The Nation Newspaper

Category: Insurance

  • NCRIB president bows out

    The Nigerian Council of Registered Insurance Brokers (NCRIB) is set to install a new president as its President, Olaide Osijo, bows out.

    Executive Secretary of NCRIB, FataiAdegbenro, who disclosed this, said the investiture of the institute’s Deputy President, Ayodapo Shoderu as the 17th president in Lagos next week will climax its annual conference.

    He said the place of insurance brokers in Financial Sector Strategy (FSS 2020) will be the central focus at its National Insurance Conference with theme entitled: “Insurance Brokers and FSS 2020: Imperatives of insurance growth strategy” and will be delivered by the Head of FSS 2020 project, O.A. Jokosenumi.

    He said the conference is meant to draw attention of insurance professionals and other players in the business sector to their place and contributions to national economic vision and development under the FSS 2020.

     

  • ‘Growth potential in Africa’

    A.M Best Rating Company has indicated that Africa’s insurance and reinsurance markets offer potential for growth.

    According to a report released by the company, despite the challenges in Africa, insurance penetration is growing, but from a very low base and in certain countries given the economic development in the region.

    AM Best posited that each country has different drivers for heightened insurance demand which ranges from economies dominated by the oil and gas and mining industries, to large populations.

    The report further stated that insurance market growth in recent years has also been characterised by an increase in the number of direct partnerships between businesses in Africa with others internationally.

    “There has been an increasing interest in international insurer financial strength ratings, with the need for insurers and reinsurers to demonstrate solid underwriting and overall sound financials as a key aspect of the sector’s development.

    “The benchmarking a company’s financial strength against competitors in other international domiciles is increasingly an aspect of this continent’s insurance development, in the same way as it has become a feature of other global insurance markets,” it said.

  • Insurers pay N81.3m fines, penalties to NAICOM

    •Commission generates N1.97b 

    Insurance operators in the country paid N81.3 million as fines and penalties during the year ended December 31, 2011to the regulatory authority, the National Insurance Commission (NAICOM)as against N70.3 million paid in 2010.

    This was revealed in the NAICOM 2011 yearly report obtained by The Nation.

    Total insurance levies paid by operators, including insurers, brokers and loss adjusters in the year under review amounts to N1.57 billion as against N1.4 billion recorded in the preceding year.

    With a staff of 143,117, NAICOM generated an income of N1.97 billion as against N1.6 billion the previous year and recorded a surplus of N624 million.

    Under its operating income, it got Federal Government’s subvention of N582 million, registration and renewal fees of N104 million and attestation fees of N310 million.

    NAICOM, however, spent N1.3 billion out of which it donated N2.33million during the year.

    Out of the donations, the commission gave N1 million to Nigeria Youth for Goodluck Jonathan, N1 million to fire disaster prevention & safety, N300,000 to Nungtso Charity Foundation and N30,000 to West African Insurance Institute.

    Speaking on the industry in the year under review, Commissioner for Insurance, Mr Fola Daniel said the insurance sub-sector underwent substantial structural and regulatory reforms three years ago.

    Daniel hinted that the medium term reform plan of the Market Development and Restructuring Initiative (MDRI), the a new Strategic Plan Document and the introduction of micro insurance and Takaful insurance models were possible inclusion in the commission’s plans.

    The two insurance models like the MDRI scheme, are focused on addressing issues of low insurance uptake, financial and social inclusion, lack of insurance awareness, market deepening and insurance penetration in the country.

    On the nation’s economic outlook, Daniel said overall economic performance last year was likely to increase, but at a slower pace.

    He said: “In 2012 specifically, the growth rate of real GDP is expected to fall, inflationary.

    “Pressures are likely to be higher, while value of total trade is forecast to decline. This is attributable to increased insecurity and general financial industry reforms still ongoing. The overall growth for the year is expected to be affected by the economic loss from the nation-wide strike early in the year; the partial removal of fuel subsidy will feed into the overall price level to contribute to the inflationary pressures in the economy.

