Chiamaka Ajeamo, [email protected]
The 2019 operating landscape obviously stood out as a tough year that stakeholders would not forget in a hurry due to its challenging macro-economic environment.
Indeed, all financial institutions particularly, insurance companies have really felt the brunt of this hardship even as operators and regulators of the industry endeavoured to stabilise the system using available measures.
Despite efforts by the sector’s regulator; the National Insurance Commission (NAICOM) to insure the industry’s batered image is redeemed it is rather sad to know that the sector still struggles to wean the public long ago misconception of it.
This misconstruction is primarily based on the inability of insurers to settle claims. Although, there was an upgrade in the value and volume of claims paid by the insurance industry in 2019 compared to 2018, negative insurance perception still persist.
To curb this negative image, the industry set up a N300 million rebranding project in 2018 with the intentionof correcting the poor public perception about insurance products and services and also educate the public on the need to embrace insurance as a tool for poverty alleviation.
The insurance rebranding project is an innovation of the Insurers’ Committee, comprising of the managing directors of the 58 registered insurance companies as well as the National Insurance Commission, aimed at deepening insurance penetration through massive insurance education and awareness across all states of the federation, even though, Lagos and Abuja are expected to be the pilot states.
While NAICOM had contributed N40 million towards the project, the 58 insurance companies are expected to contribute the remaining N260 billion,with Leadway Assurance Company Limited becoming the highest contributor while other companies contributed according to their financial prowess and some did not contribute at all.
Also associations such as; the Nigerian Insurers Association (NIA), Nigerian Council of Registered Insurance Brokers (NCRIB), Institute of Loss Adjusters of Nigeria (ILAN) and Association of Registered Insurance Brokers of Nigeria (ARIAN), also pledged to support the initiative with funds.
Findings revealed that part of the exercise which was outsourced to Alder Consulting, was to create a tempo and the hype that would attract the public attention to insurance through, print, electronic and social media platforms.
Further investigation showed that the first phase of the project gulped N30 million while N90 million was released by the insurers’ committee to the consultant to initiate the second phase of the project. This brought the total amount spent so far on the project to N120 million.
Despite all these efforts put in place, to ensure the rebranding project works to address the negative perception of the sector, it has failed to achieve intended purpose.
Market observers said that the failing of this project was because it was anchored on social media. Also, the lopsided financial commitment on the part of insurance firms hindered it progress because as soon as NAICOM announced the recapitlaisation plan, first with the cancelled Tier-Based Minimum Solvency Capital (TBMSC) and later the current recapitlisation regime, companies channeled their financial energy on boosting their capitalisation, neglecting the financial commitment to the insurance rebranding initiative.
In the end, it was a ‘money miss road’ project as experts believed the N120 million spent on the project could have given a better result if it was effectively deployed.
However, there is still hope for the initiative to function as the insurers’ committee recently at its meeting in Lagos, said it is reviewing the project.
Speaking at the meeting, a member of the Media and Publicity Sub-Committee of the Insurers’ Committee, Toye Odunsi, said, “The rebranding project has been stopped. We did because of issues regarding poor participation by operators. We have to come back to it. We are back on the drawing board.”
Later in the year, to fight fake motor insurance in the country, the Nigerian Insurers Association (NIA) launched a campaign tagged ‘Wetin U Carry’.
Speaking at the launch of the project, the Director-General, NIA, Mrs. Yetunde Ilori said the industry is set to tackle the menace of fake motor insurance certificates on Nigerian roads by launching ‘Wetin U Carry’ where vehicle owners can confirm the authenticity of their insurance papers by dialing *565*11# on their phones.
Stating that the campaign is using Lagos as its pilot state, she added that the association will also have mobile teams that will be cross-checking insurance paper of motorists on the roads and advise those whose paper is about to expire to quickly renew them.
She promised that the campaign will go round all the states of the federation as times progresses, even though, the *565*11# USSD code can work from anywhere in the country.
Ilori noted that the association had deployed a team of 33 persons, known as insurance squad, to all parts of Lagos state to enlighten the public on the benefits of possessing genuine motor insurance covers.
However, findings revealed that the campaign can only boast of two giant bill boards in Lagos, one on the Island and another on the mainland.
Meanwhile, with six months left to the June 2020 insurance recapitalisation deadline, operators are fighting the greatest battle of their lives and doing all they can to stay on course as no fewer than 10 companies have approved the capital market to seek assurance towards raising funds to recapitalise to stay in business.
The National Insurance Commission had earlier in the year ordered insurance companies with composite licence to increase their capital base from N5 billion to N18 billion; life insurance firms was increased from N2 billion to N8 billion, amounting to 400 per cent increase in their capitalisation.
Also, general insurance companies are to shore up their capital base to N10 billion from N3 billion , just as rensurance firms will now need N20 billion capital base to operate.
According to investigation, some of the companies approaching the capital market for funds include; WAPIC Insurance Plc, LASACO Assurance Plc, Consolidated Hallmark Insurance Plc, AIICO Insurance Plc, Sovereign Trust Insurance Plc, Royal Exchange Plc, Linkage Assurance Plc, NEM Insurance Plc, among others.
While some are exploring business combinations, such as rights issue, placements, mergers among others, some are interested in outright acquisitions.
For the insurance industry, it looks like the year ended on a good note with the passage of 2020 national budget into law as the budget encompassed the insurance and pension components.
According to industry sources, it is believed insurers will benefit from federal government insurance renewals as well as underwriting of some capital projects allocated for in the budget.
Speaking on this development, the Executive Secretary, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Fatai Adegbenro, applauded the federal government and the National Assembly to have passed the 2020 budget earlier than it used to be, stating that, this would ensure there is adequate time to execute projects allocated for in the budget, unlike the previous years where projects are rolled back into another year because budgets are passed late in the year with no ample time to execute projects.
Adegbenro added that this would ensure that government and its agencies renew their insurances as and when due, thereby, contributing to growth in premium income of the insurance industry.
“As federal government embarks on capital projects, insurers would equally be able to underwrite especially those capital intensive projects, and the timely passage of the budget would lead to rapid economic transformation and growth, while ensuring that government has more time to provide the needed infrastructure that will lead the country to its promise land,” he said.