The Nation Newspaper

Category: Insurance

  • NAICOM may review MDRI programme

    The National Insurance Commission (NAICOM) may review the Market Development and Restructuring Initiative (MDRI) designed to enhance the industry’s growth, The Nation has learnt.

    The Commissioner for Insurance Fola Daniel, who disclosed this in a telephone interview, said NAICOM will next year review the guidelines of the initiative to align it for better performance.

    He said the review is one of the commission’s programmes for the new year.

    It was learnt that the review became necessary due to the failure of the industry to achieve projections envisaged for it in the first phase where a target of N 1 trillion premium income was to be attained.

    Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye said delay in the implementation of the initiatives affected the projections set to be achieved, adding that the programme was meant to start in 2009, but never took-off until 2011.

    He noted that to recover the lost period, there should be a shift in the deliverables to make-up for the difference between the time of the strategy crafting and implementation. He said the N1 trillion premium income projection was to be achieved with a four-year strategic plan, adding that there is no way the target would be achieved, with the commencement of implementation of the initiative a year to the set deadline.

    He said: “Most people are reading the strategy document and not relating it to when implementation took off. If there is a projection that in four years we will get N1 trillion premium and from the implementation document, we were to start in 2009, we had what we are to achieve in 2009, 2010, 2011 and 2012. So, N1 trillion is in four years. If implementation started in 2011, it will be a case of shifting the deliverables forward based on the difference on the ground between the strategy crafting and the implementation”.

    He said the initiative is remarkable in the history of the industry.

    He noted that the initiative cannot be wished away as it has brought about many developments adding that efforts by NAICOM to reposition the industry through micro-insurance, takaful and more are strategic plans stated in the MDRI document.

     

  • ‘Why we can’t get oil, gas accounts’

    • Firms blame NNPC for blocking them

    Insurance brokersare groaning under the weight of hurdles placed on their path for oil and gas accounts by the Nigerian National Petroleum Corporation (NNPC).

    A source, who preferred not to be named, said the hurdle, restrains insurers from qualifying for risks allotted to local brokers by the Nigerian Content Policy.

    The source said 34 brokers were engaged for the NNPC lucrative account last year, but the number was reduced to 14 this year. The number may also go down next year, it was learnt.

    President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs Laide Osijo, said the corporation has subjected brokers to enormous demands.

    She said the operators are worried because they thought they would acquire more knowledge as they grow on the business, but regretted that the reverse is the case now, as they are not given the opportunity to improve their knowledge on the job.

    She said: “Honestly, in the area of oil and gas, the Nigerian Content Policy made provision for local operators to be trained, so that the business could be handed over to us. But what the oil and gas operators are doing is contrary to what is expected.

    “What they are asking for was never envisaged when the law was provided.The NNPC is really putting more demand on brokers. We are worried because we thought we would acquire more knowledge as we grow in the business, but reverse is the case.

    “We have undertaken oil and gas training at home and abroad, but with the restrain by the oil and gas operators, we can never put to test what we learnt. With the things they are asking for, hardly can 10 brokers or even five qualify for the business. If they are doing it intentionally, where do we then put the local content law?”

    She said the operators were supposed to be trained so that the foreigners would hand over the businesses to them, adding that if the operators are not given the practical training and exposure, how they would learn.

    “The oil and gas operators have been unfair, but we will continue to strive until we get there. The first time they did it we had 34 brokers engaged, and the next one we had 14. We thought after getting 34, we would have higher rate, but they went and reduced it. This year, they put so many conditions and at the end only few brokers will also be engaged.

    “It is unfair to the local content law. The local content law is there to protect us and put food on our table, but the way they are asking for some many things, it is really disturbing. We will continue to strive to meet their demands.’’

    Laide further said: “Honestly, the brokers are complaining. They are not happy about it; most of them have paid so much to certified many documents. Corporate Affairs Commission (CAC) gave us certification, but NNPC still want us to recertify it and they would give us short notice within which they want us to implement these things”.