    “However, the mounting interest in Takaful and micro-insurance models schemes coupled with appropriate country-wide diagnostic research study will lead to the implementation of a social benefits programme through insurance with resultant effects of higher insurance awareness, market deepening and increase in insurance penetration. The outcome will therefore be increased investments and improved standard of living with a growing economy.”

    Furthermore, the commissioner said NAICOM has taken steps aimed at ensuring stricter compliance with existing laws and created additional operational guidelines to strengthen supervision in the industry.

    These he stressed include new regulations on premium receivables, solvency margins, and guidelines for the oil and gas insurance.

    “The Commission is moving to (bridge) any existing gaps in the regulation of insurer’s solvency status, in addition to remission of premiums by brokers. More so, the Commission has set out to introduce the new accounting administration for the industry.

    “The International Financial Reporting Standard (IFRS) is to replace the old practice of financial reporting in the insurance industry and NAICOM is championing its course through various stakeholders’ engagements, awareness and education,” he added.

    Accoring to him, NAICOM is also spearheading the anti-money laundering campaigns within the industry in collaboration with other related agencies to prevent fraudulent practices and detect them if any. Insurers’ are advised to undertake due diligence ontheir clients, he said.

    Daniel said the commission was at the fore-front of advocacy for the Local Content Act, adding that the law held significant potential for the growth of the insurance industry.

    He noted that the law places responsibility on foreign oil companies to retain a substantial portion of their operations in the local economy adding that aside from addressing capital flight, it provides indigenous insurers with an appreciable level of exposure to complex oil and gas risk underwriting deals that could rub off positively on human capital development and underwriting expertise in the industry.

    “Under the regulation, no insurance risk in the Nigerian oil & gas industry should be placed overseas without the written approval of the Commission which will ensure that Nigerian local capacity has been fully exhausted. The law aims to retain up to 70.0 per cent of oil and gas risks in the local insurance markets.

    “Following the release of Oil and Gas Guidelines, the Directorate inspected 31 insurance companies on April 6 to 19, 2011 to ascertain compliance with the statedguidelines. The reports of the inspection were reviewed and proper sanctions were meted to defaulting companies,” he said.

  • Five vexatious car insurance questions

    Why must I list all household members on my policy?

    Many people wonder why insurance policies require that all licensed drivers in the house be included on their insurance policy, even if they will not be driving regularly.

    This question often arises when the driver in question is a teenager whose inclusion on the policy increases the rates.

    “If someone gets into an accident, then the insurance is going to have to pay, so the driver’s risk factors need to be calculated into the overall cost of the policy,” says Jeanne M. Salvatore, spokesperson for Insurance Information Institute.

    Why does a car have to be insured if it’s never driven?

    A car doesn’t need to be insured under certain circumstances.

    “Most states have mandatory insurance laws only for registered vehicles. If a driver is going to store a car for a very long period and not drive it, most states will allow him/her to remove the license tags [so that the vehicle legally can’t be driven] and, as such, the owner will not be required to carry insurance,” says Teresa Scharn, auto insurance product director for Nationwide Insurance.

    The problem is this: It’s possible for a car to be damaged even while sitting in your garage or driveway through vandalism, fire or storms, so be cautious about removing coverage.

    Why do married people pay less for car insurance?

    According to Kevin Conlee, director in auto line management at Allstate, “If you are married then the data shows that you have a lower propensity for future losses than single drivers with the exact same factors.”

    Sorry, single folks – the insurance statistics aren’t in your favor.

    Why do different auto insurance companies charge wildly different amounts for the same coverage?

    Car insurance companies use different “underwriting models,” which result in different calculations of risk. For example, a person with a DUI conviction might be viewed as less “risky” by one insurer over another. That’s why it’s important to shop around. The insurer that gives your sister a great price might not be the one that gives you the good deal.

    Salvatore says that insurance companies also use price differences to compete in the marketplace.

    “One company might seek out only the best drivers and price their policies to encourage top drivers while another might focus on first-time drivers. Companies price their policies to help them compete in the market that they are looking to attract as customers,” says Salvatore.

