The Nation Newspaper

Category: Insurance

  • Agents bicker over commissions, fees

    Agents bicker over commissions, fees

    A CRISIS is brewing between underwriters and insurance intermediaries over commissions and fees.

    The Nation gathered that they are quarelling over what should be their ‘’appropriate” commissions and fees.

    Investigation revealed that the intermediaries – brokers, loss adjusters, agents and risk surveyors – are not happy with their remuneration. It was also gathered that most of the intermediaries’ entitlements are not paid by underwriters.

    It was learnt that the brokers early this year took their complaints on group life commissions to the National Insurance Commission (NAICOM), demanding an increase.

    NAICOM asked them to agree on a fixed rate and get back to it.

    The Nigerian Insurers Association (NIA) and Nigerian Council of Registered Insurance Brokers (NCRIB) were mandated to use a single letter-head to inform NAICOM on the agreed rate.

    It was learnt that the parties’ efforts were unproductive as NIA shunned the meetings. The development compelled NAICOM to peg the commission at eight per cent and mandated the operators to comply.But this is not go down well with brokers.

    President, Risk Surveyors Association of Nigeria (RISAN), Jacob Adeosun, called for a resolution, adding that the inappropriate remuneration of surveyors would lead to exit of experienced practitioners from the industry.

    He noted that survey fees are not paid promptly by underwriters, stressing that the arrears of unpaid fees was capable of affecting the efficiency of surveyors’ service delivery.

    Chairman,Technical Committee of the NCRIB on Market Development and Restructuring Initiatives (MDRI), Siyan Oyebadejo, said poor remuneration of agents by underwriters is threatening the MDRI, a project which is meant to drive insurance penetration.

    He noted that unless something drastic was done, the initiative would fail to meet the industry’s expectations, adding that the committee had recommended to NAICOM, the need to increase the remuneration paid to agents who are the drivers of the initiative.

    He said it was worrisome that graduates engaged as agents were paid pittance, an amount, which could not move them around the market and win businesses, noting that the initiative would only succeed if the agents were well motivated.

  • Mansard Insurance posts N1.22b profit

    Mansard Insurance Plc has recorded an all time high profit of after tax (PAT) of N1.22 billion in the last three quarters of the year.

    The risk bearing firm disclosed this in a statemnt, adding that the amount is about 98 per cent higher than its PAT in the corresponding period in 2011.

    According to the company, its gross premium written rose by 22 per cent from N8.26 billion in 2011 to N10.05 billion in 2012 while profitability rose by 98 per cent in the last three quarters of the year.

    The statement also noted that the company’s net insurance premium revenue rose by 22 per cent to N3.55 billion from N2.92 billion recorded in the corresponding period in 2011. Also the firm’s investment and other operating income rose by 91 per cent to N1.26 billion in the period under review from N662 million recorded in a similar period in 2011.

    Mansard stated that its profit before tax rose by 68 per cent to N1.37 billion from N811 million in the same period last year. The company’s total asset stood at N29.86 billion up from N24.69 billion in 2011, an increase of 21 per cent within the reviewed period

    The company’s Chief Clients Officer, Tosin Runsewe, said: “Our result as at the end of September 2012 validates our leadership position within the industry and shows that we remain on track towards achieving our strategic goal for the year.

    “These achievements are as a result of improving underwriting performance, impressive sustainable growth in investment, and greater focus on cost optimisation without compromising excellent service delivery to our esteemed customers and gains made from the expansion of our retail distribution network.”

    She said with this position, the company expects to meet stakeholders’ expectations by the end of the year.

    Chief Financial Officer, Rashidat Adebisi, noted that the improved indices during the period under review further affirmed the company’s strategic intent of building a robust and diversified retail sales force focusing on the vastly underserved Nigerian retail market.

    The company stated that although insurance receivables rose by 59 per cent to N2.64 billion in the third quarter of the year and also from N1.66 billion in December 2011, it actually fell by 11 per cent when compared to its position as at the end of June 2012 figure of N2.97 billion which was indicative of the payment cycle for very large institutional clients.

