Category: Insurance

Kano State’s population  has shown that the state is a critical stakeholder in increasing insurance penetration and growth, the Commissioner for Insurance/Chief Executive Officer, National Insurance Commission (NAICOM), Olorundare Sunday Thomas has said.

Thomas, who spoke during a meeting with top government functionaries in Kano on the implementation of compulsory insurances in the state, said it is on this premise that they urged the  government to set the pace for the north to embrace insurance, especially Takaful Insurance (otherwise known as Islamic Insurance) as an alternative to the conventional insurance to cater for sentiments of religion and tradition.

The partnership, he said, is an opportunity to assist the people when they needed it most and for the financial services sector to also increase financial inclusion which is one of the cardinal thrust that has been a forefront policy of the Federal Government for a sustainable  development and lifting families out of abject poverty.

He lauded Governor Abdullahi Umar Ganduje for aligning with their objective to boost insurance penetration in the north.

The commission has three agenda in Kano. They are: to build a regional office; domesticate the laws on compulsory insurances; and set up a  committee on the implementation of the compulsory insurances.

Thomas said the Insurance Act 2003 and other relevant Laws of the Federal Republic made six products insurances mandatory.

He said: “The six compulsory insurances are third-party motor insurance in respect of mechanically propelled vehicles that ply the public roads; all buildings under construction that are more than two floors; public, buildings, including schools, offices, hotels, hospitals, shopping malls etc.; professional indemnity for medical practitioners and hospitals; and group life insurance cover by employers for employees where there are more than three persons; and annuity for retirees as provided under the Pension Reform Act 2014”.

He stated that the compulsory insurance would enhance the development of insurance culture.

He further said the commission is monitoring Nano, Micro, Small Enterprises (NMSMEs) after  its workshop in Kano and the interest generated.

“The implementation of motor vehicle third party insurance and other compulsory insurances as contained in the terms of reference of the committee with the state government is indeed a welcome development and it is expected to change the narratives by moving Kano State from its 11th position in the gross premium ranking to be among the first three states in the federation.

“Kano State is a commercial centre with huge population and business potential, the adoption and enforcement of the compulsory insurances will, no doubt, have a multiplier effect on insurance premium, employment opportunities, the standard of living of the people and the internally generated revenue of the state. It is my belief that the committee will work out a fashionable mechanism that will ensure the state to be a role model to other states in the country in the area of insurance penetration.

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“I urge the committee to also look into the recurrent fire inferno in different markets across the state which have been causing so much economic havoc on our traders and the government. One of the cardinal objectives of insurance is to protect insurance service consumers against such disasters by creating the needed awareness that will forestall occurrence and where the unexpected happens compensation will be paid to victims to minimise its impact. Having the markets and goods insured is going to ensure stability and comfort for our people and also save the government some cost that ordinarily would have gone in compensating traders.”

The commissioner listed some of the benefits of insurance to include creation of a source of Internally Generated Revenue (IGR) for Kano; reduction in government’s exposure in event of disaster that may affect the citizens of the state by shifting the burden to the risk-bearers (insurance companies); financial compensation to citizens who may lose their properties or become disabled in event of occurrence of insured accidents/disasters etc; Provision of assistance on Fire-Fighting Equipment for the State Fire Service; Job/employment opportunities for citizens of the state; and Free Risk Management Education and Enlightment programs for the citizens of the state”

He assured the government and people of Kano State that with introduction of Islamic insurance (Takaful) and Microinsurance for small businesses, the state as a commercial nerve will not be let down by the insurance industry, we need you as much as you need us. We must let everyone around us know that insurance is something you buy when you seem not to need it because it will be too late to buy when the unforeseen occurs and you may regret not buying it.

“It also imperative for the government to always factor insurance whenever it is considering disbursement of funds either to farmers or traders in its poverty alleviation programs etc. it is only with insurance that the government can guarantee business sustainability and revolving of funds for the future thus providing a safety net for the NMSMEs against unforeseen circumstances while securing millions of jobs and wealth creation.

“There is need for the joint committee to consider the issue of collapsed buildings that have continued to be one of the problems in our big and major cities. The state agencies that approve and monitor construction should be given mandate to look into this matter and collaborate with other agencies like the Town Plannning Authority, Fire Service, Police etc and relevant professional associations like COREN some of which should also be co-opted into the Committee. This will ensure that provisions of the law regarding the insurance of public buildings against 3rd party liability and all buildings under construction that are above 2 floors are strictly adhered to.”