    She noted that many brokers have written petitions to her office about the roadblocks placed by the NNPC for qualification, adding that the corporation is not given brokers fair treatment.

  • Framework to protect insured coming, says commissioner

    Framework to protect insured coming, says commissioner

    The National Insurance Commission (NAICOM) is taking steps to reposition the industry to protect policy holders and serve the low-income earners, the Commissioner of Insurance, Fola Daniel, has said.

    Speaking at a forum in Lagos, Daniel said the commission has reviewed the industry’s claims management process which culminated in the development of a draft framework.

    “The framework when operational will enthrone robust insurance consumer/policy holder’s protection, fair treatment of customers, transparency and disclosures”, he said.

    According to the Commissioner, this will go a long way in improving public confidence in insurance.

    He said the steering committee that would facilitate micro-insurance development in the country will include all the stakeholders such as regulator, the Nigeria Insurers Association (NIA), NCRIB, Corporative societies, micro finance institutions as well as non-government organisations.

    Daniel also added that collaboration will also take place under the auspices of the national financial inclusion strategy that was introduced recently by the Federal Government.

    He said,”the process for the appointment of a national micro –insurance coordinator to drive for financial inclusion using micro-insurance is ongoing. The expert will transfer knowledge and will coordinate all the partnership between all the stakeholders in micro insurance value chain.”

    According to the Commissioner, the development of a reliable micro insurance framework is moving close to completion. He said the framework will provide clear rules for the would-be operator and proactive micro insurance consumer protection requirements.

    In recognition of the peculiar nature of micro insurance, the Commissioner said that the framework would be simply supervisory, reporting, underwriting and licensing processes and identification of certain incentives for micro insurance model selection, fees and commission level for intermediaries.

    He said: “We shall ensure that the rules are flexible and are designed in such a way that encourages new and innovative products that relate to the needs of the small and medium enterprises and at affordable cost.”

    According to NAICOM Boss, an effective micro insurance distribution channel is a major concern. The issue, he added could not be overemphasize considering the fact that micro insurance cannot be effectively accessed using the conventional intermediaries such as the brokers and agents.

    He said there are a variety of alternative intermediaries and channels that that can be involved in micro insurance distribution. The distribution network appears to be highly concentrated in a few cities with a focus on corporate accounts and mandatory insurance using alternative channels and distributors that already have links with the uninsured in rural and urban areas is vital for sustaining development of micro insurance while offering value and convenience to clients,” he added.

  • NAICOM’s proposed ‘no premium, no policy’ excites insurers

    The insurance community is excited over the plan of the National Insurance Commission (NAICOM) to implement the ‘No premium No policy’ from Monday.

    To insurers, the proposal was a right step in the right direction.

    It was taken to reposition the industry and make it contribute to the development of the economy.

    The Managing Director, Royal Exchange Prudential Life, Mr Wale Banmore, said the implementation of the policy will have effects on the insured, the insurer, as well as on the economy.

    On the insured, he said when the insurance firm collects premium on time and invests same, when it is time to pay claims, the insurer will not have any reason to drag its feet. He said, “for instance if someone insures a car for N1 million on the first day of a month and pays just N100, 000 and on the tenth day of that same month the claim becomes due, the insurance company will not have any option but to pay the insured the N1 million irrespective of the fact that the insured paid just N100,000 premium 10 days ago. The insurer must pay the N1million. So the insurance companies need the premium from the insured as early as possible to pool together and invest so as to be able to carry the risks.”

    On insurance firms, he said they are all over the world thrive on putting the little amount of premium paid by the community (the insured) together, and investing same. The policy when fully operational will affect the insurers positively, he said, adding that in the instance of governments that normally pay in areas, he said they will have no option than to adjust.