  • Activist seeks speedy trial of ex-NAICOM chiefs

    Activist seeks speedy trial of ex-NAICOM chiefs

    A human rights activist, Austin Agu, has demanded speedy trial of the former Commissioner for Insurance, Emmanuel Chukwulozie and the Deputy Commissioner for Insurance (Finance and Administration) five years after they were charged to court.

    In a statement, Agu said a situation where those accused of fraud and misapplication of funds are denied the opportunity to continue with their lives for upward of five years without any serious prosecution does not speak well of the justice system.

    The Economic and Financial Crimes Commission (EFCC), acting on petitions filed by the former Minister of State for Finance, Dr Nenadi Usman, initiated the trial of the top officers of National Insurance Commission (NAICOM) following their suspension by the Federal Government.

    Chukwulozie and Mrs. Ogungbe were accused of spending N170 million without any budget.

    He said the case against the officers was instituted in 2007, adding that since then, care has not been taken to diligently prosecute it. Each time the case comes up in court for hearing, it is adjourned for flimsy reasons, he said.

    Agu said the accused had been suffering untold hardships, because of the poor prosecution of the case.

    He appealed to the courty to discharge and acquit the officers if the prosecution is not ready to go on withthe case.

    “I have followed this fraud case with keen interest since it was instituted by the EFCC over five years ago. Each time the case is called up, the prosecution would fail to produce a key witness or ask for adjournment on flimsy excuses,” he said.

    “While this has continued, the accused have been suffering in silence having been denied their means of livelihood. They should be allowed to go and continue with their lives, look for fresh jobs and run their respective families and business if the government job is no longer there for them,” he said.

    Agu further noted that government runs the risk of being accused of carrying out vendetta should it continue with the trial of the accused without any serious attempts to prove them guilty and therefore called for speedily trial of the accused.

    “Government may be accused of vendetta against the accused if after five years the case is still on without any form of seriousness on the part of the prosecution. I therefore, appeal to the Federal Government and the judiciary to please let the officers go and continue with their lives if nothing is found against them instead of tormenting them for no reason,” he said.

  • CIIN seeks operators’unity, cooperation

    The President, Chartered Insurance Institute of Nigeria (CIIN), Dr Wole Adetimehin, has said the rift among insurance operators is inimical to the industry’s growth.

    Adetimehin, who spoke during a stakeholders’ conference in Ibadan, Oyo State urged the operators to collaborate and move the industry forward.

    He called on the practitioners to have a change of attitude, adding that the industry can only grow when stakeholders are committed to their profession.

    He said: “My observation is that we are loyala to the arms of our industry instead of seeing ourselves as professionals with a common stake; that is, brokers are loyal to Nigerian Council of Registered Brokers (NCRIB), underwriting staff to Nigerian Insurers Association (NIA), Loss adjusters to the Institute of Loss Adjusters of Nigeria (ILAN).

    “We must shed this coat and put up a united front as one profession. Self-development is advocated for the individual and companies should reward the staff adequately when they acquire higher qualifications.”

    He noted that the need for change of attitude and total commitment to the profession can note be over emphasised, adding that integrity and transparency should at all times be the guide for operators.

    “We must refrain from unethical conduct and any infractions should be reported to the institute for disciplinary action to deter others and improve our perception,” he said.

  • ‘Take business interruption insurance serious’

    BusinessES’ failure can be avoided if entrepreneurs and managers take ‘business interruption insurance’ seriously, Raymond Akalonu, General Manager, Group Insurance Dangote Group, has said. He spoke at the Risk Surveryors’ conference in Lagos.

    “Business interruption insurance, Raymond said, “covers the loss of income that a business suffers after a disaster while its facility is being rebuilt.A property insurance policy that most insured businesses take only covers the physical damage to the business, while the additional coverage allotted by the business interruption policy covers the profits that would have been earned. This extra policy provision is applicable to all types of businesses, as it is designed to put a business in the same financial position it would have been in if no loss had occurred,” he explained.

    Speaking on the serious dangers posed to businesses worldwide as a result of natural and/or man- made disasters, such as fire at the work place, flood and others, Raymond said, the best thing to do is take the appropriate steps before the harm occurs.

