Restoring Confidence In Insurance Industry

Since January, the insurance industry has had its own share of ups and downs, to which stakeholders have reacted differently.

Some analysts say that growth in the sector had been slow, in relation to increased awareness of the relevance of the industry.

Novel road shows put up by insurance companies in major cities across the country, as well as advertisements and broadcast programmes sponsored by the National Insurance Commission (NAICOM) and the Chartered Insurance Institute of Nigeria (CIIN) have been remarkable.

Analysts also view the Nigeria Local Content on Oil and Gas Act 2010 as a major milestone, being part of a broad strategy to guarantee the future growth of the insurance industry.

They readily point to the Act as a tool of reducing insurance on Oil and Gas and other foreign dominated risks offshore, while encouraging players to build up financial capacity to participate in such risk.

They recall that NAICOM kick-started the process of enforcement of compulsory insurance products through the launching of various products in Calabar, Ibadan, Ilorin, Maiduguri and Lagos.

NAICOM also intensified its Market Development and Restructuring Initiatives (MDRI), which were geared towards attaining the insurance component of Vision 20:2020 programme.

Industry watchers view with appreciation, the moves by the CIIN to ensure the actualisation of active study centres in Warri, Calabar and Port Harcourt, by being part of the investiture of the branches’ new executive councils.

Within the year also, the institute revised its syllabus and made compulsory three major courses — Life Insurance, Principles of Property and Pecuniary, Risk Regulation and Capital Adequacy.

Equally noteworthy was the activities of the Nigerian Insurers Association (NIA). The association launched the Consumers’ Complaints Bureau and appointed retired Justice George Oguntade as its head.

Mr Sunny Adeda, the President of CIIN, said that 2010 had been better than 2009, reflecting on the recovery of operators from the shock of the crash of the capital market.

“I am confident that the end result for the 2010 financial year will be in excess of the N200 billion recorded in 2009 despite the difficulties of many companies in getting their accounts passed,’’ he said.

Adeda attributed the success to “the application of prudent guidelines, which necessitated the writing off of many uncollected premium that were over 90 days, particularly for companies.

“Some companies have shorter periods than what the regulators actually specified. As a result of this, many companies made losses technically,” he said.

Adeda was, nonetheless, optimistic that the premiums were recoverable over a period of time.

“We believe that by the close of the year, most of the premium would have been collected and the overall performance for the year will be better than 2009,’’ he said.

Also reviewing insurance activities for the year, Mr Olusola Oladipo-Ajayi, the Chairman of Nigerian Insurers Association (NIA), said that many companies still grappled with the results of 2009 financial year because of the International Financial Reporting System (IFRS).

According to him, many companies have yet to do their annual general meetings based on the new guidelines.

“I have not seen much improvement in the fortune of the industry. The rates are still not up to the desired level since premium collection is still a big problem.

“NIA has not started reviewing up-to-date activities of the industry. This is because most companies have not published their third quarter results.

“I do not see any real promise in the horizon but I believe it will soon be over,” Oladipo-Ajayi said.

Mr Sikiru Oyesefo, the Managing Director, Staco Insurance Plc, said that the operating terrain for the industry in 2010 had been very rough.

He, however, said that with the enactment of the Nigerian Local Content on Oil and Gas Act (2010), many companies would see a lot of improvement in the future.

Oyesefo bemoaned the failure of many policy holders to pay up their premium because of the general economic recession, adding, however, that such policy holders expected to be paid claims whenever the need arose.

Dr Ausbeth Ajagu, the Chairman, Gold Fish Insurance Ltd., said that lack of insurance awareness among Nigerians had made activities in the industry very slow and poor in 2010.

He said that the average Nigerian did not have faith in the industry, stressing the need to properly educate the citizens that insurance companies would definitely settle genuine claims whenever they were made.

Mr Fola Daniel, the Commissioner of NAICOM, the insurance industry recorded huge success via the inauguration of the six compulsory insurance products in five zones in 2010.

He said that the launch aimed at sensitising the public on the existence of six insurance products that were made compulsory by the Insurance Act (2003).

Daniel identified some of the products as Motor Vehicle Third-Party Insurance, Employers Liability Insurance and Insurance of Public Buildings.

Others are Medical and Health Care Professional Indemnity Insurance, Insurance of Buildings Under Construction and Group Life Insurance.

“The sensitisation of the public on the six insurance products was the focus of the road shows embarked upon by the insurance companies across the country since January 2010,’’ Daniel said.

Hajia Maryam Ciroma, the Chairman of NAICOM, said that the focus of the six compulsory insurance products in 2010 was the protection of third-party lives and property.

She described the eventual implementation of the Act, seven years after it was enacted, as deriving from the fact that its enforcement was a very expensive activity, which required enforcement structures.

“There is need to put in place high-level business ethics and values among all the insurance practitioners because credibility, transparency accountability and integrity are very paramount in its implementation,” she said.

Ciroma described good corporate governance as very important in the business of insurance today, advising all operators to imbibe it.

“Good corporate governance will always be topical and evergreen in the insurance business in view of the global financial meltdown and the last capital market crash in Nigeria,” he said.

On development of the human capital, Adeda praised the CIIN for an excellent job, as it had attained increases in student population, qualifiers and study centres.

With cautious optimism, industry watches say that there are enough indicators to show that the industry is poised for greater heights and development in the New Year.

Agu writes for News Agency of Nigeria (NAN)

Chidinma Agu