With what I have seen and the interest shown by the state government, I know that the state will lead by example by ensuring that it adequately protects its assets and liabilities by effecting appropriate insurance cover, he added.

FBN General Insurance, in partnership with Supersaver Supermarket, has launched a customer loyalty insurance scheme as part of its strategies to deepen insurance penetration.

Supersaver Supermarket is a leading  community supermarket. Its partnership with FBN General Insurance is targeted at establishing a mutual business relationship between the companies and the benefiting customers.

The scheme, which offers gift vouchers to Supersaver customers on attainment of N100,000, also offers the customers an FBN General Insurance Personal Accident cover that ranges from a cumulative value of N600,000 to N3.4million for  one year, depending on the option.

Some of the benefits of the partnership for Supersaver include increased customer base and retention of the existing ones; and increased growth rate and spread for supersaver as a result of word-of-mouth referrals and testimonials.

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According to the insurer, the minimum benefits of the personal insurance cover for customers of Supersaver Supermarket, covers death, permanent disability, medical, and burial arrangement for a year, after issuance.

At the launch, the Managing Director of FBN General Insurance, Mr. Bode Opadokun, expressed his delight with the deal.

He  urged customers to take advantage of the partnership to enjoy its  benefits.

He said: “We are delighted to launch this proposition in partnership with Supersaver. These two unique brands have not only added value aside the regular household items purchased from the supermarket, but have collaborated to make provision for additional personal security for people through insurance in an unpredictable security environment.

“I want to assure our customers and stakeholders that FBN General Insurance will continue to leverage on diversified business model to ensure they are satisfied at all times.’’

AIICO Insurance Plc is set to explore opportunities across East and West Africa and maximise gains from a new concept known as embedded Insurance, its Managing Director/Chief Executive Officer, Babatunde Fajemirokun, has said.

Fajemirokun, who spoke with reporters in Lagos, said with N62 billion gross written premium in 2020, which was the highest in the  sector, AIICO is not resting.

He said they had revised their vision and that the company’s board had given the management the approval to look beyond Nigeria insurance space and explore opportunities across Sub-Saharan Africa.

He said: “Despite that Nigeria has one of the lowest penetration rate in Africa, we still believe that in terms of our business models to improve the level of diversification, is important to look outside.

“We still very much at preliminary stages, but we are reviewing other markets to see the opportunities for us to expand into those markets but we have not concluded yet.

“Our view is that when we look at some of these other digital places that have come into Nigeria in digital banking at various other segments, one of the reasons why they are getting the valuations that they are getting is because is it an African thing. Africa is diversifying the business sufficiently to be able to command a premium on the value of the shares.

“If you look at markets such as Kenya and other markets in east Africa there is a lot of innovation going on in those markets. Kenya, for instance, has one of biggest in terms of digital instruments. It will be good to explore some of those types of opportunities in those markets,” he posited.

He said the firm is looking at East Africa, West Africa not really the North, adding that there are interesting opportunities that the firm is looking to explore within those markets.

Divisional Head, Shared Services, AIICO Insurance, Olusanjo Shodimu, said the firm is also enlarging it frontiers in the retail market space through embedded underwriting.

“We have adopted two approaches to managing micro insurance. What we are doing is seeking partnership by identifying people operating within the space of business we want to do. There is a new concept called embedded insurance, that is partnering people with large customer base and putting insurance on their platforms,” he said.

 

African Alliance Insurance Plc has paid N475 million claims to customers, the Managing Director, Joyce Ojemudia has said.

In a statement in Lagos, Ojemudia said the claims were part of a larger N7.5 billion claims paid in the year.

She noted that the company paid N1.23 billion in individual life claims; N1.36 billion group life; N626 million takaful; N25.2 million esusu payouts as well as N4.35 billion in annuity payments.

She reaffirmed the company’s commitment to satisfying her teeming policyholders.

She said: “At African Alliance, we are in the business of paying genuine claims as and when due. This is more important as a new year commences with many uncertainties. For us, we have promised we will be with our customers for life.

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“The firm has instituted a seamless claims process which includes fortifying the claims unit with agile and nimble claims experts enabled by technology to join the team on ground. This has resulted in a faster processing time for claims. As we commence this year on a good note, we are reassuring our customers that we won’t renege on our commitment to paying claims as due.

