Category: Insurance

The Nigerian Exchange (NGX) has emphasised the need for diversification of portfolios by investors to ensure enhanced return on investment.

Divisional Head, Trading Business, Nigerian Exchange (NGX), Jude Chiemeka, who spoke at the Retail Investors Workshop organised by the NGX and ARM Securities Limited, said as a multi-asset exchange, the NGX had various products for every investor regardless of what their investment goals, risk appetite or return expectations might be, listing the products as equities, fixed income, Exchange Traded Funds and derivatives.

He explained that portfolio diversification is the process of investing one’s money in different asset classes and securities to minimise the risk of the portfolio.

“Just imagine what would happen if you invested all your money in a single security. Everything would be great as long as the stock’s performance is good. But in case where the market takes a sudden U-turn, the likelihood of significant loss of investments is increased. The fundamental purpose of portfolio diversification is to minimise the risk on your investments; specifically, unsystematic risk. This is risk of significant loss is further compounded if the stocks belonged to the same sector like manufacturing because any news publication or information that affects the performance of one manufacturing stock could as well affect the other stocks in a similar way.

“If an investor chooses the same asset, he can diversify by investing in different sectors and industries. There are so many different industries and sectors to explore with exciting opportunities like pharmaceuticals, information technology (IT), consumer goods, conglomerates, financial, agricultural and so on. Furthermore, NGX is a multi-asset exchange that provides a wide range of asset classes for investors to leverage. Investors could also add other investment options and assets to their portfolio,’’ he added.

Mutual funds, bonds, Equity Traded Funds as well as other asset classes such as real estate and pension plans are other investments they can consider. Investors are encouraged to ensure that the securities vary in risk and follow different market trends. A typical example is the general trend where the bond and equity markets have contrasting movements. By investing in both these instruments, investors can offset any negative results in one market by positive movements in the other.

“A sound diversification strategy, adding Index or bond funds to the mix provides ones portfolio with the much-needed stability. Also, investing in Index funds is highly cost-effective as the charges are quite low compared to actively managed funds. At the same time, investing in bond funds hedges your portfolio from market volatility and uncertainty and prevents gains from being wiped out during market volatility,” Chiemeka said.

He assured that NGX would continue to prioritise investor education to ensure that investors understand capital market investments and mechanisms, as only then will they be empowered to make sound investment decisions.

THE Nigerian Council of Registered Insurance Brokers (NCRIB) has appealed to the Federal Government to enforce compulsory insurance.

Its President, Mr. Rotimi Edu, spoke at this month’s NCRIB Members’ Evening hosted by African Alliance Insurance Plc in Lagos.

Edu stated that enforcement was still at its low ebb, and that ythe government’s intervention was urgently needed.

He said some of the fake sellers of motor insurance had their offices in some local government secretariats.

Aside from loss of revenue, he said the criminals had created a bad image for the industry.

He noted that most of the unattended claims in motor insurance were victims of fake certificates.

He said: “It was recently reported that the Nigerian insurance industry loses over N160 billion yearly to fake motor insurance racketeer. It is, however, disheartening to note that an industry which had been contributing less than one per cent to the gross domestic product, in spite of its huge potentials, loses such whopping amount of money to fake vendors who contribute nothing to the growth of the nation.

“Some of the insurance policies flying around local government are just putting money into people’s pocket. I am certainly aware that the Nigerian Insurers Association deployed technology in curbing proliferation of fake certificates. But I am of the opinion that enforcement is still at its low ebb.

“We appeal to the government to wade into the situation and curb the perpetrators. Also, my plea goes to Vehicle Inspection Service (VIS) to see this as a clarion call. Your organisation can as well increase your enforcement strategies to include Insurance Certificate in such a way that any motorist without genuine Motor Insurance Certificate should be made to face sanctions as stipulated in the law.

“Our economy continues to drag because we are not paying attention to the issue of insurance.”

Also, the Managing Director/Chief Executive Officer, African Alliance Insurance Plc, Joyce Ojemudia, said brokers crucial are to driving insurance penetration.

She emphasised that NCRIB  is a  a partner worthy of doing business with.

“Ours is a mutually rewarding relationship and as a business, our goal is to improve on this with all our stakeholders whilst delivering best-in-class insurance services to all our policyholders,” she added.