    Why do I have to insure all my cars when I can only drive one at a time?

    State laws require insurance (or some other proof of financial responsibility) on all cars that are registered.

    But you might be able to drop coverage under special circumstances.

    “If you have a seasonal car or antique car that you never drive, then you can technically suspend coverage for the car,” Conlee says. “But if you are going to drive it, you need to have coverage for at least minimum liability limits.”

    He also notes that cars can be damaged even if they are not being driven. If you suspend coverage, you will not be able to make a claim due to a tree falling, theft, fire or other calamity.

    Why doesn’t my car insurance cover me when I drive someone else’s car?

    Policies are priced based on the specific vehicle and the members of the household who have access to the car. This is how insurers calculate their likelihood for claims payments, and that’s why insurance follows the vehicle, not the driver. While other people might occasionally borrow the car, the main risk resides with the family members who are regular drivers.

  • Indigenous insurers fret over influx foreign operators

    More foreign underwriters are coming to the industry through mergers and acquisitions while the indigenous companies are bracing for synergies to meet recapitalisation that is aimed at boosting competition, writes Omobola Tolu-kusimo. 

    A  new dawn is set in the sector following the influx of global insurers acquiring indigenous players.

    The foreign investors have discovered how they can thrive where the indigenous firms seem to have failed in deepening insurance penetration, thereby posing a competition to indigenous operators.

    The ban by the Federal Government on the issuance of new licences to investors has also had its impact.

    Minister of State for Finance, Dr. Yerima Ngama, who made the pronouncement in Abuja during the inauguration of the new board of the National Insurance Commission (NAICOM), said rather than issue fresh licences, any investor desiring to own a firm should acquire existing companies.

    He said the new investors will be able to recapitalise them and start running the companies well.

    He noted that there are many distressed companies, arguing that it is either the regulator liquidates them or get some serious people to take them over.

    He said: “So, there is no need to issue new licences when they have several licences to take over. It is just like the banking system, if we have so many distressed banks, why should we issue a new licence to a bank? Why not buy one of the distressed ones and restructure it?

    “That is why the sector does not have a single distressed bank. So, the same thing should apply to insurance; we have so many of them. Anybody who is interested in investing in them is welcome to buy two or three of these distressed insurance companies, merge them, recapitalise them and run them.”

    Ngama also urged NAICOM to step up its regulatory duties as the government had already initiated several reforms that would help to make the sector stronger.

    Before now, insurers were doing business in their comfort zones, not minding its slow pace of growth and insignificant contribution to the Gross Domestic Product (GDP).

    Last year, the sector generated less than N300 billion premium income instead of the N1trillion target set for it by NAICOM.

    After the consolidation about eight years ago, life, general and re-insurance companies’ minimum capital increased from N150 million to N200million, N350million to N2billion, N3billion and N10billion.

    There are 57 insurance and two re-insurance firms in the country. Some of these have, however, been either merged or acquired.

    In the light of the low performance of the less than one per cent contribution of the sector to the economy, the foreign investors are eager to partake in the domestic market because of its huge population of about 167 million and vast untapped underwriting business.

    So far, Old Mutual, one of Africa’s biggest insurers with headquarters in the United Kigdom (UK) is here to set up shop. The firm provides life assurance, asset management, banking and general insurance to over 14 million customers in Africa, the Americas, Asia and Europe. It started in South Africa.

    Last year, Assur Africa Holding, a consortium of three European Development Finance Institutions (DFIs) and two Private Equity (PE) firms acquired 67.68 per cent shareholding in GTAssure, now Mansard Insurance Plc. The DFIs are Netherlands Development Finance Company (Holland); German Investment Corporation (Germany) and French Development Finance Company (France), while the two Private Equity Firms are Development Partners International, based in the UK, and Africinvest existing shareholder based in Tunisia.

    Also, Group NSIA, a company based in Abidjan, Cote d’Ivoire bought 96.15 per cent equity of Diamond Bank Plc in ADIC Insurance Company Limited.