“Incorporated in 1960, African Alliance is widely regarded as one of the strongest and most experienced life insurance specialists in these climes. Operating out of our headquarters in Lagos and 18 branches nationwide, the ISO certified firm recently demonstrated its ambitions in the retail space with the opening of two new branches to aid penetration.”

The Lagos Chamber of Commerce and Industry (LCCI) has urged government at all levels to patronise insurers.

Its President, Mrs. Toki Mabogunje, who made the call during the Nigerian Council of Registered Insurance Brokers (NCRIB) conference in Lagos, stated that risk management and business continuity have become critical factors in business sustainability.

She noted that there were concerns about uncertainties and risk exposure that portend dangers for the post-COVID-19 pandemic era.

She, however, advised the sector practitioners to rise to the task of providing cover for policy holders.

She urged the government to  patronise insurers to grow the economy.

NCRIB President, Mr Rotimi Edu, urged Nigerians, especially business owners and exhibitors, to always patronise brokers to avoid claims denial.

Edu, however, advised Nigerians to patronise only registered insurance brokers.

He said the Council was working to create awareness and deepen insurance knowledge among Nigerians.

He said: “The era of claims denials has far gone pass. With more awareness about the importance of insurance brokers in insurance value chain, Nigerians would get best professional advice and go through seamless process when buying insurance policies and processing claims payment.

“I am happy that we have taken insurance further from where it was and taken it closer to the doorsteps of Nigerians.”

The Nigerian insurance industry continues to pursue various targets with minimal result in 2021. OMOBOLA TOLU-KUSIMO writes on the low and high points of the regulator, the National Insurance Commission (NAICOM), and operators.

Insurance in Nigeria remains fragile and realising the potentials of the fragmented sector has been difficult.

The number of uninsured Nigerians is among the world’s largest within prospective insurance markets.

According to the National Insurance Commission (NAICOM), this is as a result of its inability to enforce the compulsory insurance laws and lack of cooperation among insurance operators in the country.

But all hope is not lost for the industry regulator as it believes the battle to grow the sector’s potential can be achieved.

In the course of the year, the Commissioner for Insurance, Sunday Thomas, had in January this year, said the commission would move with its plans on different policies and initiatives to deepen insurance penetration thereby ensuring that more Nigerians and assets are insured.

Most importantly, he was optimistic that the N1 trillion target set for using the Market Development and Restructuring Initiative (MDRI) goals will be met.

This is not minding the challenges before the regulator in whipping the operators into line, ensuring that all claims including COVID-19 and #EndSars are paid.

Other objectives for the commission this year, Thomas said, include consolidating the sector’s capital, Human Capital Development, Financial Inclusion, Bancassurance initiative, Life Annuity, New Insurance Law, African continental free trade agreement, Improving efficiency in the supervisory processes, among others.

 

 Low points

 

Further findings from sources in the industry who spoke on condition of anonymity revealed other low points of the industry during the year as ineffective enforcement of ‘No Premium, No Cover’; lack of enforcement on insurance of all building under construction that are more than two floors and all public buildings including schools, offices, hotels, hospitals, shopping malls etc.; motor insurance; inconclusive recapitalisation; among others.

As a result of lack of enforcements, trillions are being lost to insurance businesses, going by pension business alone that has generated over N13 trillion assets within 17 years by the pension sector which was cut out from insurance industry.

Presently, the insurance industry can only boost of about N500 billion, despite targeting N1 trillion since 2010.

According to the National Bureau of Statistics, insurance penetration to our Gross Domestic Product (GDP) remains at 0.3 percent.

Similarly, out of about 12 million registered vehicles, only 2.5 million have genuine insurance cover according to the Nigeria Insurers Association (NIA).

 

‘No Premium, No Cover’

 

Despite the hype on the enforcement of ‘No Premium, No Cover’ by the regulator, findings show that some brokers are still not remitting premiums as when due to insurance companies.

The brokers rather withhold premiums collected from insured in the bank to yield interest for themselves, thereby causing delays in claims payment by insurers when the need arise.

This is against the ‘No Premium, No Cover’ policy put in place by the regulator.

The “No Premium, No Cover” rule is expected to ensure that no insurer grants cover without fully receiving the premium or a premium receipt from the relevant broker.

 

Recapitalisation

 

The Nigerian Insurance Industry ranks 62nd in the world with $1.64 billion premium representing 0.2 percent of premium collected globally in 2018, according to the Nigerian Stock Exchange (NSE) in its 2019 report.