For his contributions to insurance, the Chairman, Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi, has been inducted into Marketing Edge Hall of Fame.

At the event in Ikeja, Lagos, 21 personalites were  inducted.

The Publisher/CEO of Marketing Edge, John Ajayi, said the inductees had distinguished themselves in their fields.

He said each of the inductees had provided a crucial nexus between creativity and the economy, and that these innovative leaders believe creativity.

Guinea Insurance has launched a self-service motor insurance e-portal that allows customers to purchase motor insurance products in less than two minutes, the Managing Director, Guinea Insurance, Ademola Abidogun, has said.

Abidogun, who spoke during the launch in Lagos, said the portal would provide the public  access to real-time purchases.

He stated that the portal would give customers the freedom to buy authentic and reliable policies.

He said: “Consumer behaviour is shifting and favouring effortlessness more than before, whether by simply engaging with a business quickly and conveniently or by easily accessing the most relevant information to meet their individual needs.

“Our customers nationwide would be able to choose and make informed decisions to purchase motor insurance products that best suit their insurance needs.’’

Disturbed by the slow rate of insurance penetration and slow growth in the industry, stakeholders have begun moves for change. Omobola Tolu-Kusimo reports.

For the industry to grow, the National Insurance Commission (NAICOM), Chartered Insurance Institute of Nigeria (CIIN) and other stakeholders have listed some steps for operators.

These include risk-based capital approach, enhancement of investment in digital capabilities and automation, capacity development programmes, and products development.

Some stakeholders also believe increased awareness and the Petroleum Industry Act, among others, would create opportunities for the industry.

They spoke at the Business Outlook Seminar organised by the CIIN, with the theme ‘Economic policies of the government in 2022: Challenges, issues and prospects’.

The Commissioner for Insurance, Mr Sunday Thomas, who spoke on ‘Strategies aimed at cushioning the effects of the COVID-19 on the operations of the Nigerian insurance industry and the way forward,’ said the NAICOM ensured increased visibility for the sector.

He said the Commission has also continued to implement effective policyholder protection schemes, market development as well as strengthened regulatory oversight and risk management.

“The commission reviewed  policyholders’ protection schemes and improved use of the security fund for settlement of insolvency and distress; improved enforcement of market conduct rules; and monitored degree of customer satisfaction and enhance insurance awareness by policyholders in Nigeria,” Thomas said.

The President/Chairman of Council, CIIN, Sir Muftau Oyegunle, described the forum as an avenue where key players in the industry and financial subsector converged to review the business environment  in the past year and strategise on the way forward for the industry.

He said they examined the national budget, reviewed the thrust of the fiscal and monetary policies of the government and estimated how these would affect the insurance industry.

The Managing Director/Chief Executive Officer, Dr Oladimeji Alo, said there were untapped opportunities in the sector.

“This is one of the reasons foreign investors are coming into the  industry. There is the need for insurance companies to increase awareness on claims paid by the industry, and attract the public with friendly retail insurance products,” he added.

The Group Chief Executive Officer, United Capital Plc, Peter Ashade, implored operators to focus on oil sector, stressing that the Petroleum Industry Act would create more opportunities for the industry to harness.

He urged them to increase their capacity on agricultural insurance as there are huge opportunities in the sector too.

He called for proper management of data, noting that the quality of their decision making was driven by that of their data.

The President, Chartered Insurance Institute of Nigeria (CIIN), Sir Muftau Olakunle Oyegunle, has been conferred with a honorary Doctorate in Insurance (Honoris Causa) by Joseph Ayo Babalola University (JABU).

Conferring the degree on  Oyegunle at the university’s 12th Convocation in Ikeji Arakeji, Osun State, the Vice Chancellor, Prof. Kola Sonaike, said Oyegunle has distinguished himself in his commendable service to humanity.

By the conferment, Oyegunle would be admitted into the Hall of Alumni of the university.

Oyegunle stated that he was proud to be associated with such a reputable institution that is committed to implementing the three cardinal responsibilities of a university which are teaching, research and community service.

He noted that since he joined the insurance industry June 3, 1985, through Leadway Assurance Company Limited, he had remained a student of insurance and had devoted his working life to the development of the business of insurance and risk management as his contribution to the growth, development of the country and humanity.

Cyber, political risks and violence, and macroeconomic developments are likely to be the top three business risks in the year, the Allianz Risk Barometer 2022 report has shown.