    He said.“The law is that you must pay before cover is granted. All over the world, insurance covers are only extended after premium has been made. It is only in Africa, we always try a way around an issue that will not take us anywhere. The government is the biggest consumer of insurance products but the insurance industry is determined to implement the policy because this is the right way to do it.”

    Also, the Managing Director of Union Assurance Limited, Mr Godwin Ejembi Odah, said it is not that the government does not pay premium, it is only that it takes time. They don’t pay as at when due but the government does pay.

    “The government takes time in everything. For instance, the budget that is the basis for everything does not usually become operative immediately because of the process that it goes through. The National Assembly has to approve budgets before they can become operational, that is why government takes time before paying premium but it does pay.

    “But we hope that there will be changes because the era of extending insurance cover on credit is over.” He said when insurance companies get their premium on time, invest same and run their businesses profitably, they will be able to pay dividend to their shareholders and the economy will be the better for it.

    Commissioner of Insurance, Fola Daniel, said as from January 1, 2013, all insurance covers shall only be provided on a strict, ‘no premium no cover’ basis to all who seek such cover, be they governments or otherwise. He said the day premium is paid is the day cover is provided, “no cover on credit anymore,” he stated.

    The Commissioner said “any insurer who grants cover without having premium in advance, or premium receipt notification from the relevant insurance broker, shall be liable to a penalty of N500, 000 for each cover so granted, and in addition, may have his licence suspended.

    He said: “Irrespective of the period of insurance, insurers shall ensure that at any point, they have received directly or indirectly, through the insurance broker the full premium in advance for cover being granted.”

    Daniel observed part of the reasons insurance firms are unable to settle claims promptly could be attributed to the delay, or non-payment of premium by the insured.

    According to him, “most insurance firms make huge provisions for outstanding premiums in their books annually, which invariably affects their bottom-line and thus, their ability to settle claims as and at when due to the insured, make profit, pay dividend to shareholders and attract investments to enable growth”.

    He noted that the situation is unhealthy and dangerous to the insurance industry and unless it is halted, it is capable of driving the industry into extinction.

    Daniel accused government at all levels as the major culprit as far as insurance on credit is concerned. We have noticed that budgetary provisions for insurance of government assets and properties are either inadequate or in most cases not made at all.”

    “Besides, where the provisions are made, payments of premium to insurance companies are either delayed for months or the funds 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.” From now January 1,2013, no insurance cover shall be extended government or any other person without adequate premium paid.

    Managing Director, Royal Exchange Life, Wale Banmore, said the policy will succeed and that corporate bodies were making calls to inquire on payments for their policies.

    Banmore said before the policy was announced, most of them will not make any enquiry until about the second quarter of the year.

    He said he was optimistic the policy will succeed.

  • Early budget execution good for insurance

    Early implementation of the budget would enable operators meet their projections, President Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs Laide Osijo, has said.

    She told The Nation that proper implementation of the budget would impact the industry positively, adding that operators performance would improve tremendously if premiums are paid as at when due.

    She called on the government to put adequate compensation for the insurances of its properties, which have been made compulsory, adding that delay in implementation of the budget is affecting the insurance industry negatively.

    She said: “When proper premium is paid on group life scheme, there would be an increase in the income of insurance industry. We have been advocating early implementation of the budget. We have so many premiums that are outstanding due to late implementation of the budget. “Premiums cannot be paid if the budget is not released. Therefore, if the budget is released on time, definitely, insurance companies would have their premium at the right time and all the risks would be covered adequately. No Premium No Cover policy is ignored, because of delay in the implementation of the budget. The delay in implementation of the budget is affecting the insurance industry negatively, if the government could implement the budget early and make all necessary payments, insurance companies would benefit a lot.”

  • Law Union & Rock Insurance pays N1.2b claims

    Law Union & Rock Insurance pays N1.2b claims

    Law Union & Rock Insurance Plc has paid over N1.2billion in claims to its policy holders within the first three quarters of 2012, according to the firm.