    Hesaid:“Remember,you wouldn’t want to learn navigation in the middle of the sea during a storm. Successful b usinesses learn from their mistakes and those made by others. Many businesses failed as a result of Hurricane Katrina because they failed to plan for the worst. They did not believe it could happen to them. Consistent focus and consistent action can pay off in the event that an unexpected catastrophic loss event occurs”.

    On how businesses can go about this, he said the best defence against losses is a series of interdependent programmes created by management to identify and control fire, explosion, mechanical and electrical breakdown, and other perils, and to deal with the resulting emergency or contingency.

    To ensure the effectiveness of management programme, he said a standard feedback system must be in place.

    “The effectiveness of these programs must be continuously monitored because the failure of one or more of them significantly increases the potential for loss.

    Raymond said this type of coverage is not sold as a stand-alone policy, but can be added on to the business’property insurance policy or comprehensive package policy. Since business interruption is included as part of the business’ primary policy, it only pays out if the cause of the loss is covered by the overarching policy.

    “With 25 per cent of the population displaced, over N17 billion set aside for resettlement, flood, either man made or as a natural disaster has come to stay as warnings indicate of more perilous times ahead. How prepared are we to take on this challenge?”

    He recalled the fire that gutted the business platform of the Nigerian Bottling Company (NBC), in 2008, which was settled for N8,010,579,302; the one at the Sugar refinery in Kenana, Sudan in 1998, which was settled on arbitration for $108 million, the recent fire in Karachi & Lahore in Pakistan that killed about 315 people and led to a colossal loss of two big clothing facilities and the Dangote Sugar refinery fire incident in July, which underwriters have been advised to make a reserve of over N7 billion.

    He added the Hurricane Sandy in the United States, which he said, destroyed properties worth billions of dollars.

  • NAICOM takes over ailing firms

    NAICOM takes over ailing firms

    • Shareholders hail action

    Shareholders have praised the National Insurance Commission (NAICOM), for taking over some ailing firms.

    So far, the commission has taken over Goldlink Insurance Plc and Alliance and General Insurance.

    The President, Nigerian Shareholders’ Renaissance Association (NSRA), Olufemi Timothy, said with this step, underwriters would now sit up.

    He said: “With the measure taken by NAICOM, underwriters would see the Commission as a dog that can bark and bite. It is a good development that some people are made scapegoats. We have been complaining of uncomplimentary things going on among the underwriters.

    “Now that NAICOM has risen to punish them, they would realise that most of the things they have been doing that they cannot escape with them.

    “The step taken by NAICOM is a good development and it portends a good future for the industry”.

    On why shareholders have been silent over the rot that is being uncovered by NAICOM, he said: “When you talk of shareholders in the insurance industry, you are likely to have 200,000 of us. Where you have 200,000 shareholders, opinions would vary. Some of us who are active have been talking of the misdeeds in these companies, but nobody listened to us. We had been calling on the regulators to look into the accounts of these firms, but nobody cared to listen, but now that we have got somebody who was ready to listen and take action, we are happy that our voices would be adhered to and our complains would be acted upon,” he said

    Secretary, Nigerian Shareholders Solidarity Association (NSSA), Gbadebo Olatokunbo, said the taking over of the companies was good, adding that it would raise the confidence of stakeholders.

    He noted the measure would deter other operators who are carefree in carrying out their responsibilities.

    NAICOM, in a statement, said it has constituted a seven-man interim board of directors to oversee the affairs of Goldlink with effect from November 1.

    It noted that the constitution of the interim board is sequel to the resignation of members of the board of directors of the company following anomalies discovered in the audited financial statements of the company for the year ended December 31, 2011.

    The board is, among other things, charged with investigating the financial reports and corporate governance failures observed in the company’s financial statement for the year ending December 31, 2011.

    The board, which has a six-month tenure, has Mr James O. Ayo, as Chairman; Gbolahan Olutayo, as Managing Director and Mr Adeyinka Olutungase, as Chief Finance Officer.

    Other directors are Ambassador Umar Damagun, Alhaji Sashe Dabana, Prof. Chioma Kanu Agomo and Mallam Abubakar Sadiq Mijinyawa.

    The statement said the development would not affect the firm’s service delivery.