Cyber perils will be of the biggest concern for companies in Nigeria, Africa and Middle East, South Africa and worldwide in the year, the report added.

The threat of ransomware attacks, data breaches or major Information Technology (IT) outages worries companies even more than business and supply chain disruption, natural disasters or the COVID-19 pandemic, which affected firms in the past year.

The report, which is outcome of the 11th Allianz survey, states that pandemic outbreak dropped from first risk to ninth position as the majority of companies were less concerned and feel adequately prepared for future outbreaks.

Besides, political risks and violence will still still be a major concern as they move from fifth to second.

Chief Executive Officer (CEO), Allianz Global Corporate & Specialty (AGCS), Joachim Mueller said business interruption might  remain the key risk theme for this year. Also, building resilience is becoming a competitive advantage for companies.

Globally, cyber incidents top the Allianz Risk Barometer for only the second time in the survey’s history (44 per cent of responses), Business interruption drops to a close second (42 per cent) and Natural catastrophes ranks third (25 per cent), up from sixth last year. Climate change climbs to its highest-ever ranking of sixth (17 per cent, up from ninth), while pandemic outbreak drops to fourth (22 per cent).

The yearly survey from AGCS incorporates the views of 2,650 experts in 89 countries and territories, including CEOs, risk managers, brokers and insurance experts.

Mueller said: “Business interrupted’ will likely remain the key underlying risk theme in 2022. For most companies, the biggest fear is not being able to make their products or deliver their services.”

2021 saw unprecedented levels of disruption, caused by various triggers. Crippling cyber-attacks, the supply chain impact from many climate change-related weather events, as well as pandemic-related manufacturing problems and transport bottlenecks wreaked havoc. This year only promises a gradual easing of the situation, although further COVID-19-related problems cannot be ruled out. Building resilience against the many causes of business interruption is increasingly becoming a competitive advantage for companies.”

“Violence, changes in legislation and regulation rising concerns for businesses in Nigeria. Political risks and violence moved from fifth to second following #EndSars in 2020. Changes in legislation and regulation moves up four places to fourth in the country. Fortunately, large scale terrorism events have declined drastically in the last five years.”

Head of Global Political Violence and Hostile Environment Solutions at AGCS, Bjoern Reusswig, however, said: “Civil unrest has soared, driven by protests on issues ranging from economic hardship to police brutality which have affected citizens around the world. And the impact of the COVID-19 pandemic is making things worse – with little sign of an end to the economic downturn in sight, the number of protests is likely to continue climbing”, he said.

 

As the price of crude oil in the international market continues to rise, the Federal Government should use the surplus to either reduce the budget deficit or build infrastructure, Chief Consultant, B. Adedipe Associates Limited, Dr. Biodun Adedipe, has said.

Adedipe, an economist, who spoke at a forum for Insurance and Pension Correspondents in Lagos, said the price of crude oil has been favourable to the economy.

He said: “The price of crude has been favourable to us. It is either the Federal Government uses the gain to reduce the deficit, or alternatively, to build infrastructure, which, ultimately, will also increase government revenue.

“In pre-election years, politicians spend a lot of money and that creates liquidity pressure.You have so much money circulating and that stands to put pressure on prices, so it will be expected this year that there will be inflationary pressure.

“In recent years, imports value in Nigeria had become far greater than exports. Yes, we export crude oil, condensates, as well as associated gas. In spite of this, we have been importing more than exporting and that has been creating employment for other countries to the detriment of our country.

‘’Also, there is nothing wrong with borrowing. But don’t borrow to buy food, don’t borrow for consumption. If you must borrow, borrow for anything that is investment in nature. We produce crude oil but don’t refine.”

On the sector’s growth, Adedipe said: “For it to grow, the government also needs to be responsible to its insurance obligations which talks about paying premium.’’

 

 

The International Credit Rating Agency, Global Credit Rating Limited (GCR), has, in its recent rating carried out in 2021, confirmed Sovereign Trust Insurance Plc (STI) as an A rated underwriting firm in the insurance sector.

STI’s Head of Corporate Communications and Brand Management, Segun Bankole in a statement said before now, STI was rated A- due to its high claims paying ability, among other requisite considerations, for the rating.

