Category: Insurance

•Insurers get March deadline on outstanding claims

The National Insurance Commission (NAICOM) has expressed misgivings over underwriters’ inability to harness opportunities created from its engagements with state governments in enforcing compulsory insurance.

Speaking with reporters in Lagos, the Commissioner for Insurance Mr. Sunday Thomas, said on his appointment two years ago, he pledged to focus on the development of the market.

He said the Commission had  been driving this issue and the enforcement of compulsory insurance , adding that some gains were recorded.

According to him, greater efforts had been made to partner state governments on the enforcement of compulsory insurance and insurance of their assets and that the commission had embarked on this drive to till the ground while expecting the operators to take over and engage the markets but the response from the industry had been less than satisfactory.

He assured the operators that the commission would 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 the core mandate as an industry, he said, all parties must facilitate improved perception of the insurance industry, as public confidence in the industry depends, among other things, on how, promptly and fairly, they deliver on their promises and obligations to customers and stakeholders.

Meanwhile, the commission is taking two steps to settle outstanding claims by March.

Therefater, the companies would be required to publish outstanding claims until 2021 in national newspapers.

The Commissioner said the complaints caused the Commission to hold a ‘technical session’ to how to resolve outstanding claims up to December 2021.

Thomas said it had been resolved that the outstanding claims would be put to rest in the first quarter of the year.

He explained that insurers would be required to create a schedule of cleared outstanding claims and the reasons they were outstanding.

The increase of Third Party Motor Insurance premium from N5,000 to N15,000 from yesterday by the insurance companies is upsetting vehicle owners.

Findings show that motorists are unhappy that the hike is coming at a time prices of goods and services are almost unbearable.

Third Party Motor Insurance is one of the compulsory insurance policies that any vehicle owner  is required to have.

The National Insurance Commission (NAICOM) a fortnight ago approved a new premium rate for Third Party Motor Insurance policy to N15,000 as against N5000.

Consequently, private vehicle owners are covered to N3 million for Third Party Property Damage (TPPD) – the limit an insured can enjoy on the policy.

This means that the third party’s vehicle would be repaired up to N3million instead of N1million.

In the same vein, the premium for staff bus has risen to N20,000 with a TPPD of N3 million; and N5 million limit for own goods, with premium of N20,000.

Commercial vehicles, trucks/general cartage has TPPD limit of N5 million with a premium cost of N100,000; Special types, TPPD limit of N3 million with premium of N20,000; Tricycle, TPPD limit N2 million with premium N5,000; and Motorcycle, TPPD limit N1 million with premium of N3,000.

NAICOM approved the new rates following meetings between the Commission and insurance firms.

The approval was contained in a circular entitled: New Premium Rate for Motor Insurance: numbered: NAICOM/DPR/CIR/46/2022, dated December 22, 2022; signed by the Director, Policy and Regulation, NAICOM, Leo Akah, for the Commissioner for Insurance Sunday Thomas and sent to insurance firms.

Akah stated that the circular on the new motor insurance premium rates was issued in the exercise of its function of approving rates of insurance premium under Section 7 of NAICOM Act 1997 and other extant laws.

He warned that failure to comply with the circular would attract sanctions.

He explained that comprehensive motor insurance policy premium rate would not be less than five per cent of the sum insured after rebates or discounts.

A vehicle owner, Kareem Adeyemi, said the increase of third party premium from was coming at a wrong time.

He said he could barely feed and is saddled with how to pay his children schools in January.

Ifeoma Nweke said since she had never benefited from insurance since she had  been paying the old rate of N5,000, wondering what she stood to benefit with the increase.

She lamented that the hike was too much, noting that the premium should have been N10,000.

Meanwhile, insurance operators have appealed to Nigerians and called for understanding.

The Managing Director, SUNU Assurances, Mr. Samuel Ogbodu, said the premium is not in view of the increased benefits which people are not looking at.

