The Nation Newspaper

Category: Insurance

  • Insurance penetration to hit 30% by year end

    Insurance penetration to hit 30% by year end

    The rate of penetration of insurance in Nigeria which stands at just six per cent of the population is expected to hit 30 per cent by the end of the year, the Director-General, Chartered Insurance Institute of Nigeria (CIIN), Adegboyega Adepegba, has said.

    Explaining why the rate of insurance acceptability is low in Nigeria, Adegboyega said one of the causes is the poverty level among the larger population.
    He said people consider insurance last in their scale of preference due to the level of their income, adding that the industry wwould take its place in the financial sector when the economy and living standard of people improved.

    “The major cause is the level of poverty in the country. There is poor economic down turn, because of this, insurance comes last in the thing most people what to do. When you take your salary, you probably think of paying your house rent, take care of your car, feeding and paying your children’s school fees. So, you probably think about insurance last.”

    As long as we still have this level of poverty, we will still have a lot of challenges for the insurance sector. But as the per capita income increases, then insurance will have its own fair share of what should come to it. The economy must improve for the industry to thrive.”

    The industry’s present penetration stands at six per cent, while its density (purchase) is N1,200, premium volume, N200 billion, and contribution to the Gross Domestic Product (GDP) is 0.7 per cent. He said operators hope to increase penetration from six to 30 per cent by the end of this year, grow the density (purchases) from N1200 to N7500, premium volume from N200billion to N1 trillion and contribution to the Gross Domestic Product (GDP) from 0.7 per cent to three per cent.
    The Commissioner for Insurance, Fola Daniel, said the National Insurance Commission (NAICOM) was poised to providing necessary frameworks that will aid the achievement of the vision, adding that the vision was predicated on compulsory insurances.

    He said the commission would ensure the plugging of leakages in the industry which deterred the growth of the sector, noting that NAICOM was collaborating with practitioners to ensure that the sector takes its place in the nation.

    “What my colleagues and I at NAICOM have done is to look at ways the industry could leverage on existing laws to plug many of the leakages in terms of insurance premium. If the implementation is as envisaged, there is no reason the premium income benchmarks of N1 trillion will not be met and surpassed. He added that the commission’s desire was to develop and build an industry with high capital and standard.

    Analysing events in the industry in the last ten years, the NAICOM chief said insurance professionals left the industry to half-baked managers and industry leaders followed the lead of quacks into all sorts of unprofessional conduct that combined to expose the industry to ridicule.

    “Rather than strive to sanitise and restore the pride of our profession, our professionals chose to take the easy path of ‘if you cannot beat them, join them’, indulging in unethical practices.

  • Ex-annuity agent sentenced

    Insurance Commissioner Dave Jones last week announced that Alvin Leroy Black, 75, of Penn Valley, was sentenced in the Nevada County Superior Court to 180 days in County Jail and five years of supervised probation, for violating Penal Code Section 487(a), Grand Theft.

    Black must also participate in theft counseling and has been ordered to pay $204,777.93 in restitution. Black pled guilty to a single felony count of grand theft in March of this year.

    According to Investigators from the California Department of Insurance (CDI) Investigations Division, between July 2001 and August 2004, Black sold his 80 year-old victim seven annuity policies with a deposit amount totaling $1,535,000 without fully disclosing the terms of the annuities and without her full understanding of what she was purchasing. Black earned $87,336 in commissions for transacting the annuities.

    The investigation revealed that in March 2003, Black formed a California non-profit corporation, in the name of the victim, without the knowledge or consent of the victim. Black had the victim sign documents to change the beneficiary and the ownership of all her annuities to the foundation without her knowledge of what she was signing.

    Black submitted the change of ownership forms and change of beneficiary forms to the insurance company also without her knowledge or consent. Black eventually cashed three of the policies for a total amount of $224,703.89, causing the victim to incur surrender charges of over $26,919.74 as well as income tax liabilities.

    Black received and deposited the money into the foundation’s bank account and used the funds for his personal gain. The victim was never given access to the foundation’s bank account.

  • NIA yet to deploy electronic cards

    The Nigerian Insurance Asso-ciation (NIA) is yet to deploy the over 500,000 electronic card readers two months after launch because of logistics.

    A source said the organisation has been sorting out some logistic challenges, adding that efforts were being made to ensure that the desired result is achieved.

    He said the association wants to ensure that the gadgets get to the various states and people they are meant for, stressing that the deployment would commence soon.
    Former NIA Chairman Olusola Ladipo-Ajayi said the project would help stem fake policies carried by motorists and help security agencies – Nigeria Police and Federal Road Safety Commission (FRSC) – ascertain genuine vehicle licensces and weed out fake insurance certificates.