  • ‘Workers save less than 5% for retirement’

    GLOBAL research, consulting and professional development group, LIMRA, has said two-third of middle-incomeAmerican workers save less than five per cent of their yearly income for retirement, .

    In a report, Matthew Drinkwater, associate managing director, LIMRA’s retirement research. said: “These results, while not surprising, are very troubling.”

    “Less than 30 per cent of American workers have a traditional defined benefit retirement plan that could help them pay for their expenses in retirement, so the responsibility for providing the financial resources for retirement lies squarely on the individual. Many Americans will live at least 20 years in retirement, and will need significant savings to ensure their financial security.”

    Overall, four in five American workers are saving less than 10 per cent of their income for retirement. Most disturbing, the largest age group that reported not saving for retirement was those ages 55 and over (26 per cent) – often considered within 10-15 years of retirement. One in four workers ages 18-34 reported not saving at all for retirement.

    While more workers age 35-54 report saving some percentage of their income for retirement, almost one in five are not saving for retirement at all.

    “Optimally, all people should be saving systematically throughout their careers to ensure they can amass the funds necessary to live the lifestyle they wish in retirement,” noted Drinkwater.

    “Many Americans’ plans include delaying retirement or not to retire at all, but our research has found that more than half of current retirees retired before they planned – often involuntarily. It is important that Americans take the steps to prepare for every contingency while they are drawing an income.”

    Most Americans understand that they need to set aside more for retirement. Eighty percent of those surveyed said they needed to save more to be on track for retirement, with a quarter of Americans saying they need to save an additional 15 per cent or more of their income annually. Older workers (age 55+) and women, who represented the highest level of non-savers, were most likely to think they need to save at least 15 per cent more.

    “While economic conditions are clearly challenging Americans’ ability to save for retirement, savings habits have not changed significantly over the past two decades,” said Drinkwater.

    “Over this period, employer-sponsored retirement plans have continued to transition from defined benefit plans managed by employers to defined contribution plans where workers are fully responsible for their retirement funds.

    Our research indicates that workers still need more education and guidance to help them make the right decisions to ensure they have sufficient savings for retirement.”

  • ‘Micro insurance useful for risks management’

    ‘Micro insurance useful for risks management’

    The Commissioner for insurance, Mr Fola Daniel, has advised low income earners to use micro insurance products to manage their risks.

    He gave the advice at a workshop organised by the commission for stakeholders on developing micro insurance in Nigeria in Abuja.

    NAICOM has identified micro insurance as one of the financial instruments that could help in taking the challenges of poverty and other socio-economic burdens facing millions of Nigerians off them.

    Daniel described micro insurance as a market-based mechanism that promised to support sustainable livelihood by empowering people to adapt and withstand the stress.

    According to him, the Vision 20: 2020 described the insurance sector as ‘grossly untapped opportunity with low attendant of market penetration’.

    He attributed the development to sundry reasons, such as the nation’s peculiar environment, limited awareness and the prescriptive nature of the insurance Act 2003 as well as negative public perception by those who are unaware of insurance.

    The Commissioner said: “From empirical findings, it has been proved that low income earners can use micro insurance where it is available, as one of several tools to manage their risks.

    “It is, therefore, expected that the insurance industry would leverage and key into this sector by developing the needed micro insurance products and services tailored to support, protect and assist the low income populace to alleviate poverty.

    “Let me state clearly that micro insurance has been specifically designed for the protection of low income earners against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

    On the purpose of the workshop, which was organised with the commission’s partners, including GIZ of Germany, Access to insurance Initiative, Making Finance work for Africa and International Labour Organisation, the insurance expert said the objectives of the workshop were to access the findings and recommendations of the country-wide diagnostic research on micro insurance and to provide a platform for further in depth discussion among various stakeholders.

  • Govt accused of stalling insurance penetration

    WORRIED by the inability of the government to honour its insurance laws, practitioners have called on the federal, state and local governments to insure their assets. This, they said, will go a long way in helping the sectors’ leadership to deepen the practice of insurance in the country.

    Captains of the industry, who spoke with The Nation, said there is need for the government at all levels to support the industry. They said though the Federal Government has shown some positive interests in the insurance business, appropriate premiums should be made available to pay for government’s covers.