While urging Nigerians to look at the benefits of the new rate, he said: “Property damage limit has been increased to N3million from N1million. This is three times the former limit.

“Also, the new Third Party cover includes ECOWAS Brown Card, a requirement for cross border travel within the Ecowas countries. This means the third party cover automatically extends beyond the Nigerian geographical limit to the ECOWAS states. You don’t have to buy ECOWAS brown cards anymore anytime you are traveling outside the country

“This also means that the jurisdiction clause extends beyond Nigeria such that court decisions and award of liability can be obtained in courts outside Nigeria, but within the ECOWAS countries to the extent that the laws of the countries permit, especially for injuries, disability and death which are unlimited.

“It suggests that liability can be brought against a Nigerian insurer in foreign currencies, with specific focus on the unlimited liabilities. The foregoing shows that the new price regime is not high. Let’s educate people to look at the benefits and not the price alone. In addition, inflation and forex volatility has made the N5,000 premium unprofitable.’’

An operator, Mr. Jide Orimolade,  doesn’t believe the N15,000 premium was too high when compared with other countries.

“Apart from this, liability limits have been increased. So people should look at it from the increase in liability,” he noted.

Ola Agboola of Linkage Assurance said: “There was no upward price review in the above circular, especially for the private class. A critical look shows that the TPPD benefits were multiplied and also the premium.The base premium still amounts to N5,000 per N1million TPPD. NAICOM is fair and very strategic enough in this to increase the insurance density and of course Insurance penetration.

“An upward review in actual pricing to reflect present inflationary changes and market developments should be much more expensive. Upon this backdrop, this new rejig will lead to more premium production; more brokerage Commission; more insurance protection; and more insurance penetration.

What is then required from operators is a mindshift, cooperation, collaboration and sensitisation.

He stressed that there was also need for orientation of the public, adding that claims value was increased.

He said the new consolidated insurance bill, when signed into law, would cater for enforcement.

On timing, when is the best time to introduce a transformation was yesterday but done today, fine. Putting it till omorrow is procrastination, he said.

“On fake insurance, driving a culture of Insurance may gradually help to make insuring population adopt purchase. For a better insurance industry, we must support the development,” he added.

LEADWAY Assurance Company Limited has unveiled LOLA, a virtual assistant service to optimise customer engagement.

LOLA was designed to play the role of an always-on customer service representative, equipped with artificial intelligence and multiple scenario programming to enable her to assist the customers in all ramifications.

With LOLA, Leadway Assurance hopes to eliminate the numerous pain points for its consumers, such as the cumbersome queues at experience centres and clunky paperwork, which they may be otherwise subjected to during in-person visits. Hence with LOLA, customers can buy insurance plans, make claims, report complaints, and track policies using their WhatsApp social media platform.

Managing Director, Leadway Assurance, Mr Tunde Hassan Odukale, expressed satisfaction at the firm’s major’s outstanding commitment to meeting its customer demands, especially by leveraging technology.

He said: “As leaders in the Nigerian insurance sector, caring for and meeting up with the multiplicity of our customers’ demands is a point of significant priority and an integral aspect of our operational ethos.

 “As such, over the years, we have committed immense human and natural resources to ensure that we not only satisfy these expectations but also consistently unveil innovative methods leveraging the rapid evolution of digital technology.

“More importantly, as a future-centric organisation, we recognised the two-pronged role of technology and digitisation in our business operations. While, on the one hand, technology has impacted our modern-day customers by empowering them to demand a swift, real-time audience to their situations, we have also identified that it is the key to unlocking their true satisfaction by leveraging the real-time, immersive, and dynamics capabilities of digital technology.’’

•Says proper reinsurance of risks crucial  

Efforts by the Central Bank of Nigeria (CBN) to curtail inflation and fluctuation of exchange rates will help manage the soaring inflation, the Commissioner for Insurance, National Insurance Commission (NAICOM), Sunday Thomas, has said.