    Law Union and Rock Insurance Plc also had its share of foreign mix when 60 per cent of its controlling shares were acquired by a consortium comprising Alternative Capital Partners (ACAP) and Swede Control Intertek Limited.

    Sources said a strong management team with a track record was put together by the new core investor to work with external consultants.

    According to the source, the new core investor has already set a target of being among the top five insurance companies by the end of 2015.

    UBA Metropolitan, a subsidiary of United Bank for Africa, has a South African presence from Metropolitan Life, while FBN Insurance Limited, a subsidiary of FirstBank of Nigeria Plc also has strong presence of South African Investors, Sanlam Group.

    Determined not to be left out, indigenous firms in the local market are rooting strategically. Custodian and Allied Insurance Plc, one of the top players, have merged with Crusader (Nigeria) Plc having secured the nod of their shareholders through the court.

    Also, Cornerstone Insurance and Fin Insurance seem to be warming up while AIICO Insurance and Linkage Assurance are also mulling mergers and acquisitions.

    According to the Nigeria Insurers Association 2011 Insurance Digest, the long term call on the sector is supported by its demographic advantages and the economic prospects relative to other emerging markets.

    “Although a fast-rising bottom population base provides significant headroom for premium expansion, decades of poor insurance uptake exacerbated by widespread cultural aversion and the inefficiency of the micro economic parameters have slowed down the desired growth in the insurance sector.

    “However, if the various initiatives in the sector is sustained and strengthen, the insurance sector revenue will assume a positive dimension in the coming years,” it said.

    Group Chief Executive Officer, Old Mutual West Africa, Offong Ambah, said the economy is moving fast.

    According to him, the country offers significant growth opportunities and Old Mutual is banking on this.

    He said: “Old Mutual is in Nigeria as part of the group’s overall strategy to build a franchise in the West African sub-region.

    “Following our acquisition of Oceanic Life, we are in the final stages of acquiring the short-term insurance company, Oceanic General business, which enables us to provide a broad range of short term and life insurance products to the market.

    “Our objective is to work with existing insurance companies and regulator to broaden and deepen the insurance market in Nigeria. This we plan to do through the introduction of innovative products financial education reaching out to the underserved and un-served segment of the market tackling the sceptism of Nigerians regarding insurance through prompt settlement of claims and excellent service delivery among others.”

    According to him, Old Mutual has set aside R5billion ($600million) of capital to fund its expansion in East and West Africa.

    Managing Director, Cornerstone Insurance Plc, Mr Ganiyu Musa, said the company was looking at various opportunities available to it in its merger plans, adding that it would announce its plans soon.

    Managing Director, FBN Life, Mr Val Ojumah, said the sector will do better with large companies that can compete fairly well in the world insurance market.

    The retention capacity of the industry is low. Majority of the risks in the oil and gas, aviation and other high technology and high value risks are reinsured abroad.

    Chief Operating Officer, AIICO, TundeFajemirokun, said the company is considering merging.

    He affirmed that there is an influx of foreign investors in the market.

    He lauded the Federal Government for stopping the issuance of new licences, noting that existing companies need to team up.

    He said: “To cope with the ongoing competition, we are investing in our operations, technology, people and agency network.

    “There has been some strong influx of foreign investors in the insurance market and most of them have positioned themselves. For AIICO, we have had a lot of potential suitor that want to merge or even acquire us.

    ‘’Two years ago, we had agreement with shareholders to raise some money and we have been talking to investors. We have acquired before but sometimes there is need to be careful with acquisitions. Sometimes the company acquired most of the value and not the other way round; so, we are being careful about acquiring any company.”

    Fajemirokun agreed that insurance penetration was still low.

    ‘’The foreign investors believe they can improve on this and develop our products a lot better than they are today. We also have the National Pension Commission (PenCom) regulated annuity, which is a huge part of the market coming up,’’ he said.