    He said the data device was aligned with that of the FRSC to forestall harassment of policy holders by security officers, adding that the device will block the enormous financial leakages in motor insurance due to fake operators.

    He said: “Our data is linked to the FRSC data base so that they can verify the authenticity of insurance certificate that will be presented to them by motorists. We are deploying the electronic card readers to the security agencies to enable them know vehicles that are properly insured.

    “The most important thing is for us to get it right. It is not how soon, but how well, because every existing data must be captured, tested and be error proof. This is because we do not want any body to be denied passage by the police and other security agents when he or she has a genuine vehicle insurance cover.

    “What this means is that all policies that are still running now will be captured into the system, so that when a policy holder is accosted, he or she will not be accused of carrying a fake or counterfeit document, whereas the individual is carrying a genuine document. This we are presently doing.”

    Ladipo-Ajayi said the data would provide a mechanism for verification of insurance certificates issued or presented as evidence of insurance, an enabling environment for submission of statutory returns online and also provide access to relevant policy, underwritten and claims information.

    He noted also that the initiative will enhance transparency and accountability to stakeholders, thereby restoring confidence in the insuring public. It will create the basis for scientific management of operations in the industry and enable the tracking of transactions in the industry.

  • Couple charged with insurance fraud

    Attorney General Scott  Pruitt’s Workers’ Compensation and Insurance Fraud Unit has filed a charge against an Oklahoma City couple for allegedly conspiring to falsely obtain insurance money.

    Shake Haque, 33, and wife Nadeea Hossain, 39, were charged in Oklahoma County District Court with one count of conspiracy to commit a felony.
    According to the charge, the following events took place:

    Nov. 29, 2011 – Haque was involved in a morning car accident while driving his wife’s car. He allegedly gave the other driver an expired insurance policy number. Later that day, his wife bought a liability only policy for her car.

    Hossain contacted the other driver and allegedly asked her to say the accident happened the following day, Nov. 30.

    Dec.6, 2011 – The insurance company contacted the other driver and she told them that the accident occurred on Nov. 29 and records from the Midwest City Police Department confirmed the date of the accident.  Dec. 13, 2011 – The accident claim was denied.

    The Attorney General’s Workers’ Compensation and Insurance Fraud Unit is the only Oklahoma law enforcement agency dedicated to the investigation and prosecution of workers’ compensation fraud. The Unit also helps raise public awareness of insurance fraud in Oklahoma.

  • Cornerstone, Linkage others mull merger option

    • Director, Corporate Relations, Guinness Nigeria Plc, Mr Sesan Sobowale; Managing Director, Mr Seni Adetu; Chief Economic Adviser to the President, Dr Nwanze Okidegbe, and Special Assistant to Chief Economic Adviser, Dr Ogho Okiti, during a courtesy visit by the Managing-Director to the Economic Adviser in Abuja.

    About six insurance firms are engrossed in merger talks to boost their performance, The Nation has learnt.

    Last week, the
    (NSE) said it received a proposed merger plan between Cornerstone Insurance Plc and Linkage Insurance Plc.

    Mr Wole Tokede, the spokesperson, in the weekly activity summary, said the institutions had notified The Exchange of their proposal to merge into one.
    The Exchange said the merger would result in the transfer of assets, liabilities and undertakings, including real property and intellectual property rights of Linkage Insurance Plc to Cornerstone; and the cancellation of the issued shares of Linkage.
    The Exchange said: “The application for the merger which is under consideration will however result in the transfer of all assets, liabilities and undertakings, as well as real property and intellectual property rights of Linkage Insurance Plc to Cornerstone Insurance Plc, the shareholders of the Scheme Shares of Linkage Insurance Plc so cancelled will be entitled to 30 per cent shareholding (approximately 74 percent of the current shareholding in Linkage) of Post-Merger Cornerstone Insurance Plc.
    Commissioner for Insurance Fola Daniel, who confirmed the merger plans, said several firms were fine-tuning theirs. He said the new twist by operators aligned with the National Insurance Commission (NAICOM) transformation programme.
    He noted that the commission over the years has been striving to grow companies that can compete favourably in the global sphere.
    He lauded the merger plans of Cornerstone Insurance Plc and Linkage Assurance Plc.
    Daniel said: “We want bigger companies; we want bigger players’ not faint firms.
    The merger plans between Cornerstone Insurance Plc and Linkage Assurance Plc is in line with our reforms programme.
    “There are several companies that are looking at merger, at least there are half a dozen that are doing so presently.”
    He urged policy holders and other stakeholders to look forward to a more vibrant industry that would be made up of companies with adequate strength and consumer friendliness.
    President, Chartered Insurance Institute of Nigeria (CIIN), Dr Wole Adetimehin, said the move is to build mega companies, adding that companies have realised that they cannot harness more of the opportunities in the industry with solo effort. He noted that reforms initiated by the government and NAICOM have opened up more businesses for the industry.
    “Presently, there are some silent moves where some people are planning to merge to become mega companies,” he said.
    Director-General, Nigerian Insurers Association (NIA) Sunday Thomas, said NAICOM has put in place structures to enable companies have the required capital that can underwrite the type of risk they cover, adding that some companies have begun consultations on how to raise their capital to enable them key into the opportunities provided by the Local Content Act, especially in the oil and gas insurance business.
    “The capital base may not be adequate, but I am aware that companies that want to operate within the Local Content are making efforts to shore-up their capital. Also, NAICOM is working very hard to put in place risk-based supervision. And one of the fundamentals of risk-based supervision is risk-based recapitalisation.
    “Risk-based recapitalisation measures the type of business in relation to the capital to back-up the business. Some companies may not be there now, but they would not be allowed to operate beyond their capacity.
    I think NAICOM is doing a good job in that direction. For the industry, efforts are being made to shore-up capital and of course, there have been discussions about mergers and how companies can be bigger, because companies have realised that there is beauty in being big. If they are big, they will be able to increase their capacity to retain more businesses and that will impact the economy through job creation,” he added.