The Commissioner expressed optimism about CBN’s efforts during a podcast with Continental Reinsurance.

He pointed out that the surge in inflation and fluctuation of exchange rate which is impacting insurance can be addressed through proper reinsurance of risks.

The Commissioner for Insurance, Sunday Thomas, noted that inflation remains a great concern to stakeholders in the industry, stressing that insurance is more futuristic than immediate.

Thomas said he was not too keen about insurance customers seeing what he is doing, but want them to feel his works through prompt claims payment; development of needs meeting products; easy access to insurance products; provision of first class services by insurers amongst other initiatives of the commission.

On how the commission is encouraging innovation, he submitted that innovation is very critical to development as it introduces, enhances and meets the needs of customers.

He applauded the role  of FSD Africa in assisting the commission in  entrenching innovation in the sector.

He maintained that the commission is focused on development which is driven by leveraging technology to reach people especially at the grassroots and encouraging them to consider insurance as oxygen they need to stay alive.

He also stressed that awareness is key to innovation, adding that there is need for intensified awareness creation as many people do not understand how insurance works

On claims, he said the issue of claims is a combination of reality and assumption, adding that most people who talk about non-payment of claims do not have a policy but speak based on what they heard.

Thomas submitted that NAICOM was addressing challenges with claims through its portal which enables the commission to monitor claims processes, stressing that with the portal, NAICOM is able to follow claims from when they are filed to when paid and when there is a delay, the commission would ask questions why the claim is not settled as scheduled.

The Lagos State Health Management Agency (LASHMA) has announced the roll-out of its resource mobilisation arm, Eko Social Health Alliance (EKOSHA), aimed at deepening access to quality and affordable healthcare for vulnerable residents of the state.

LASHMA was established to regulate the Lagos State health insurance ecosystem and ensure the provision of health insurance for residents of the state. E

KOSHA is the resource mobilisation  arm of the agency, tasked with mobilising additional funds to ensure that indigent residents  can conveniently access quality healthcare without financial burden to themselves.

Speaking to reporters at the launch,  General Manager, LASHMA, Dr. Emmanuella Zamba, notedthat EKOSHA was conceived to complement government’s effort towards increasing coverage of vulnerable residents on the Lagos State Health Scheme and up-skilling beneficiaries on the plan.

She stated, quoting the Lagos State Bureau of Statistics, “An estimated 72 per cent of Lagos’ 24 million population live below the poverty line. To this end, the Lagos State Health Scheme was conceived to ensure every resident of the state, irrespective of their socio-economic status, has access to proper healthcare at a premium.

“We understand that not everyone can afford this premium, hence, EKOSHA was formed as an alternative funding source to cater for the health insurance needs of the vulnerable and indigent. EKOSHA will also collaborate with relevant Ministries, Departments & Agencies (MDAs) and organisations to empower beneficiaries with critical skills to ensure they can eventually become independent and live a better life.”

She further noted: “Governor Sanwo-Olu has been consistent in his commitment towards making universal health coverage a reality for Lagosians. However, given the state’s huge population, the administration alone cannot resolve the challenges that come with making quality healthcare accessible to its citizens, especially for the vulnerable and indigent.

“The law provides for one per cent of the Consolidated Revenue Fund to address the challenge of providing health coverage for the poor in Lagos State but that falls short of what is required to make any meaningful impact. That is why we are excited about the prospects of EKOSHA to bridge the gap in healthcare financing for the poor and vulnerable.”

We are optimistic that EKOSHA will become a springboard from which Lagos can build a sustainable health insurance coverage that will accelerate the State’s aspiration for Universal Health Coverage (UHC) especially for its vulnerable and indigent.”

Speaking during the event, Prof. Akin Abayomi, Honourable Commissioner for Health, Lagos State, reiterated government’s efforts at providing social welfare empowerment programs designed to support residents of the state and called on well-meaning members of the public to contribute their quota to the success of the scheme.