     

  • IAIS to develop global capital standard

    The International Association of Insurance Supervisors (IAIS) plans to develop a risk based global insurance capital standard (ICS) by 2016.

    The IAIS is a voluntary membership organisation of insurance supervisors and regulators from over 200 jurisdictions in nearly than 140 countries.

    The IAIS said full implementation will begin three years later, after two years of testing and refinement with supervisors and internationally active insurance groups (IAIGs).

    In 2010, the IAIS began developing a comprehensive framework for the supervision of IAIGs, or ComFrame. The IAIS has now agreed to develop a risk based global ICS and to include it within ComFrame, which has always included a capital component within its solvency assessment. This component, which is being finalised in concept, will be used as a starting point for development of the ICS.

    In 2014, the IAIS will also develop straightforward, backstop capital requirements (BCRs), which are planned to be finalised and ready for implementation by global systemically important insurers (G-SIIs) in late-2014. BCRs will serve as the foundation for higher loss absorbency (HLA) requirements for G-SIIs, and it is anticipated that their development and testing will also inform development of the ICS.

    Chair, IAIS Executive Committee, Peter Braumüller, said it is undeniable that the business of insurance is global, and global issues demand global responses,” said. “This is why the IAIS, whose Members constitute nearly all of the world’s insurance supervisors, has committed to develop and implement the first-ever risk based global insurance capital standard.”

    “From the financial crisis, we learned that our global financial regulatory regime should be more robust and comprehensive in scope, and jurisdictions should share a commitment to global standards,” said Michael T. McRaith, Chair of the IAIS Technical Committee.

    “The IAIS with its mission to promote effective and globally consistent supervision of the insurance industry and to contribute to global financial stability has an essential role in fulfilling these objectives.”

     

     

  • AIICO mulls merger, acquisition

    AIICO Insurance Plc plans to embrace merging and acqusition.

    Its Chief Operating Officer, Mr. Tunde Fajemirokun, gave the indication during the introduction of the new management team of the firm in Lagos.

    He affirmed that there is an influx of foreign investors coming into the market because of its untapped potentials.

    He lauded the decision of the Federal Government to stop issuing new licences to insurance companies, noting that existing companies need to come together for the market to grow.

    To cope with ongoing competition, Fajemirokun said the company investing in its operations, technology, people and agency network.

    He said: “We are also looking at enabling the existing effective schemes and also enabling them.

    “There has been some strong influx of foreign investors in the insurance market and most of them have positioned themselves.

    “For AIICO, we have had a lot of potential suitor that want to merge or even acquire us. Two years ago, we had agreement with shareholders to raise some money and we have been talking to investors and some of them, you will hear about soon. We have acquired before but sometimes there is need to be careful with acquisitions. Sometimes the company acquired captures most of the value and not the other way round so we are being careful about acquiring any company.”

    He pointed out that insurance penetration was still very low in the market, adding that there were various reasons for this.

    “The foreign investors believe they can improve on insurance penetration and develop our products a lot better than they are today. We also have the National Pension Commission (PenCom) regulated annuity which is a huge part of the market coming up,” he said.

    He said the company is more interested in strategic investment in order to improve product development, operations and technology adding that the firm is challenged by ongoing development in the industry and plans to remain the market leader.

  • CII launches ethics guide for SMEs

    CII launches ethics guide for SMEs

    Two ethical books to help employers have been launched by the Chartered Insurance Institute (CII), London.

    The books are intended to assist firms, especially Small and Medium Scale Enterprises (SMEs).

    A third guide is due for publication later this year.

    In past five years have, the institute has invested in some initiatives which provided guidance and support to members, to ensure they not only understood, but also show awareness of the code of ethics and its practical requirements.

    The new guides are: Demystifying the Code of Ethics,published last year,and this year’s online ‘ethics toolkit’ for financial advisers.

    The CII’s emphasis on ethics echoes greater scrutiny by the Financial Conduct Authority (FCA) on culture; this combined with intensified public interest following the LIBOR crisis and the subsequent Banking Standards Commission report, which called for increased professional standards in the banking sector.