    The President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs Laide Osijo, said the government should not undervalue its assets as has been the practice, adding that there is need for the government to further protect the industry by living up to its responsibility, as the largest insurance client.

    He said the undervaluation of government’s assets is capable of slowing the pace of development of insurance industry.

    Mrs. Osijo said situations where insurance assets are not properly evaluated, leading to inappropriate rates and premium, it could result in the diminution of the growth and depth of insurance penetration in the country.

    She said the government should make it a priority to attract foreign investment into the country in to grow insurance capacity, among other things, and ensure that violation of insurance laws are met with appropriate sanctions.

    Also, the President, Chartered Insurance Institute of Nigeria (CIIN), Dr Wole Adetimehin, called on governments to support the insurance industry by procuring policies to cover their risks.

    He noted that such patronage would help to promote service delivery and enhance international best practices.

    He said there are compelling reasons why the citizenry and governments should take insurance more seriously, adding that Nigerians are under threats from risks emanating from natural disasters, such as floods, rainstorms and security, which have taken their tolls on the citizenry.

    He argued that low insurance contributions to the economy stemmed from lack of necessary infrastructure, which prevent people from buying insurance.

    “With unemployment at an estimated 23.9 per cent in 2012, the insurance business in Nigeria is hardly able to improve on its contribution to the nation’s GDP above one per cent, unlike in South Africa where it is 15 per cent,” he said, adding that the reason for this is because people are apparently laden with costs which are channelled at the procurement of otherwise basic and fundamental needs, such as electricity, water and security.’’

    The President of the Risk Surveyors Association of Nigeria (RISAN), Jacob Adeosun, said if the government has taken the insurance its assets seriously, when crisis arise like the floods that have have ravaged most coastal communities, the insurance industry would have come to their rescue.

    He criticised the situation where the government takes money budgeted for other things to solve or replace state properties when they are damaged, saying the insurance industry would have done that had the government insured the assets and paid premium, accordingly.

  • Insurers: Sandy’s damage hits $10b

    Some insurance companies say they were prepared for Hurricane Sandy, but the same may not be true for flood insurers who are feeling increased pressure as the storm caused more water damage than normally expected in such storms.

    Hurricane Sandy’s overall toll on the economy could be as high as $20 billion, according to estimates released before the storm, with traditional insurers on the hook for about $5 billion to $10 billion of damage. That would make the storm more devastating than last year’s Hurricane Irene in dollar terms, but not nearly as bad as Hurricane Katrina in 2005.

    The National Flood Insurance Program, however, which is administered by the federal government, may be facing some large bills. While most hurricanes produce heavy winds and rain, Sandy brought with it the highest water levels in New York Harbor since the 1960s, causing massive flooding on the city’s streets, subways and buildings. Depending on the extent of the damage, which has yet to be determined, that could be very expensive.

    “I would say the estimates I saw come out before the storm looked low to me,” said Ryan Ogaard, senior vice president of product management at Risk Management Solutions, a California-based company that specialises in catastrophic risk modeling used by insurers. “I don’t think anyone realized what was going to happen with the level of flooding. It really was a worst-case scenario in some places.”

    Insurers have yet to release their damage estimates, and it may take days or weeks to compile the information. But Risk Management and Eqecat, another firm that calculates the industry’s disaster exposure, expect it to be worse than Irene, which cost insurers about $4.5 billion in losses.

    Those figures would have little impact on overall health of the industry, which could potentially withstand damage up to $100 billion, which is twice the tab from Hurricane Katrina, according to Eqecat President Bill Keogh.

    “That’s certainly something the insurance industry can absorb,” Mr. Keogh said. “It would be really hard to do a lot of damage to the industry. It really isn’t getting to the point of stressing the capital structure of the industry.”

    Insurers prepared for the storm over the weekend, sending emergency crews to central locations that were expected to be hit the worst.

    Agents are setting up mobile units where policyholders can come to file claims for the next few weeks. Insurers also will send adjusters out to affected homes to assess the damage.

    Bob Hartwig, president and economist at the Insurance Information Institute, said insurance companies are deploying “armies of adjusters” to affected neighborhoods.