The Nation Newspaper

Category: Insurance

  • Oyo seeks brokers’support

    The Oyo State government is seeking the support of brokers to render efficient services to the people.

    The Commissioner for Finance, Adedeji Adelabu, spoke when the management of the Nigerian Council of Registered Insurance Brokers, including its President, Mrs. ‘Laide Osijo, visited him in his office.

    He said there was no better time to seek the assistance of professionals and their groups than now that the state government is embarking on massive infrastructural turn-around of the state for the long-term benefits of the people.

    He said the state government has realised the importance of risk mitigation and management of its numerous human and material assets and is ready to engage the services of qualified insurance professionals who have the requisite skill to assist the government achieve its goals.

    Adelabu said: “The notion of self- insurance, which governments, including that of Oyo State always felt they could undertake on their own, had failed severally, necessitating the need to cede such technical areas to the professionals.”

    He also said the state government, in conformity with the Pensions Act 2004, has put in place the group life policy for its civil service and mandated the clients, especially those in the construction industry to ensure they insure their workers.

    Earlier, Mrs. Osijo commended the state government for the structural development of the state, noting that insurance was a complementary service to the government’s developmental efforts.

    She noted that brokers give clients the advantage of competitive rates from underwriters through their regular advice.

    Meanwhile, President, NCRIB Mrs. Laide Osijo, at the Members Evening of the Council, urged brokers to cooperate with NAICOM in the implementation of the new premium regime. She advised them to avoid any infraction that may lead to sanctions.

    She stressed that the council has gathered from members and underwriters that the public and government are already adjusting to the new premium rule. She called on insurance operators to embark on enlightenment of client on the new rule.

    She said: “Reports reaching us from the underwriters and brokers indicate an adjustment to the new rule by insurance clients, including the government.

    “Even though it is not out of place of some pessimism about its workability from some quarters, the onus is on insurance operators, including our members to embark on enlightenment of clients on the new rule.

    “From my findings, it has become necessary to advise brokers to cooperate with NAICOM in the implementation of this rule as well as avoid any infraction that may lead to sanctions by the commission.”

    Osijo noted that the new rule would put to rest the unnecessary bickering between brokers and underwriters over the unpaid premium and remission of commission.

  • RenCap cuts Ecobank’s revenue growth forecast

    •Urges lender to raise capital

    Renaissance Capital (RenCap), an investment and research firm, has slashed Ecobank Transnational Incorpo-rated’s (ETI’s) revenue growth forecast for fiscal year 2013 to 16 per cent, from initial 19 per cent. The forecast is, however, higher than manage-ment’s 15 per cent revenue growth target for the year.

    RenCap, in an emailed report obtained by The Nation, said even if there is little improvement in the bank’s Net Interest Margin (NIM), management’s revenue-growth target implies a slower progression in non-interest revenues than it had previously assumed.

    It said though the bank’s management has been guided to higher deposit growth of 20 per cent, its biggest constraint is not lack of liabilities, but capital. It said that all indicators suggest that the group, if inhibited from raising more Tier 1 capital by existing shareholders, will have to raise non-convertible Tier 2 capital.

    “Following guidance from management at Ecobank Transnational Incorporated’s (ETI) capital markets day in January, we conclude that our previous forecasts were too positive. As a result, we have lowered our expectations for earnings growth in fiscal year 2013, which has implications for our 2014 and 2015 forecasts,” it said.

    RenCap said it reduced its forecast for the bank’s 2003 loan growth to 10 per cent from 25 per cent, on the back of management guidance, which it considered conservative, adding that there could be upside risk.

    Although ETI states it provides a pan-African banking solution, RenCap is doubtful its operations in-country competes effectively with the dominant local banks in all its markets.

    However, market-share data suggest the group has no trouble competing in countries, such as Ghana, Chad, Cote d’Ivoire and Burkina Faso, where it is the leading bank. It said the lender’s sub-optimal operations in east and southern Africa undermine the pan-African proposition.

    The research firm said with targeted revenue growth of 15 per cent this year, cost growth will have to be kept below low double-digits to deliver a Cost to Income Ratio (CIR) of 72 per cent or below. It said the bank’s proposed entry into its remaining five target markets – Ethiopia, South Sudan, Angola, Mozambique and Madagascar – remains a risky venture.

    “We exclude the $200 million of one-off expected income from the disposal of Oceanic Bank’s non-core assets from 2012 forecasts. Uncertainty around the timing of these disposals means this capital could come in over a longer period than initially indicated.