  • Insurance penetration low in Nigeria, says FBN Life boss

    Insurance penetration in Nigeria is low with Life Insurance below 0.3 per cent and non-life slightly above 0.5 per cent, Managing Director, FBN Life Assurance Company Plc, Val Ojuma, has said.

    Speaking during an interview in Lagos, he said the National Insurance Commission (NAICOM)
    and industry operators were working together to increase insurance education and awareness among the public. Also, the regulator is encouraging operators to redesign the various products offerings to make them more consumer friendly.

    “ The challenge of distribution remains daunting with poor state of infrastructure for premium collection. Overall, most operators have become aware that the size of the uninsured public offer great potentials for premium growth and will therefore increase penetration,” he said.
    He said FBN Life Assurance Company Plc, a subsidiary of FirstBank of Nigeria Plc, strategy right from inception is to offer customised products to customers at the least cost.

    He listed some of the company’s retail products to include Flexi Savings Plan, Flexi Cash flow, Flexi Education Plan, Extended Family Support Plan.

    Ojuma said the firm’s approach would attract more insurance consumers, build confidence, increase market penetration, enhance industry contribution to overall economy, and position the sector for global competitiveness.

    “The company, which is the latest arrival in the insurance industry, having got its licence in 2010, is excited about the reception of its products by insurance consumers, stating that its impetus has awakened old and complacent players in its line of business,” he said.

    He said the firm had always met and sometimes exceeded its standard in claims payment, making claims payment within 24 hours.
    Ojuma said the company’s products have received very wide acceptance, much to its surprise and delight, pointing out that all have been designed with the consumers in mind, and to address specific gaps in existing product offerings in the market.

    According to him, the company is taking advantage of its Financial Advisers and the extensive network of FirstBank of Nigeria to reach potential customers.  “We are now able to bring insurance closer to potential customers. We have held several seminars in Lagos and are extending various educational programmes to schools and associations across Nigeria, to enhance the public understanding of insurance,” he said.

    He said the company is not yet where it wants to be in terms of service delivery, as there is always need for improvement. However, he said that the firm’s service delivery will improve significantly before the end of the year.

    He said the firm’s products have been well received and we have brought some new excitement into the industry. “The old operators, whom seem to have been complacent, have been awakened by our impetus. Our shareholders have shown a lot of understanding and our directors have supported our strategies,” he said.

  • Company launches private health insurance exchange

     Flexible Benefit Service Corporation (Flex) has launched its ‘Insure XSolutions’ private health insurance exchange. The private exchange promotes a defined contribution funding model that gives uninsured employers a way to set their own budget and assist employees with health care expenses.The Insure XSolutions web platform provides an online insurance marketplace where employees can shop, compare and apply for insurance plans that fit their personal needs.

    Available in select markets, InsureXSolutions is an ideal solution for employers currently not offering employee benefits. Employers simply allocate a fixed amount of funds for each employee.

    Employees can then login to the InsureXSolutions web portal for access to online quoting and comparison resources for individual and family insurance plans from various national and regional insurance companies. Once employees find the right plan, they use the InsureXSolutions online marketplace to directly apply for health insurance, Medicare, short-term insurance and/or vi
    sion insurance.