Prof. Abayomi who was represented by the Director, Medical Administration, Training and Programs in the State Ministry of Health, Dr. Funmilayo Shokunbi, stated that, “The Lagos State government has been relentless in improving the health sector and making free healthcare a reality. Since 2020 when the Lagos State Health Scheme was launched, a total of N750 million has been disbursed as equity funds in addition to other financial provisions and sponsorships. Today, over 230,000 Lagos residents spread across the 57 LGAs of the state including members of elderly and orphanage homes; vulnerable persons living with HIV/AIDS, tuberculosis and sickle cell anemia; and victims of domestic and sexual violence enjoy free healthcare at zero cost.”

Relatedly, LASHMA recently rolled out the ILERA Eko Diaspora Plan which is a financing vehicle through which Nigerians in the diaspora can pay for the health insurance of their relatives in Lagos, if they so desire.

Finally, Dr. Zamba gave the assurances that stringent processes would be put in place to monitor the utilization of resources mobilized, also, a quarterly newsletter to provide progress reports on the activities and progress of EKOSHA.

A banker, Mr Okoro, insured his car, a Range Rover 2018 model for about N70 million and bought a comprehensive insurance cover at about N2 million.

Okoro went on to renew his policy in the second year.

In the second year, his wife drove the jeep out for shopping at a supermarket where she parked it.

Suddenly, a tanker driver lost control and crashed into the jeep.

The tanker and the driver were not insured. Mr. Okoro and his wife were devastated.

He contacted his insurance company, SUNU Assurances Nigeria Plc to seek compensation (indemnity) and, in fact, sought to have a new jeep because the damage destroyed the whole back side of the vehicle.

SUNU upon validating Mr. Okoro’s claim agreed to buy him a new jeep, like the accidental jeep subject to the limit of the sum insured.

Excited, Okoro praised the insurance firm, stating that the experience is the best he has had in his life.

He said SUNU helped his family not to suffer depression as his wife was greatly traumatised after the accident.

The Managing Director of the company, Mr. Samuel Ogbodu, said Nigerians should take advantage of insurance in their day-to-day activities, noting that insurance is very good.

He said they have paid a total of N1.14 billion claims to the insured as at September, and would pay more before the end of the year.

He further advised Nigerians not wait to have a bad experience before keying into insurance.

He called on individuals, corporate entities, state and Federal Government’s agencies to insure their lives and assets against the New Year.

Ogbodu, who said SUNU Assurances brand remains one of the best in the industry, noted that they are in business to pay claims to policyholders when they suffer loss.

He said: “Insurance is a way to manage your risk. When you buy insurance, you purchase protection against unexpected financial losses. The insurance company pays you or someone you choose if something bad happens to you.

“If you have no insurance and an accident happens, you may be responsible for all related costs.’’

The Head, Claims in the Technical Group, Mr. Bamidele Akande, confirmed that the negligent truck was not insured as at the time of the accident.

Notwithstanding, he said they would have to settle their client so that he does not feel pain or stress.

“We are supposed to get subrogation from the tanker’s insurer but it will take a long process because he does not have a current certificate of insurance. But we will take it up with recovery agent who will pursue it but we will have to first settle our client so that he does not feel any pain or stress.

“If we later get something from the owner of the tanker who failed to insure his truck before putting it on the road, the better for us. It is a criminal offence to put a vehicle on the road without insuring it. Presently, the tanker is at the police station,’’ he added.

Potential recession, cyber and environment, safety and governance (ESG) concerns are major risk trends for insurance directors and officers next year, a report by Allianz Global Corporate & Specialty (AGCS) has shown.

AGCS looked into the main factors driving the possibility that a company and its board of directors may be sued by investors or other stakeholder groups next year.

According to AGCS, a poor financial performance or even insolvency amid economic uncertainty and the prospect of a global recession, a lack of robust cyber security and governance processes, or an inadequate or non-compliant response to ESG issues are among the key risk trends in the directors and officers insurance space.

