By Henry Uche, [email protected]
The Nigeria insurance industry has proven to be one of the most resilient and fastest growing sectors of the economy. The sector has contributed immensely to the sustainability of the economy in real GDP and also providing succour (primarily) to policyholders who were victims of various fortuitous incidents.
The sector defied past economic recessions and effects of the global COVID-19 pandemic when other sectors of the economy pointed south, the market proved to be irrepressible not only with regards premium generation but in capacity to retain businesses which signifies sound financial stability and carriage capacity.
For stakeholders in the industry, 2022 stood out as a year with mixed fortunes, characterised by obvious negative economic indices thus: National debt burden of over N42tr with its ballooning debt servicing, low productivity, 60 per cent youth unemployment and underemployment, epileptic power sector, hyper-inflation and exchange rate variations, decayed infrastructure, unprecedented corruption and insurgency, about 133 million Nigerians in extreme poverty and other unpleasant economic realities that has befalling the country.
A breakdown of the data sourced by National Economy from the National Insurance Commission (NAICOM) showed that insurance sector made N514.6billion Gross Premium Income (GPI) in 2020 and N616.6billion in 2021 financial year (a 20% increment).
As observers await the total GPI for 2022, NAICOM’s quarterly report showed that the industry made N532.7billion GPI in the third quarter of 2022, in Year on Year (YoY) growth rate of about 15 percent from what it recorded in second quarter.
With this, NAICOM has expressed optimism in 2023, affirming that the industry is growing and that such growth must be sustained to build a strong insurance sector- able to contribute more to the nation’s GDP, however all stakeholders must comply with regulations to the letter.
As the year 2023 settles in, stakeholders in the industry with great expectations have implored the Buhari-led administration to ensure that the economy does not sink into irrecoverable comatose before it hands over to the next administration in the second quarter of the year.
Speaking with the Deputy General Manager (DGM), Corporate Communications & Investor Relations of Sovereign Trust Insurance, Basil Olusegun Bankole, applauded NAICOM for the recent upward review of third Party motor insurance, and implored the regulator to ensure strict policy enforcement.
According to him, issuing policies, regulations and directives without a commensurate force of enforcement would not only jeopardise the efforts but make everything look infantile.
“The new third Party motor insurance to N15,000 and the 5percent rebate is a way forward, but how well has enforcement been so far? The problem has always been implementation.
“I know for 10 years the industry has been chasing that ambition of writing N1tr as GPW for the whole industry. And that has not been coming forth, the reason is poor pricing. Imagine someone buying a car of N80million and at the end of the day he said he can only pay 1.5 percent and if anything happens, he expects huge claim.
“Sadly we collect so little and pay huge in claims. You cannot marry the two. With the new rate regime, operators should take advantage of it. We should not compromise about it. We have a situation where the big operators want to kill the smaller ones because they have other businesses they operate. Instead of competing with one another, we should come together to leverage on this atmosphere created by NAICOM.”
The DGM also called for a critical look into the Professional Health Indemnity insurance Cover; where it has been observed that many hospitals, doctors and other health caregivers do not take it serious.
Bankole suggested that most compulsory insurance products, like those under the Market Development Restructuring Initiative (MDRI) which includes third party; the professional health indemnity, and others should be part of the criteria for any contractors seeking contract from government or private sector, that they must produce.
He urged the federal government to ensure that all its Ministries, Departments and Agencies (MDAs) take up insurance as and when due, both for the physical properties and for their lives as they are meant to do, noting that the era of preparing extra ordinary budget when unfortunate incidents happen should have been over.
“Every assets of MDAs should be insured to avoid wasting financial resources. That money used to rebuild or restore damaged property due to fire outbreak or the likes would have been useful for something more important.
“By simply insuring those properties, insurance would take care of any loss covered. Government should make it mandatory for MDAs to insure both lives and properties. This would boost revenue for the insurance industry and the confidence of the industry would be rebuild with time.”
For the intermediaries in the insurance value chain, he advised, “We should work in sync as partners in progress. Brokers and Agents should represent us transparently (in honesty and utmost good faith) even Loss Adjusters. We’re all in this new regime. They should let the insuring public know that Insurance companies are established in their own interest.
“Kudos to NAICOM for asking us to input what we collected (Premium) in our quarterly returns. So if NAICOM calculate and discover that Underwriter committed an infraction, such would be sanctioned. If all of these would be followed through intoto, I believe we shall have a better confidence in the insurance industry in Nigeria,” he affirmed.
For Heirs Insurance, a positive collaboration with all stakeholders in the insurance market with the aim of ensuring customers satisfaction was top priority. For instance: Liaising with Banks for accessing ‘BVN’ data while onboarding of insurance customers among others tops its expectation.
Speaking with the, Executive Director (Technical Operations), Heirs Life Insurance, Mr. Wasiu Amao, he said it was imperative for insurance companies to collaborate with the Nigeria Police Force to create unit of data bank for issuance and storage of police reports on accidental death and other traffic cases nationwide.
“Following successful implementation of Nigerian Insurance Industry Database (NIID) for the motor insurance business, a collaboration between NIACOM and the Nigerian Medical Association for the creation of data bank on the issuance and administration of ‘Medical Certificate of Cause of Death.
“There is need to ensure compliance of compulsory insurances by all and sundry. NAICOM and NIA should partner with all arms of the Government to ensure insurance awareness and deep penetration in the country, and ensure full compliance of the statutory rates by all stakeholders in the industry and penalise all defaulting operators.
He urged NAICOM to have a paradigm shift in their mindset and migrate from the conventional ways of doing things (e.g., there are too many bottlenecks to some processes). Speed and full adoption of ICT facilities should be adopted
“NAICOM should extend the implementation of the International Financial Reporting Standards (IFRS) 17 to year 2025 and put all necessary guidelines in place. They should also revisit the tier-based capital structure for insurers,” he urged.
For Loss Adjusters, federal government’s intervene (through the regulator) in what they perceived as ‘ill -treatment’ meted on them by Underwriter was top in their list of desire and expectations in 2023.
“Loss adjusters are looked down upon by fellow practitioners in other arms of the insurance industry, particularly the Underwriters. Underwriters don’t take us serious. As a result, fresh graduates are not attracted to adjusting job. Because they relegated us, loss adjusters avoid even needful trainings and events that could further develop their skills. “Underwriters in particular will suffer the most if the current generation of long-suffering loss adjusters quit the stage. They should prepare to then pay foreign adjusters on hourly rates in dollars, unless something is done urgently to halt this ill treatment,” he maintained.