She also spoke on other
issues affecting the Nigerian economy, the global financial crisis
and the insurance industry in general. Excepts
Before I came to NICON Group
I was the 42nd President of the Institute of Chartered Accountants
of Nigeria. That was between 2006 and 2007 and I had a successful
tenure as ICAN president. We were able to record landmark accomplishments.
For instance, I led a delegation of Chartered Accountants last year
to the 17th World Congress of Accountants in Istanbul, Turkey and
for the first time we won an award of the International Federation
of Chartered Accountants, (IFCAN). We were able to launch our first
student center outside Lagos in Yenagoa, Bayelsa State. We were
able to make some reforms into our electoral process which made
it possible for more Chartered Accountants to be able to vote and
for the first time people were able to register online for our exams.
To summarize, I think I had a very successful time as ICAN President.
And shortly after my tenure ended in May 2007, August last year,
I was invited to serve in my home state as the Honourable Commissioner
for Finance which position I occupied for six months. It was a good
opportunity, when I was there, I saw that one can bring much of
professionalism into what is going on, bring some efficiency in
doing government business and one can think of doing that within
ones ability. With obvious lack of capacity, one was able to bring
core professionalism to restructure, re-organize and make things
happen. So I enjoyed my time as the Commissioner of Finance.
When there was a cabinet reshuffle, I was moved to Special Duties
as a commissioner. When I was holding that position, I had a special
assignment which was to take care of Imo Airport. I was to operationalize
Imo Airport which was commissioned as an International Cargo Airport
but it had not assumed that role and one of the first challenges
one had was to call for all stakeholders meeting in order to chart
the way forward. That was our first outing. We had the Minister
of Aviation all the who is who in the aviation industry there, so
we actually set the tone for the development of Imo Airport.
NICON Group of Companies
But of course when I was still doing the assignment I was invited
to assume my present position as the Group Managing Director of
NICON Group of Companies. NICON Group comprises of eleven companies
within the group and it is still growing. We have a big appetite
for expansion and the flagship of the group is the NICON Insurance
Plc. It was formerly the National Insurance Corporation of Nigeria
(NICON), from where we got our name. But there are other companies
within the group. They include NICON Properties Limited, which is
a huge custodian of properties all over the country. There were
also NICON Investments, that champions and channels resources into
key investment areas. Of course, we have NICON Airways which presently
we are trying to put back on stream. We also have NICON Sao Tome,
which is NICON Insurance business in Sao Tome and Principe.
There is also NICON Academy and so on. So I have the responsibility
to oversee the activities of the Group. Each of the companies has
a Managing Director and Chief Executive Officer (CEO), that reports
to me. So my job is to give direction and oversight over all the
companies in the Group.
Our operations
Coming to what we have been doing since I came to NICON, I hope
that you are aware of the recent issue of NICON take-over by the
Federal Government and the matters in court. The first challenge
was to deal with the fallout of the situation and now the matter
has been wholesomely and amicably resolved. There are no outstanding
issues with the Federal Government. Of course, the regulator, Nigerian
Insurance Commission (NAICOM) has issued operating license to NICON
Insurance and Nigeria Re-Insurance Corporation. We are also involved
in getting fresh capital into the business.
We brought in N17.3 billion into NICON and N7 billion to Nigeria
Re-Insurance with the total appropriating N25 billion. That automatically
makes NICON Insurance the most recapitalized in the North West and
Central African region. Of course, NICON Insurance also has total
assets in the excess of N50 billion and it is the only insurance
company in Nigeria that has branches in every state of the federation
plus nine zonal offices scattered all over the federation. But coming
out of the situation with the attendant issues to it are some of
my immediate focus. You know building bridges and also trying to
get back to business because we know that a lot of our competitors
used that as an opportunity to take some of our customers but the
good news is that NICON Insurance Plc is back and it is now bigger
and better.
Also part of the agreement is that the Board has to be reconstituted
and special people have to be brought in. It was as a result of
that actually that I was brought in to have a revitalized Board
with me now as the Group Managing Director, to champion the activities
of the group.
Insurance industry in Nigeria
NICON is a financial services provider. Of course in Nigeria, people
are not insurance friendly. In the developed world you don’t
need anybody to tell you. You have to insure your life, you have
to ensure your property, insure every risk of life so that in the
case of any unforeseen eventuality, the insurance company comes
in to bail you out. Apart from suffering the pain of the loss, you
don’t have to be deprived. If it is a house that got burnt,
you have to be put back in a place where you were before the house
got burnt. Insurance company does that. But here, it is not like
that.