The report read: “The D&O insurance market has seen a favourable shift for buyers, but inflation and current risk environment means the potential for more frequent and severe losses remains.

“Despite a downward trend in new filings, US class action securities litigation remains a key concern, particularly around mergers, while cryptocurrency companies and exchanges are subject to increasing activity, the insurer’s annual D&O report also notes.

 ”The recent decline in the number of filed securities and class actions in the US, coupled with an influx of new entrants, has created a more favorable market for corporate buyers of D&O insurance after double-digit percentage premium increases across key markets in 2021,” says Vanessa Maxwell, Global Head of Financial Lines at AGCS.

“However, there is still a lot of risk facing insurers as macroeconomic issues and a potential slowdown loom, conditions which typically lead to an uptick in D&O claims. Inflation is likely to influence future claims through larger settlements. Cyber risk remains at an elevated level and is now seen as a core duty of D&Os, with increasing scrutiny on how they respond. Meanwhile, ESG-related liabilities – whether it is inadequate action on climate change or diversity and inclusion issues – can potentially become significant exposures for D&O insurance as well.”

The report further showed that it’s a gloomy economic environment from the energy crisis to stock market volatility.

Global Head of Management Liability Commercial at AGCS, Katie Fioretti said: “For many countries, the economic outlook for 2023 is doom-laden with recession risk rising. Plunging growth rates, surging inflation, the energy crisis, continuing stock market volatility and ongoing supply chain issues are monitored closely by D&O underwriters as they could cause liquidity and profitability squeezes in many sectors and fuel rising insolvencies.

 ”More than ever, D&O underwriters are focused on the financial strength of a company, particularly around liquidity.  With global economic uncertainties progressing, carriers are closely monitoring if the trend of increased Chapter 11 filings (in the US), which impact both public and private companies will continue in 2023″she noted.

The AGCS further stated that half of the countries analysed by Allianz Research recorded double-digit increases in business insolvencies during the first half of the year, with the SME sectors in the UK, France, Spain, the Netherlands, Belgium and Switzerland accounting for two thirds of the rise. Overall, insolvencies are expected to increase by +19 per cent in 2023 globally.

“An economic downturn typically brings a higher risk of D&O claims: A study by broker Marsh found that between 2005 and 2007, the firm received an average of 200 to 300 D&O claims in the UK. With the onset of the financial crisis, claims notifications rose by 75 per cent to around 500 in 2008, peaking in excess of 1,600 in 2012. In the US, filings and enforcement actions – a proxy for claims frequency – doubled to over 2,000 at their 2011 peak, compared to around 1,000 in 2006.

 ”The likelihood that a public company will be sued in a securities class action increases when financial performance is poor, a company’s share price drops or there is a risk of bankruptcy. In such scenarios, investors may argue that the company failed to disclose the challenges it was facing to maintain its earnings guidance, driving a potential increase in D&O claims,” says David Van den Berghe, Global Head of Financial Institutions at AGCS.

Meanwhile, issues such as data security and information protection are now core areas to watch for directors, the report notes. Investors increasingly view cyber security risk management as a critical component of a company’s board risk oversight responsibilities. As fiduciaries, board members are therefore expected to develop and maintain accountabilities for IT security before, during and after any cyber incident. Alleged failures can be seen as a breach of duty, the report stated.

• Releases revised guidelines

The National Insurance Commission (NAICOM) has broken the monopoly created by by bancassurance,  and perpetuated by insurance firms owned by banks through its newly released revised guideline.

Bancassurance is the retailing of insurance products in banks. It is a model by which insurance products are distributed through experts who are employees or representatives of an insurance company.

A bank, partnering an insurance company, would through its employees, identify prospects who would then be contacted by an insurance expert to buy an insurance product.

But it was observed that banks only patronise their insurance companies, thereby cutting off the opportunity for other insurance companies not owned by banks to sell their products through the model.