    Early findings from a forthcoming  skills survey of CII members indicates there is an increased awareness and requirement for support from professionals themselves, with three quarters of respondents (74 per cent greater emphasis on ethical and conduct training and support.

    On the books, David McIntosh, chair of the CII Professional Standards Board, said: “While there is a clear understanding of the need for change, many individuals and firms could struggle to find a practical way of articulating, incentivising and demonstrating how they pursue high standards of conduct. This is not an easy area for those who are used to working with clear cut compliance rules. That is where professional bodies such as the Chartered Insurance Institute can play a vital role.

    “As the independent chairman of the CII’s Professional Standards Board, I think the work of the CII in recent years to promote high standards of conduct is just as important as their work to promote high standards of technical competence.

    “That is why I welcome the CII series of ethical guidance, of which this publication is the first, as another practical tool to help guide the profession – whether for individuals on their own or through their firm – and to drive a step-change in the culture of financial services for the long-term benefit of the public.”

    The guides are not intended as a compliance tool, but to provide support for individuals and their firms in meeting the challenge to raise standards in the public interest, he added.

  • Insurers fear increase in regulation cost

    Operators are apprehensive over plans by the Federal Government to stop allocation to the National Insurance Commission (NAICOM) from next year.

    They fear the regulatory body may increase levies and tighten sanctions and penalties to boost its Internally Generated Revenue (IGR).

    The major source of fund for the commission flows from the Insurance Special Supervisory Fund (ISSF) Decree 20 of 1989, which mandates insurance companies to contribute one per cent of their gross earnings to the fund.

    Aside from the allocations, NAICOM gets its income from the one per cent statutory levy imposed on insurance operators. This is imposed on the gross premium income of insurance and reinsurance companies, gross commission made by insurance brokers and gross fees earned by loss adjusters.

    It also generates income from investments and loans from sources approved by the board, fees and penalties paid by insurance institutions, local and foreign grants.

    Deputy Chairman, Nigeria Insurers Association (NIA), Mr. Godwin Wiggle, who spoke with The Nation, believes the aim of the Federal Government to stop allocations to NAICOM is to partly grant it the autonomy it asked craved for.

    Wiggle however, hopes the commission will not seek to generate more income by reviewing the one per cent commission it charges operators in the industry.

    He said: “My fear is that the commission may want to look at increasing the one per cent commission paid by operators as this can affect insurance business. As a supervisory arm of government, it is entitled to foreign grant hence I believe there are other ways it can generate income.

    “In the event the commission increases it, the Insurance Act has to be amended. But I want to look at the development positively. I feel that government in its wisdom wants to grant the commission part of the autonomy it has been craving for, which will give it the opportunity to widen its supervisory role.”

    Former President of the Chartered Insurance Institute of Nigeria (CIIN), Mr Wole Adfetimehin, said that going by his research, government is used to taking decisions based on trial and error.

    He said he does not support the decision by the government to stop budgetary allocation to NAICOM as it will be an added cost on operators.

    “What this simply means is a review of the commission percentage that we pay to NAICOM and this will affect overheads of companies. “This is a sector that we have been trying to grow and I wonder why they are comparing us with the banking sector.

    “How many of the government parastatals have paid their premium this year. It is only the Nigerian National Petroleum Corporation (NNPC) that has fully paid and this is because it has the capacity to do so on its own,”he said.

    President, Nigerian Council of registered insurance Brokers (NCRIB), Olaide Osijo, said members of the Council have been calling her to express their fears but she has told them not to be apprehensive or speculate about how NAICOM will generate its income.

    But in case their fears come to light, she said that insurance in Nigeria has gotten to a stage that NAICOM does not do anything without consulting the sector.

    She noted that the various stakeholders in the sector, including, the Nigeria Association of Insurers (NIA), CIIN and NCRIB, had come together to form the Insurance Industry Consultative Committee (IICC) to fight their cause.

    Two weeks ago, the Federal Government said it would halt allocations to NAICOM from 2014, admonishing the newly inaugurated board and management to evolve innovative ways of boosting its IGR.