The report stated: ‘’When compared to other jurisdictions, the insurance industry is relatively small and ranked 62nd in the world with a total premium volume of $1.64 billion dollars. The total Nigerian insurance market accounted for only 0.2 percent of the global premiums in 2018.

On penetration and density index, the report stated: “Nigerian insurance industry currently stands at 0.3 percent which is relatively low compared to other jurisdiction, while total density of the insurance sector is currently at $6.2 and lags behind its African counterparts.”

However, the report noted that the insurance penetration of 0.3 percent, is less than one 10th of that of India with similar GDP per capita, stressing that this is a significant un-tapped potential.

The report further stated that the total amount raised by the industry through the capital market in the last five years amounts to N36 billion from 2015 to 2019, while total amount raised during the first and second recapitalisation equals to N8.1 billion and N280 billion, where bank recapitalisation stood at N654 billion.

The Chief Executive Officer, NSE, Oscar Onyema said that it is expected that recapitalisation and consolidation, should present new opportunities in private equity  deals as well as increase public offerings.

He said: ‘’An estimated capital of N200 billion is expected to be injected into the Nigerian insurance industry post-recapitalisation with a 400 percent increase in the minimum capital required for life, 333 percent for non-life, 360 percent for composite and 200 percent for re-insurance.

“While I am optimistic that this directive by the industry regulator would enhance performance, bring about efficiency, innovation and profitability, the industry needs significant support to unleash its growth potential.

‘’At the NSE, we see close parallels between this recapitalisation and that of the banking sector in 2005. The massive growth in the banking sector can be attributed to successful capital raised through the capital market.”

Also speaking at the event, Director-General, Nigerian Insurers Association, NIA, Mrs. Yetunde Ilori agreed recapitalisation will strengthen the capacity of the indigenous companies.

This is the right time for the industry to increase its share capital to strengthen its capacity and operation. We need to change our business models, we need to look at how we can make money, and this would include cutting costs, she said.

On his part, Executive Director, Wapic Insurance, Mr. Bode Ojeniyi said that one of the issues the industry faces is premium flight.

According to him, with the capital increase, the industry will witness increase in her premium income.

The Commissioner for Insurance, Sunday Thomas while speaking with journalists, said the recapitalisation exercise was necessitated by Identified Assets Liabilities mismatch and to avoid imminent systemic collapse and solvency crisis in the insurance sector.

Thomas said the principles of Capital Adequacy and Solvency entail an objective and consistent “valuation of assets” in a transparent and prudent manner.

He said: “It is also required that assets have to be appropriate, objectively valued and sufficiently realisable. Capital Adequacy and Solvency regimes are necessary to address assets and liabilities match”.

He stated that in the course of supervisory review and analysis, the commission observed that the symptoms and causes of a number of ailing insurers with a possible consequence of failure can be attributable primarily to factors that include risks arising from macro-economic environment, high inflation and interest rates  with consequential effect on the value of insured assets over the years, among other issues.

Unfortunately, the recapitalisation of the sector seems to have hit the rocks following litigations against the regulator by some shareholders and operators.

 

Market Development

 

The primary mandate of the market development unit is to develop insurance market with the objectives of deepening insurance penetration in all the States of Federation, with the clear goals of promoting market efficient, fair, safe and stable Insurance market for the benefit and protection of policyholders.

Meanwhile, only Kano State has commenced implementation processes of compulsory insurance.

 

High points

 

The commission was able to open online regulatory portal thereby banning manual submission of requests/application and develop human capital.

 

Industry Portal

 

NAICOM commenced online operations of its activities in September this year after several years of works on a portal.

The commissioner said its operations has transmited from manual to online processing and all operational activities or issues concerning insurance institutions that requires the commission’s attention, comment and approval are to be submitted and processed via the portal called NAICOM Licensing System.

Consequently, all insurance institutions operations were directed to NAICOM Portal for submission and processing of all requests such as certificate of registration/renewal; approval -In-Principle (AIP); product authorisation; micro insurance; takaful insurance; letter of request; financial statement approval; enforcement action; governance and complaints issues amongst others.

 

Human Capital Development

 

NAICOM has identified poor quality of human capital as part of symptoms and causes of a number of ailing insurers possible consequence of failure

According to the Commissioner, there is inadequate human capital for underwriting, claims and investment management; insufficient actuarial services leading to inability to recruit and retain quality personnel; inadequate training and manpower development.