    “We have lowered our fiscal year 2013 forecast for net earnings to $251 million from $368 million; and 2014 forecast to $374 million from $502 million. We have rolled our forecasts forward by one year, to include 2015. We forecast 2015 net earnings of $524 million,” it said.

  • ‘Court rulings ‘ll empower NAICOM to implement premium payment’

    The National Insurance Commission (NAICOM) has said it will take advantage of court’s rulings to implement the new premium regime.

    In a circular entitled: Settle court case on partial/instalment/non-payment of insurance premium, signed by its management, the commission noted that the settled Appeal Court cases on insurance premium are clear indications that anything short of full payment at the commencement of an insurance contract renders such transaction null and void.

    It said the Provision of Section 50 (1) of the Insurance Act 2003 which states: “The receipt of insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance”, is indeed in the interest of the insured going by decided cases on the issue by competent court of law.

    The Commission quoted case one as Court of Appeal in Ajaokuta Steel Co. Limited V. Corp. Insurance Limited where it was decided that the fundamental purpose of an insurance contract is to give cover for an insurance risk. Thus, a law, such as Insurance Act, which says that there is no insurance cover unless premium was pre-paid, is, in fact, saying that the contract is void if no premium was paid.

    The Commission said: “By virtue of Section 50(1) of the Insurance Act, No 2 of 1997 (as amended), the receipt of insurance premium is a condition precedent to a valid contract of insurance and there can be cover in respect of an insurance risk unless premium was paid in advance.”

    The second quoted case by the Commission in the circular was the case involving Leadway Assurance Company Limited Limited V. J.U.C. Limited (2005) 5NWLR 539 at 543: “By virtue of Section 50(1) of Insurance Act, 1997, the receipt of an insurance premium is a condition precedent to a valid contract of insurance, and there is no cover in respect of an insurance risk unless premium is paid. In other words, a valid insurance contract is made when premium for the insurance is paid.

    “Case 3, in IGI Company Limited V. Adogu (2010) INWLR pt 337 at 357 the Court held that the premium paid must be full and stated that: Section 50 of Insurance Act 2003 does not contemplate installment payment of premium in an insurance contract.”

     

     

     

  • ‘Weak enforcement, culture hamper insurance penetration’

    Weak enforcement of policies and poor insurance culture among Nigerians have been identified as some of the factors inhibiting insurance penetration in the country.

    The Assistant General Manager, Corporate Communication and Brand Management, Sovereign Trust Insurance Plc, Mr Segun Bankole, lamented that had the compulsory insurance policy of the Federal Government been implemented, it would have gone a long way at chnaging the fortune of the industry for the better.

    Bankole, who spoke with The Nation in Lagos, added that poor insurance culture also formed a major stumbling block against the success of the Market Development and Restructuring Initiatives (MDRI) otherwise referred to as Compulsory insurance. He said under the circumstance, the National Insurance Commission (NAICOM) has done well but observed that there has not been proper monitoring to ensure its success.

    The programme, which started two years ago, had Group life Insurance in line with the Pencom Act 2004, Employers liability in line with the Workmen’s Compensation Act 1987, Buildings under construction-section 64 of the Insurance Act 2003,Occupiers liability insurance –section 65 of the Insurance Act 2003, Motor Third party Insurance –section 68 of the Insurance Act 2003 and Health care Professional indemnity insurance-under section 45 of the NHIS Act 1999.

    Bankole said these policies are by law compulsory and they come with sanctions. He said if those charged with enforcement in the insurance industry are empowered as their counterparts charged with monitoring money laundering or those charged with tax collection, the situation will not be what it is today. He said it is not proper to blame NAICOM as the regulator is doing all within its power to ensure the success of the industry.

    Insurance is primarily for the good of the insured, he said, wondering why people should be forced to do what is good for them.

    Still speaking on enforcement, he said if sanctions are implemented the way it is done abroad, it will go a long way in instilling the discipline of voluntary obedience.

    He said the premium required is usually very small compared to the benefits when due. He said if people know that that if they flout the insurance law, they will be heavily sanctioned as it is done abroad, they will do what they are supposed to do for their own good.

    On poor insurance culture, Bankole said it is sad to observe that a Nigerian can load up to N3,000 on his phone and waste it in a matter of minutes, but cannot invest that amount in a year in an insurance policy that can fetch him up N1 million if the policy materialises.

    He said there are policies Nigerians can invest with as little as N1,500 premium in a year and can have a benefit of over N600,000 if it falls due.