    Minister of State for Finance, YerimaNgama, said the commission has come of age.

    “From time to time, the government supports the commission as its internally-generated revenue grows. But today, the industry has grown and is healthy; we believe that as from next year, NAICOM, just like the Central Bank of Nigeria and the Nigerian Deposit Insurance Corporation (NDIC), should be able to generate enough internal revenue to embark on their activities without any budgetary support from the federation account,” he said.

  • ‘Rising unemployment affecting insurance growth’

    Over the years, the insurance industry has been bedevilled with a myriad of problems that have hindered its growth. Omobola Tolu-Kusimo reports that rising unemployment continues to pose challenge to the industry.

    When he spoke recently about the unemployment situation in the country, everybody listened to him.

    The Team Leader, World Bank, and representative of World Bank Country representative, Prof Foluso Okunmadewa, said unemployment rate in Nigeria now stands at 22 per cent. Of this figure, youth unemployment accounts for 38 per cent.

    He urged the Federal Government to solve the problem, saying that the youth holds the key to growing the economy.

    The World Bank chief warned that achieving the set goals of Vision 20:2020 may remain a wishful thinking if youth unemployment is not checked, adding that 15 to 35-year olds account for close to 60 per cent of the country’s population.

    For the insurance industry that has been struggling to survive, this is not good news as people who are not employed cannot contemplate buying any insurance product.

    Regulator of the risk-bearing industry, the National Insurance Commission (NAICOM) said the fortunes of the industry and that of the economy will witness a boost if majority of the citizens take one form of insurance cover or the other.

    According to figures from the regulator, only 800,000 adults have insurance policies.

    NAICOM Commissioner, Fola Daniel believes the level of insurance penetration must be increased significantly such that majority of the people would have one form of insurance cover or the other for the nation’s economy to grow as expected.

    He said based on studies carried out by NAICOM, the country will attain rapid and sustained economic growth if the insurance sector’s penetration is deepened.

    But experts in the industry have said the penetration of insurance in the country is essentially tied to availability of disposable income.

    Former President of the Chartered Insurance Institute of Nigeria (CIIN), Mr. WoleAdetimehin said the state of the economy does not encourage people to buy insurance policies.

    He said going by the record of the World Bank, it is time the government began to pay more attention to its policies and projects on creating jobs in the country.

    He said: “If the records to the World Bank are true, the government of the day needs to look at ways to reduce the rating.

    “For any economy to grow, there is the need for an enabling environment. We have to reduce the rate of unemployment. When people can get jobs, insurance will sell at micro level because this will stimulate the demand for products and services in general terms.

    “These are factors that will impact on the industry. If we go by the transformation agenda of the administration of NAICOM, there should to be growth but it still need to be worked upon. NAICOM is doing a lot to grow the fortunes of the industry so it can contribute significantly to the nation’s GDP. It has embarked on sensitising the operators to embrace micro insurance. But a lot needs to be done in terms of revamping the economy.”

    Speaking about the current state of the insurance industry, Deputy Governor, Central Bank of Nigeria (CBN), Mr. Tunde Lemo said one major challenge confronting the sector is its very low level of penetration and patronage.

    According to the CBN chief, non-life insurance penetration stood around one-half per cent or only one-seventh of the average penetration of the Organisation for Economic Co-operation and Development (OECD) countries in 2010 while life insurance penetration is even lower at around 0.2 per cent.

    Lemo said: “The comparison remains the same when a better measurement of insurance utilisation is used, which takes into consideration dependence on the economic development of the country as well as the benchmark insurance penetration against the world insurance penetration average (BMIP) for the non-life sector.

    “The Nigerian BMIP value indicates that the insurance industry is underdeveloped with only 43 per cent of the world average insurance penetration at the Nigerian 2010 GDP per capital level, placing Nigeria at the bottom of comparable countries, such as Angola, Ghana, Kenya, Morocco and South Africa, with the exception of Egypt.”