The insurance industry is evolving rapidly as regulatory and market demands change. Omobola Tolu-Kusimo reports that a positive global outlook enhances the prospects of the risks sector in the new year
Global economic experts have projected that the global insurance industry will return to the yearly average premium growth of 2.1 per cent, in real terms, following total global premiums falling by an estimated 0.2 per cent in real terms in 2022 due to inflation.
According to the Swiss Reinsurance Institute Sigma Report, this growth is supported by a combination of easing inflation, market hardening in property and casualty lines, as well as stronger life insurance demand.
The insurance industry is undergoing profound change with disruption that is not just digital but also extensively architectural.
Harsh market conditions, demanding customers, innovative new market entrants and regulations are just some of the forces transforming the industry, according to the National Insurance Commission (NAICOM).
Director, Supervision Directorate, NAICOM, Mr. Barineka Thompson, at a seminar with reporters, however, said where there is a challenge, there is an opportunity and the sources of disruptions can be harnessed to become a source of growth for insurers.
He stated that while no one could predict exactly what insurance might look like in years to come, insurers were taking steps to prepare for change.
He said: “The insurance ecosystem is evolving rapidly, and insurers can no longer lean on old familiar ways while the prevailing technological and strategic winds shift around them. As our often-cloudy present opens up toward a brighter future, insurers should embrace technology across the customer journey, if they hope to secure the trust and loyalty of tomorrow’s policyholders.
“Like many industries where digitisation has taken hold, tech shouldn’t be adopted for techology’s sake. Simply upgrading to the latest technological trend is not enough to sustain a competitive edge. Factors such as distribution, claims, and operation proposition, risk and capital can drive insurers’ potential for future success as they consider their digital strategie.’’
Meanwhile, another crucial area of development the operators and regulator are focusing on this year are bancassurance, higher income for insurers and better value for insured on Third Party Motor Insurance premiums and claims.
Others areas of growth for the industry in the year are in life annuity business, takaful and micro insurance, among others.
Most importantly, NAICOM is taking claims settlement to a new level, promising to use the sledge hammer against insurance firms defaulting in claims payment to the insured as seen with the withdrawal of licences of Niger Insurance Plc and Standard Assurance Plc last year.
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The Commissioner for Insurance, Mr Sunday Olorundare Thomas, said the commission is not unmindful of the challenges operators in the industry have had to contend with in adapting to drastic changes that are designed to accelerate development and growth of insurance business.
He said: “The dynamic socio-political and economic environment in the country obviously calls for realignment by stakeholders to tackle these challenges. There is the need for a firm handshake with all arms to engender fruitful collaborations and cooperation for the collective interest of all. I challenge the leadership of the Nigeria Insurers Association (NIA) on the vexed issues of settlement of claims. I urge the new leadership to deploy the principle of self-regulation to take a critical look into this and other similar issues that are capable of demarketing the industry.
“You will agree with me that though the sector is beginning to experience improvement in terms of patronage and claims payout, the perception of the industry by the majority of the public is still not what it should be. This is unacceptable and it is high time we changed the narrative. We must see this business as an interest that we must protect and I, again, challenge the new leadership of the NIA to take on this task. I want to equally advise the new leadership to, at all times, ensure proper communication with the Commission through whatever bilateral windows available.
“On my appointment, I did mention that the focus of the administration is development of the insurance market and I want to believe that this cardinal objective has not changed.
“The Commission has vigorously been driving the issue of market development and enforcement of compulsory insurances these past two years, achieving some gains in the process. Greater efforts have been made to partner state governments on enforcement of compulsory insurances and insurances of their assets. The Commission had embarked on this drive to till the ground while expecting the operators to take over and engage the markets but then response from the industry is less than satisfactory.”
He assured that the commission will continue to support the industry and, specifically, the operators and players to thrive by instituting policies that encourage equal access, investment of funds and healthy competition.
“To actualise our core mandate as an industry, we must facilitate improved perception of the industry, as public confidence in our industry depends among other things on how promptly and fairly, we deliver on our promises and obligations to our customers and stakeholders.
“The Commission will not relent in protecting stakeholders in the industry. However, we must understand and appreciate that the mandate of the Commission cuts across stakeholders with varying expectations. Thus, the need to implement far-reaching initiatives to develop the market and expand the frontiers of the industry while guaranteeing the protection of each stakeholder to the best of our ability. We know that the times are tough, but only the resilient, strategic and focus operators will get going,” he maintained.
The President, Chartered Insurance Institute of Nigeria (CIIN), Edwin Igbiti, implored practitioners to convert challenges to opportunities as risk bears in the year.
He noted that the Swiss Reinsurance Institute Sigma Report, which forecast that the industry globally would return to premium growth of 2.1 per cent annually on average in real terms, following total global premiums falling by an estimated 0.2 per cent in real terms in 2022 carries with it, opportunities for them as local operators to leverage and boost their industry and the economy.
“On the other hand, I know there will be challenges ranging from economic hurdles such as the potential for sustained inflation; to sustainability concerns including climate risk, diversity, and financial inclusion; to rapidly evolving consumer products and purchase preferences. Fortunately, insurance is a business of risk management so, the challenges pointed above should be viewed as opportunities for us.”
He said the institute must continue to be at the frontiers of technological innovations and best industry practices to ensure members’ satisfaction that the theme of his tenure ‘Building a Sustainable Legacy’was birthed.
This, he said, would guarantee that despite current global uncertainties, the institute continue to meet the needs and aspirations of its members, he submitted.
The Insurers Committee Head Sub-Committee on Media, Mr. Jide Orimolade said the chairman of the Insurers Committee who is the Commissioner for Insurance, Thomas said: “There has been a lot of positive activities happening within the industry when you compare with a 5-years analysis. The industry has not done badly based on what we have done so far.”
Orimolade who is also the Chief Executive of Stanbic IBTC Insurance Limited spoke at the 13th Insurers Committee Meeting held in Lagos.
He disclosed that emphasis was made on claims which is the image of the industry.
“It was agreed that insurance companies must continue to pay claims promptly. Based on the types of claims that have been paid so far by insurance companies, it has come to show that we have the muscle to pay claims on time. The Commission said there will be renewed focus and activities towards claims payment.
“The regulator reminded the CEOs of the position of the law as far as issue of claim settlement is concerned. What the law empowers the commission to do in the event of non-settlement of claims which is a ground for suspension or cancellation of licenses will be carried out.
“We were reminded that this position is the law and we have to take issue of claims settlement seriously. Otherwise, the commission will be left with no other choice than to take necessary action as contained in the law”, he pointed out.