The rationale behind the rating from A-to A, according to GCR, is based on the company’s renewed financial position and stable outlook from a statutory solvency perspective in the last three years.

It will be recalled that the underwriting firm in 2019 increased its shareholders’ funds from N4.1 billion to N5.6 billion through the rights issue that was carried out in that year, in line with the capitalisation agenda of the company in wanting to occupy a leadership position in the insurance sector in Nigeria.

The agency said the company’s solvency margin improved remarkably, and it is very much in compliance with the proposed regulatory capital requirement for the industry.

The report further stated: “Despite the effects of the COVID-19 pandemic on businesses and the fallout of the nationwide protest in Financial Year (FY) 2020, the impact on underwriting performance was well absorbed by an improvement in the insurer’s scale efficiencies, with operating expense ratio registered at 37.0 per cent in FY20 against the 53.19 per cent that was recorded in FY19.”

Also, investment income maintained an upward trajectory over the review period, thereby supporting return on revenue at 10.5 per cent in FY20 as against 8.5 per cent recorded in FY19. GCR expects STI’s liquidity metrics to remain sound on the back of conservative asset allocation and the planned additional capital injection.

STI has a strong direct business generation capacity, which has over time stimulated retail segment penetration. The premium mix is considered well diversified and can still be improved upon in the years ahead.

Except there is a multi-sectoral collaboration to tackle the challenges facing the Universal Health Coverage (UHC), Nigeria may not achieve the key Social Development Goals (SDGs) by the end of this decade, The Nation has learnt.

Besides, health will not be a fundamental human right for Nigerians as expected in the SDGs.

Speaking during a virtual training of reporters by Leadway Health, its Head, Medical Services,  Dr. Temitope Falae, in a paper entitled: “Universal Health Coverage (UHC) – Challenges and recommendation”, said the UHC emphasises,  not only what services are covered, but also how they are funded, managed and delivered.

He added that while the SDGs have a commitment to deliver UHC, progress has not been made by moves to ensure that the key SDGs will be met by 2030.

Offering recommendations to the challenge, he said people-centered health care systems delivering UHC are crucial to future health and prosperity in sub-Saharan Africa and are an achievable goal with better political commitment.

He also said multi-séctoral collaboration to address the challenges in the roadmap to UHC attainment is imperative to ensure that health is truly a fundamental human right.

Relying on the World Health Organisation (WHO) figures, he said Nigeria spent a relatively small proportion of its national income on health – about four per cent of Gross Domestic Product (GDP) as at last year as against the 15 per cent in the 2001 Abuja Declaration.

Also, the country’s out-of-pocket expenditure on health is among the highest in the world at 77.23 per cent of total health expenditure and the highest in Africa.

In all, private health insurance accounts for less than three per cent of the population.

Falae said: “A voluntary National Health Insurance Scheme (NHIS) exists in Nigeria but covers less than five per cent of the population. Nigeria’s informal economy, which accounts for more than 60 per cent of its total GDP, is still largely uncovered.

“To bridge the coverage gap, several states have commenced the establishment of State Health Insurance Schemes. At present, about 19 states are at various stages of their implementation journey. Anambra, Delta and Lagos states have, particularly, made significant progress enrollment.’’

He maintained that there is no single approach to achieving UHC, noting that the strategies would depend on the circumstances.

“Improving UHC requires addressing building blocks of health systems with a proper roadmap from policy, implementation and monitoring. Under the health systems, system building blocks have to do with service delivery, health workforce, information; medical products, vaccines and technologies; financing; and leadership governance.

“This should lead to access coverage and quality safety efficiency sustainability. The overall goal and outcomes would be improved health level and equity; responsiveness; and social and financing risk protection,”he added.

Falae highlighted the challenges of health financing as underfunding, skewed funding allocation in favour of secondary and tertiary care as against primary healthcare, and poor public financial management.

“The recommendations include diversification of sources of funding; increased funding for primary healthcare services through public private partnership; state funded private health insurance in collaboration with private HMOs; better funding/incentives for health providers in rural communities; and fraud prevention and systems to check corruption,” he said.

On healthcare providers, he said they were set to jettison  their contracts with private health insurance companies across Nigeria.

He said limited political commitment to health and primary healthcare, poor policy formation, and lack of clarity on roles and responsibilities at various levels of the system were major problems in the system.

 

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