    He said for a third party motor insurance where the law demands just N5,000 premium for a year, if the sanction is as much as N100,000 on violators and are implemented, people will sit up.

     

     

     

  • NIA begins distribution of motor insurance e-readers

    The Nigerian Insurers Association (NIA) has kicked off the deployment of electronic device aimed at eliminating fake motor vehicle insurance and other unethical practices in the issuance of motor vehicle licence in the country.

    Last week, the association handed over about 25 units of the motor insurance electronic readers to the Ogun State government.

    NIA’s Head, Corporate Affairs and Human Resources, Davis Iyasere, in a telephone interview, said the units were given to the state Vehicle Inspection Officers (VIO) in Abeokuta, adding that discussions are on with the Lagos State Government.

    He said: “We have given 25 units of the phones to the Ogun State Government, through the VIO, the distribution is according to demand. If they need more, we would give them. The 25 is just for them to start with Abeokuta metropolis.”

    He noted that the association decided to start with Abeokuta, because historically, insurance in the country is traceable to the city, adding that the state also is one of the first to indicate interest in the project.

    “We are discussing with the Lagos State government. We have had meeting with the Commissioner for Transportation and we are also working out ways to reach other states,” he said.

    He said insurance companies have continued to upload their data to the database, adding that much success has been recorded.

    The industry’s database project, which was conceived in 2010, to help develop robust information on insured vehicles, was launch on June 26, 2012. The NIA, at the launch, promised to deploy over 500,000 electronic card readers to security agencies to verify genuine vehicle insurance licenses.

    The project, according to NIA, would eradicate fake insurances and minimise instances of fraudulent claims, provide real time information that would address issues raised by all stakeholders: market players, law enforcement agents and regulators.

    NIA said the project woulx also serve as a source of historical data for analysis and benchmarking, thereby providing qualitative analysis of industry performance.

    It is believed that the initiative will enhance transparency and accountability to its stakeholders thereby restoring confidence in the insuring public, create the basis for scientific management of operations in the industry and it would enable the tracking of transactions in the industry.

    Present at the handing over were Chief Vehicle Inspection Officer, Ogun State, Bayo Otuyemi; Permanent Secretary, Ministry of Works and Infrastructure, in the state, Mr Kayode Ademolake; Council member, Nigerian Insurers Association, Mr Sakiru Oyefeso and Director-General, Mr Sunday Thomas.

  • Anchor mulls agency system to boost operations

    Anchor Insurance Company Limited has said it will re-invent the agency distribution system to deliver sales targets, improve efficiency and service delivery.

    Its Managing Director, Ademayowa Adeduro, who spoke at the agency’s retreat in Uyo, the Akwa Ibom State capital, said the strategy would afford the company the opportunity to reflect on its activities and consolidate on certain areas.

    He said the re-invention would further help the company to develop and publicise its service charter in line with the ongoing reforms.

    Adeduro promised that the company would continue to render world-class services to meet public expectations and also contribute towards the up-liftment of the quality of risks mitigation in the country.

    The company’s Head, Brand Management and Corporate Communication, Mr Kehinde Olaniyi, stressed the relevance of e-business in the industry, saying only about six per cent of the country’s population was insured.

    He said the firm is targeting the uninsured youths who are technology inclined through e-insurance.

    A Technical Consultant to National Insurance Commission (NAICOM), Yemi Soladoye, said the agency aspect of insurance in the country, is not developed, and that it is only the brokering channel that has taken root. The brokers focus on the wholesale market, the government’s and the corporate accounts, he added.

    He said the retail market is hardly touched, warning that it is this market that holds the key in Nigeria and that when all chips are down, any insurance company that is not quickly expanding into the retail marketing, would find itself centuries behind because the wholesale market is very small and volatile.

  • ‘How to restore confidence in industry’

    THE Deputy Commissioner for Insurance, National Insurance Commission (NAICOM), Dr George Onekhena, has urged operators to restore confidence in the industry.

    Onekhena gave the advice at the Chartered Insurance Institute of Nigeria (CIIN) seminar in Lagos.

    He said the operators should resolve the unethical practices in the industry in line with efforts put in place by the regulators to reposition the industry.

    According to him, operators must decide to pay every premium and claims promptly.

    “This alone, if we can stand on it, can restore confidence in the industry and bring about its growth in the country,” he said.

    According to him, unfavorable tax regime and delay in payment of premium are some of the challenges confronting the industry.