    The claims payment cuts across portfolios in the underwriter’s product offerings in general business.

    A breakdown of the payment shows that Fire accounted for 41.95 percent with N535.9million; Motor vehicle claims was N355.2million (27.8 per cent); marine and aviation N160.9million (12.60per cent); general accident N105.8million (8.28 percent); engineering N82.8million (6.48 per cent) and oil and gas N35.5 million (2.78 per cent).

    The company said the total claims paid on bonds amounted to N1.2million, representing 0.10 percent.

    Following Skye Bank Plc’s divestment from the company, Law Union & Rock Insurance Plc was acquired by a consortium of investors comprising Alternative Capital Partners (ACAP) and Swede Control Intertek.

    The company has effected some strategic initiatives that would enable it provide first class insurance services to the public.

  • We’re not closing any insurance firms, says NAICOM

    The National Insurance Commission (NAICOM) has no plan to close any insurance firm as reported by Business Monitor International (BMI) Limited in its Nigeria Insurance Report, the Commissioner for Insurance Fola Daniel, has said.

    He told The Nation that NAICOM has no reason to close any underwriting firm, adding that the commission is committed to strengthening the firms for the protection of policyholders.

    In its report BMI said there are some insurance companies that the regulator would shut. It noted that NAICOM is also keen to improve capitalisation and standards among the 15,000 insurance agents and 350 brokers.

    It said: “Over the years that BMI has been monitoring the Nigerian insurance sector, the story has remained the same even as premiums appear to have grown.

    “An industry that is largely ignored by foreign multinationals with South Africa’s Metropolitan being an exception, consists of a large number of extremely small, predominantly listed indigenous insurers.

    “As is explicitly noted in the discussion by NAICOM, the regulator, of the objectives for its Market Development & Restructuring Initiative (MDRI), there are a number of bogus insurance companies that the regulator is keen to close.

    “The BMI report further added that till now, there has been no sign that the MDRI has had a substantial and positive effect on insurance penetration or popularity in a country where 94 per cent of people are completely uninsured.”

    It noted that in relation to the MDRI, it believes that total premiums this year would be about one third of the N1 trillion that was envisaged by NAICOM.

  • NIA seeks Presidency’s assistance

    The Nigerian Insurers Association (NIA) is planning a meeting with the Presidency to discuss issues affecting the sectors; its Chairman, Remi Olowude, has said.

    Olowude, who stated this in Lagos, said in line with the association’s determination to achieve its objectives, it has become imperative to take deliberate steps towards closer interaction and strategic partnership with all stakeholders, particularly the major arms of the government.

    He said the Governing Council of the association would table issues, such as the key roles of insurance to the socio-economic growth and development of the nation.

    He said how the industry and the government could collaborate in poverty alleviation, would also be considered, adding that the need to give the industry the opportunity to contribute to the formulation of certain government policies; the industry representation in appropriate government committees is important.

    He noted that efforts would also be made to ensure the restructuring and strengthening of the association’s secretariat for effective public sector liaison and monitoring of the political and legal environment as it affects insurance, adding that this has become necessary as recent events in the financial sector had shown, no insurance company was too big to fail or too small not to matter.

    He said: “Insurance companies are institutional investors which invest in equities and securities. When these entities fail, insurance companies are faced with the challenges of honouring their obligations to their customers. But, unfortunately, there is nothing in place on the part of the government to bail out the insurers in times of trouble. This is food for thought.

    “Similarly, we intend to initiate interactive sessions with the appropriate committees or organs of the two chambers of the National Assembly to discuss issues, such as restrictive laws on insurance practice, multiple taxation, insurance awareness and penetration, development of oil and gas industry.

    “The NIA will also strengthen relationships with the different organs of the Judiciary by organising annual or bi-annual Insurance seminars for judges and the leadership of the Nigerian Bar Association.