The new NICON
NICON Insurance was set up in 1969 as a government corporation to
take care of risks in government business. So much of its business
activities before now were with the government, they didn’t
have to stress themselves or market themselves. There were huge
government cheques to collect from all forms of risks. That is no
longer so with the company now privatized in 2005. We now have to
go out there and survive. Go out there do business and survive and
like I said, coming from the problem we had in the recent past,
we found ourselves coming from behind as it were. So part of the
challenge is to raise the image of the company and to do good business.
It is a departure from one big single client kind of business to
reaching out to the masses for several businesses.
We have developed a template that will enable us to partner with
state governments and parastatals in two basic areas. One is a compulsory
building insurance while the other one is good life insurance. The
compulsory building insurance comes under the Insurance Act of 2003.
Like I said, abroad, nobody needs to make law to make people take
up insurance but here it is not so. Even though that law has been
there since 2003, it is only in recent time that we see Ministry
of Finance workers in conjunction with legislatures trying to make
it compulsory.
What we are doing in NICON
What we have done is to develop a package that enables us to partner
with state governments on a kind of win-win situation whereby we
are able to recycle part of the premium back to them as Internally
Generated Revenue (IGR). We have read in the papers that state governments
are in dire need of generating internally generated revenue in order
to carry out their economic programmes and in order to deliver dividends
of democracy to their people, so IGR is a crucial thing. As a Commissioner
of Finance in Imo State, I know that we have developed a package
that enables states develop internally generated revenue and also
a percentage is set aside to enable each state to develop its fire
fighting infrastructure.
That is to bring it to the state of the art condition, perhaps to
develop call centres which are easily accessible, so that people
can from anywhere make call to the call centers assuming there is
need so that they can come to peoples need quickly. It is like a
one stop position that comply with the rule of law because it is
actually a law on the exclusive list that this must be done and
while they are doing that, they are generating revenue and they
are also building the infrastructure.
The partnership format we have developed is a situation whereby
NICON partners with the state governments. They just give us the
enabling environment and we do the rest. We are also working in
partnership with what we call NICON properties bank in order to
support government to be able to insure its own property such that
the premium for the government property will be financed by the
bank and then the revenue that is accrued to government, the resident
in each state will go to take the loan, the excess will accrue to
the state as IGR. I have been going round the states preaching the
gospel.
Most of the states we have visited have consented to partnering
with NICON. I am seeing it as one that would go a long way in the
socio-economic development of Nigeria as a whole. We are used to
buildings collapsing, market burning everything, governments have
to rely on scarce revenue to rebuild these infrastructure. So we
are put in a situation whereby in the case of such unforeseen eventuality,
there would be a pull of funds available to help them. So that is
to a large extent what is happening in the insurance aspect of our
business and, of course, we are working with all other parastatals
in different issues.
One important one is in the aviation industry where we have been
appointed jointly with Central Bank to handle Travel Insurance.
That is something big and something that would affect a whole number
of Nigerians that fly on a daily basis. Like I told you, we are
moving out of that single parastatal basis to do insurance that
will affect Nigerians wholly, wherever they live. NICON Property
to my mind is one of the biggest property portfolios I have seen.
We have properties across the length and breadth of the country.
Presently, we are getting involved in public private participation.
Typically now, we are in the FCT. Everything is on the drawing board.
We want to develop some communities within the FCT as Satellite
Towns. FCT has developed template for this and we are partnering
with them along this line. In terms of investments, the areas of
focus, that we are looking at now is power, housing and healthcare.
We have had some situations before I came on board. We are focusing
right now on dealing with those situations and getting it to bounce
back. Aviation industry has great potential in the country. We can
get to the top. Presently we have two aircraft that are grounded
because of legal issues. Once we are able to resolve the issue they
will bounce back. We are also looking at expanding it.
We are revitalizing. Everything is still on the drawing board but
for sure NICON Airways will bounce back before the end of the year.
Of course I have mentioned NICON Sao Tome. We have equally got an
operating license from the government of Sao Tome to run an insurance
company. Insurance business in Sao Tome is very interesting. I think
that is one thing they have got right. Their government made it
mandatory. All forms of insurance are mandatory. If your goods are
arriving at the ports, one of the things you must show is the insurance
certificate. There is nothing like bringing in Okada or vehicles
that are not insured comprehensively, so the insurance companies
write insurance for everything. We hope that in time to come, we
will have something like that in Nigeria. We recently got our license
and any time from now, we are going to commission the office officially
and begin to do business.