NAICOM has, however, released a  guideline to end the practice.

This was made known at the 13th Insurers Committee Meeting in Lagos.

Nigeria Insurers Association (NIA), the Head Sub-Committee on Media, Mr. Jide Orimolade, told reporters said the revised guideline would be rolled out at the weekend.

When asked if a bank could refuse  other insurance company’s product, Orimolade, who is also the Chief Executive, Stanbic IBTC Insurance Limited, said no.

He said even the Central Bank of Nigeria (CBN) regulation states that if you are proposing a product to your consumer, you can’t propose insurance company that you have alone.

NAICOM Deputy Director, Corporate Communications Department, Rasaaq Salami, explained that there are sections that have been revised in the guideline, which states that instead of one company tied to just one bank, you can have many banks. There will be partnerships in as many banks.

“Bancassurance shouldn’t breed exclusivity. The revised guideline will break the monopoly such that one insurance company cannot be tied to a bank, rather other companies can play in the space.

“For instance, Zenith Insurance Company cannot do business solely with Zenith Bank. Another company can do business with the bank”, he noted.

Orimolade quoted the Chairman of the Insurers Committee, who is the Commissioner for Insurance, Mr Sunday Olorundare Thomas, as saying: “There has been a lot of positive activities happening within the industry when you compare with a five-year analysis. The industry has not done badly based on what we have done so far.

“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.’’

Salami added that 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 licences will be carried out.

“They were reminded that this position is the law and they 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 added.

• Profit rise by 577%

SUNU Assurances Nigeria Plc’s performance has improved tremendously in the Third Quarter (Q3)  of  the year compared with Third Quarter of the previous year.

The firm witnessed growth in the first and second quarters when compared with the same period in 2021. The company has grown by over 100 per cent from 2017 till date.

In Q3 2022, the company’s Gross Premium Written (GPW) and Gross Premium Income (GPI) stood at N4.62 billion and N3.86 billion.

This shows an increase of N594.276 million in GPW and N698.027 million in GPI, representing 15 per cent and 22 per cent growth above Q3 2021.

In the same vein, Profit Before Tax (PAT) rose to N374.728 million in Q3 2022 from N55.378 million recorded in Q3 2021. The profit grew by N319.350 million representing 577 per cent growth.

Underwriting profit also increased to N1.297 billion in Q3, 2022 from N941.857 million in Q3 2021, representing N355.181 million or 38 per cent growth. This was as a result of the increase in underwriting business for the period.

The company also fulfilled its obligation to clients with claims payment amounting to N1.14 billion in Q3 2022 as against N2.2 billion paid in Q3 2021.

The Managing Director of the company, Mr. Samuel Ogbodu, said: “The company was able to achieve the impressive performance due to the massive support from the SUNU Group, Board of Directors. Our strategic investments in our greatest asset (human capital) our network and knowledge of the market, the economy, prompt settlement of claims with discharge voucher (DV), robust reinsurance facility and our undaunting ability to drive our operation with technology.’’

“In addition, the company’s financial strength has grown sufficiently to accommodate any line of business we are licensed to underwrite. If a claim occurs, we take it seriously and make immediate plans after assessment to pay. If it is a motor claim, we send our in-house staff and if it’s a large claim, we send loss adjuster to review it so that we take necessary steps to effect payment as fast as possible.

We pay claims within 48 hours after issuance of discharge voucher”.

“SUNU Assurances is a member of the highly successful SUNU Group that has over 20 insurance companies in 17 African Countries and has over 558 million Euros worth of Assets under Management as well as 229 million Euros in Premium Income. Our vision is to be a leading African Insurance company and is on a mission to be an insurance company recognized for excellent client services, using cutting edge technology, motivated workforce and good business ethics to meet stakeholders’ expectations. This is being driven by innovative service delivery, products development, cost management, customers experience and ensuring proper balance in all dealings”, he added.