    “The seminars will focus on developments in insurance law in Nigeria, and ensure that the judiciary, legal profession, the regulators, and practitioners in the insurance industry as well as the media have a mutual understanding of insurance law and practice. The more people understand the law, the less the courts are inundated with avoidable suits.”

  • Insurers urged to look beyond govt’s assets

    INSURERS have been urged to look beyond government’s premiums and focus on the retail end of the market.

    The Managing Director, Riskguard-Africa Nigeria Limited, Mr Yemi Soladoye, stated this in Lagos.

    This is the only way insurance industry can grow and unhealthy competition reduced.

    He said the concentration of operators on government‘s assets has created problems in the industry. He listed some of the problems to include rate cutting, undermining the industry operating rules and guidelines thereby creating friction among operators.

    He said the operators were engaging in unhealthy competition because they boxed themselves into a narrow distribution outlet, which is the brokerage market, stressing that in any situation; price becomes the only competitive strategy, when people are not adding value to their business.

    He said: “That the clients are asking for reduced price every year, and the brokers are doing the same, it is a manifestation of the fact that they are saying that they have not seen any competitive strategy. The insurance companies concentrate on premium growth, as against market expansion. The future and the solidity of the operators can only come from market expansion, he said.

    The Riskguard chief also said: “All the operators want is to ensure that their premium for this year is higher than what it was last year, and they are ready to do anything to achieve that. If their market position last year was number six and they move to number five this year, their board would laud their effort, not minding what they did to get there.”

    Soladoye said companies’ cost of doing business is indeed very high while the claims ratio is quite low.

    “These are pointers to the fact that insurance companies need something new and better. The issue of unhealthy competition will be getting worse, until they look for better, cost effective and non volatile distribution channels”, he said.

    He said by retail operations he means companies adopting strategies such as Bankassurance which is having collaboration with banks is a retail channel. It also means engaging in strategic alliances with organisations, like Shoprite, Megaplaza and others. Collaborating with cooperative societies and more. It is so wide but until they adopt it, the market cannot expand, he said.

    Soladoye said the adoption of retail marketing should be made compulsory, stressing that operators are already feeling the bite of the narrow distribution outlet they are using at the moment.

    He said most of the problems operators face – high cost of doing business, premium reduction, unhealthy competition, are all manifestations of the fact that they are using narrow distribution method. He added that if they have an alternative, they would do business on their own terms, but when they do not have, they have to achieve whatever anybody tells them.

    He noted that the operators are not creating alternative distribution outlets to expand their operations, adding that the industry can never grow when the operators scramble for the few businesses available.

    “I think what they need to do is to go back to the drawing board to re-examine their operational strategies. Each company needs to sit and draw strategy on how to develop their business and adopt retail marketing strategy. When this is done, issues of unhealthy competition, premium reduction and others will stop,” he added.

  • Standard Alliance boss Emerhor gets awards

    Standard Alliance boss Emerhor gets awards

    The Group Chief Executive Officer of Standard Alliance Group, Olorogun O’tega Emerhor, has been conferred with three awards in Lagos and Abuja for his contributions to the growth of the nation’s economy.

    He received The Entrepreneur of 2012 at the AES Excellence Cub’s Third Annual CEOs Dinner/Awards Nite in Lagos.

    Speaking at the presentation of the awards, a former Minister of Industries and Chairman of the Club, Dr. Nike Akande, noted Emerhor’s strides in business and his contributions to the growth of the nation’s economy.

    Others who also got awards at the event included Alhaji Yusuf Maitama-Sule; Mike Onolememen, the Minister of Works, Dr. Christopher Kolade; Rabiu Kwankwaso, Kano State Governor and Mrs Adejoke Orelope-Adefulire, the Deputy Governor of Lagos State.

    Olorogun Emerhor has also been recognised by the University of Nigeria Alumni Association and the Nigerian Chamber of Shipping with a Lifetime Achievement award and an award as a major contributor to the growth of the Chamber at their separate events in Abuja and Lagos.