Worried that most losses arising from the pandemic were not adequately covered by existing insurance policies, Commissioner for Insurance, Mr Sunday Thomas has said a review of conventional insurance products to upscale a new value proposition for the Nigerian insurance industry may be in the offing as current insurance product offerings have proven inadequate to respond to emergent risks and needs of our society.
Thomas who made this statement while speaking at the Chartered Insurance Institute of Nigeria’s (CIIN) 2020 insurance professionals forum, added that the recent outbreak of protests and civil unrest across the country and the resultant losses have further exposed the vulnerability of government, businesses and individuals to unforeseen events.
He stated that these incidents have further reinforced the value and necessity of insurance and the industry cannot continue to ignore the impact of unforeseen events on individuals, businesses, and the insurance industry as a whole.
“Recently, widespread protests, civil unrest and destruction of properties among others have created further socio-economic hardship and barriers for business profitability and growth. As Nigeria reels in the pain of the destruction and losses suffered this year, the insurance industry must utilise the opportunity to lead in the quick recovery and restoration of the affected businesses and also showcase its role in reinforcing the economic resilience of individuals, businesses and the economy at large.
“The suddenness of the COVID-19 pandemic imposed immense pressure on all businesses including insurance business. Pressures faced by consumers in the form of reduced finance and business activities, lack of access to credit, expiration and wastage of perishable goods, temporary or permanent business closures and employee contract terminations, life threatening illnesses and deaths all combined to increase the propensity for claims.
“However, these incidents are likely to increase insurance claims, thereby exacerbating the already weakened liquidity and capability of insurance companies. It has also reinforced the need for proper underwriting to ensure insurers are able to settle corresponding claims obligations to cushion the effect of losses on Nigerian households and businesses.
“It is pertinent to note that insurance coverage for Strike, Riot and Civil Commotion (SRCC) clauses, which were redundant in the past and which by competition are mostly offered free of charge must now be adequately rated as an important product for the survival of Nigerian businesses. The Commission will be issuing directives to ensure that underwriting is strengthened to appropriately rate and charge requisite premiums so that profitability can be guaranteed and claims are settled promptly without financial strain on the companies,” Thomas said.