    Onekhena identified inadequate budgeting for insurance by the government as another challenge.

    He said a dialogue between insurance operators and the government was necessary to proffer solutions to these problems.

    According to him, operators should strengthen their skills, adding that if this improves, some insurance businesses taken away from the industry would be returned.

    CIIN President, Dr Wole Adetimehin, said it was high time the operators reviewed their strategies as the nation’s risk bearers in line with growing customers’ needs, product design and revaluation of products and services value chain.

     

  • ‘Take advantage of group life insurance’

    ‘Take advantage of group life insurance’

    Life assurance companies have been advised to take advantage of the Group Life Insurance Scheme in the Pension Reform Act 2004.

    The President, Nigerian Council of Registered Insurance, Mrs Laide Osijo, gave the advice when the management of Crystalife Assurance Plc, led by the Managing Director, Mrs. ‘Seyi Ifaturoti, visited the NCRIB House in Lagos.

    Osijo said the 27 life companies in the country should evolve insurance policies that would meet the needs of the teeming population as is obtained in the developed countries.

    The NCRIB chief noted that under the Act, every employer of labour is obliged to arrange for a life insurance cover for employees, and make it workable.

    Disclosing that the public sector was complying with the Act, Osijo said there are avenues for ingenious life firms to prospect the numerous private sector workers and take advantage of the Act to grow the industry.

    She said the world over, life specialist firms play major roles in economic development, adding that they possess the required professional competence to conceive life policies or welfare schemes that would, ultimately, benefit employers and employees.

    Osijo commended the on-going synergy between the National Insurance Commission (NAICOM) and the Pension Commission (PENCOM) on group life insurance and annuity, noting that it would boost the industry and improve the welfare of Nigerians.

     

  • ‘Develop micro insurance products’

    A Financial Advisor, Dr Biodun Adedipe, has urged insurance practitioners to develop micro insurance products.

    Adedipe, who is the Chief Consultant, Biodun Adedipe & Associates, told The Nation in Lagos that the industry’s policy emphasises growth and job creation.

    “It is only insurance practitioners that can develop and mainstream micro-insurance products that will benefit from the unexplored opportunities in the business environment,” he said.

    Adedipe said the practitioners should buckle up as such products would benefit more from the enforcement of the policy of ‘no premium no cover’.

    He said its enforcement would also sanitise the industry and insurance markets as well as kick- start the needed freedom of the industry.

    According to him, the issues that arise with the payment of claims when a loss is suffered will be a thing of the past.

    “All policy holders would have paid the exact premium and the insurance companies would not have any excuse as to the actual status of policy when a loss occurs,” he said.

    Adedipe enjoined the practitioners to be up to date with the market dynamics, watch the macro economy and pay attention to key government functionaries utterances into the industry.

    He said these were bound to shape and dictate the focus of the industry in the year.

  • Unpaid premium may kill industry, says Daniel

    The Commissioner for Insurance, Fola Daniel, has warned that unpaid premium could drive the industry under, saying: if left unchecked, delayed or unpaid insurance premium can drive the industry into extinction.

    He said the vexed issue of delayed or unpaid premium has attained an alarming crescendo, threatening to drive the industry into extinction if not curbed.

    “Most insurance companies have been forced to make huge provisions for outstanding premiums in their books on an annual basis, which invariably affects their bottom-line and thus, their inability to make profit, pay dividends to shareholders and attract investments to enable growth. This avoidable situation is unhealthy and dangerous to the industry and it is time to put a stop to it,” he said.

    He said NAICOM could not enforce its new policy directive because the law is neither a creation of NAICOM, nor is it a new regulation.

    It is a statutory provision, which is obligatory on NAICOM to enforce, he said, describing its implementation as a responsibility of the insurance regulator.

    Section 50 (1) of the Act says: “The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance.

    “This is the provision of the law, and until such a time when government deems it imperative to amend the law, NAICOM, being the industry regulator has no other alternative but to implement this law.

    “Our business is to apprise the public on the modalities for the implementation and enforcement of the Insurance Act to avoid gaps in the insurance cover of government’s assets and ensure adequate provisions for insurance in its annual budget.

    He said the Commission has noticed over the years that budgetary provisions for insurance of government’s assets and properties were either inadequate, or in most cases not made at all.

    “Where provisions were made, payments of premium to insurance companies were either delayed for months or the fund redeployed to meet other needs by ministries, departments and agencies of government, which is in clear breach of Section 50 (1) of the Insurance Act 2003,” he said.