And, of course, we are looking at expanding into West Africa, like
Ghana. We are going to expand on the West African coast.
Challenges
One of the significant challenges is dealing with bad publicity.
You know that we work in a very competitive environment. We had
some problems in recent time and we found out that our competitors
have used it to malign our business. We need to deal with the situation
and convince the people that no matter how you look at it, NICON
is the biggest insurance. We have the biggest capacity. We are trying
to bring that back to the sight of Nigerians.
NICON in the next five years
The kind of potential that I see is so big. It is so enormous. I
believe that we are positively motivated and alive to the challenges.
I am actually developing products along those lines and actually
modernizing state of the art kind of insurance business. A situation
where your car is involved in an accident, what you will do is to
call a care centre and tell them to come and take your car to an
accredited, qualified engineer to take care and while that is going
on, you have a replacement vehicle. We are developing a system where
claims are paid promptly. Where commissions due to brokers are on
cash and carry basis, where business is automatic, where we have
a website that is interactive and our dealings with our customer
needs is on a timely basis. Those are the kind of products we are
developing, that is the state of the art that is next to none anywhere
in the world and we have the capacity to do it and we are determined
to do it. We believe that Nigerians deserve the best and there will
be no short cut, or trying to cut corners. We provide excellent
services.
We are also actively in strategic places to take care of issues
of health. These are the lines we are trying to develop and by the
grace of God, we will get there. There are so many potentials in
the insurance industry. If you lack at the Vision 2020 of the Federal
Government, the potential between now and 2020, which is eleven
years from now is huge. We are moving from a N200 million business
to N12 trillion business. However you look at it, NICON is going
to take the lead in accomplishing the dream because it has great
potentials.
In order to deal with that, we are also looking inwards and looking
at capacity. I mean training professionals and capable hands to
deal with the potentials and we believe that we can accomplish that
through continuous training and re-training.
Amending Insurance laws
Well, in terms of the laws, Nigeria is a developing country. I believe
that there should be more laws and appropriate sanctions that should
compel people to take on the necessary insurance. For instance,
we have seen a measure of it with the PENCOM Act which is connected
with the necessity for group life insurance. It is when you have
such thing that people can be compelled to do it. It is just like
making people pay taxes. A tax is a social responsibility, which
helps to move our society forward, but a good number of people don’t
pay tax. In order to make them pay tax you have things like tax
clearance certificate. I believe that we should do more of that
on insurance. That is, there should be laws to compel people to
take up insurance, like Travel Insurance. We are trying to start
it now with the Ministry of Aviation. There should also be insurance
on public buildings, markets and so on. Thank God for the policies
in existence, but we still need more legislation along this line.
On the issue of payment of premiums, the Insurance Act, in fact,
stated clearly the perquisites that are due to people in different
insurance categories. It is not the problem of the brokers or the
underwriters. it is an issue of our development. Like I told you,
already in NICON, we inherited accumulated premium and we have made
significant efforts to begin to pay them. In recent time we paid
premium of over N400 million and for our business, we are doing
cash and carry. If you come and do business with us, you have your
money paid up front. That is the motivation that we are giving.
People know that when they bring business to us their commission
will be paid as and when due.
NICON Hotels
We are running the hotels internally but the hotels have grown so
fast that we have carved a separate group for them. The hotels up
to recently were under the NICON group. But with the recent agreement
with the Federal Government, with the agreement we can partner with
other state governments. The way the hotels were growing was so
fast that we needed to focus on them, so we now brought the hotels
out as one group and has a Group Managing Director in charge of
the hotels. Presently he manages the hotels.
Economic meltdown
The economic meltdown is affecting everybody in different degrees.
Ultimately, I can say that it is affecting everybody. As a result
of the global economic meltdown, you see a lot of things going on.
You see unemployment escalating. You see the exchange rate deteriorating
very fast. All the major economic indices have suffered heavily,
so this has affected all of us. It means that one cup of garri in
the market is costing more. It means it costs more to travel from
point A to point B. What we are experiencing generally is inflation,
so it is biting everybody.
But specifically, in NICON, we are quite lucky to have exited a
lot of things on the stock market before things became really bad,
so the impact of that to us is heavily deflated. That is also an
index of the management being able to forecast what is going to
happen and also not taking undue risks. There are a lot of things
that are happening in the stock market. The way the market was moving,
it was not supported by any basic fundamentals. If you look at the
banks, it is not affecting all of them with the same degree because
there are some cautious ones. |