The commission pursued the issue of human capital development with operators by making arrangement to have as many actuaries as the industry can have in the industry because we know the role of actuaries in risk assessment. This is one profession that is lacking in this part of the world.

“We have committed huge resources to actuarial development, in collaboration with the Chartered Insurance Institute of Nigeria (CIIN), through the College of Insurance and Financial Management, though the entire process has been affected by advent of the COVID-19”, he noted.

 Insurance Consolidated Bill, 2020

 

The commission has been seeking for the passage of the Insurance Consolidated Bill, 2020, to drive the development of the insurance sector.

Thomas who made this known during an Insurance First Law & Impact Consulting Webinar Series said realising the potentials has been difficult with the sector fragmented and in need of consolidation.

He said: “Nigeria has used policy interventions in the past to try and increase the rate of insured customers but execution of these policies has proven challenging as the long-awaited increases in minimum capital requirement is yet to be completed.

“To say the least, enormous opportunities abound in the Nigerian insurance sector and we have so many compulsory insurances that one can hardly find in any other jurisdiction. The problem has been enforcement and lack of cooperation among operators. With the advancement and deployment of present-day technology it is expected that all compulsory insurances will be adequately enforced.”, he added.

Linkage Assurance Plc has donated kits to Lagos Metropolitan Area Transport Authority (LAMATA) for its highway managers working on the Declared Roads Networks across Lagos State.

At the presentation at LAMATA office, its Managing Director/CEO, Mr. Daniel Braie, lauded LAMATA for the projects it has executed since inception and its great achievement under the Managing Director, Mrs. Abimbola Akinajo, an engineer.

Braie said the firm was prepared to forge a greater alliance with LAMATA to actualise its Corporate Social Responsibility (CSR) objectives in Lagos State.

Mrs. Akinajo thanked Linkage Assurance Plc for the donation and stated LAMATA’s readiness to collaborate with the firm.

Braie also said as part of its CSR projects, Linkage Assurance Plc was committed to improving the standard of living of Nigerians by making the environment safe and more liveable.

Aside extending sponsorships to the Down Syndrome Foundation and Children Living with Cancer Foundation recently, his firm has  supported government efforts to contain COVID-19 pandemic.

Other CSR projects by Linkage Assurance Plc include donation of branded nose masks, face shield and hand sanitizers to schools; donation towards Bayelsa State Polo Club Inauguration and drugs to flood victims; donation to fundraising for 300-seater lecture theatre at the Lagos State University; and to Kanu Heart Foundation, among others.

The Nigerian Council of Registered Insurance Brokers has strengthened its collaboration with British Insurance Brokers Association (BIBA), its President, Mr. Rotimi Edu, has said.

According to a statement by the Council, Edu, during his visit to BIBA in London, said there were many areas of collaboration between the NCRIB and BIBA in the light of unfolding challenges post Covid-19.

He noted that the NCRIB members would leverage the expertise of BIBA members in areas such as oil and gas, risk management and strategic leadership.

On the forthcoming BIBA Conference, Edu said the Council’s delegates would attend to take advantage of the focus of the conference.

Responding, BIBA Chief Executive Mr. Steve White congratulated Edu for emerging the president of the Council and reaffirmed BIBA’s readiness to share knowledge and data with the Council when and where necessary.

Edu was joined by Dr. Funmi Babington-Ashaye, managing director, Risk Analyst Insurance Brokers, and Lanre Laoshe of Leverage Insurance Brokers.

Board members and company executives can be held liable for an increasing range of scenarios, a report by Allianz Global Corporate & Specialty (AGCS) has shown.

According to AGCS Annual Report, today’s market volatility, with the increased threat of asset bubbles and inflation, the prospect of a growing number of insolvencies due to the pandemic environment, together with rising scrutiny around the environmental, social and governance (ESG) performance of companies and the urgency for robust cyber resilience are key risks for directors and officers (D&Os) to watch in 2022.

It stated that risk managers and their directors and officers insurers should also closely monitor potential exposures to US derivative actions and other forms of litigation, while also not underestimating the challenges around increasingly popular Special Purpose Acquisition Companies (SPACs), annual D&O report.

The  Global Head of Financial Lines at AGCS, Shanil Williams said in the report: “The actions and culture of organizations and their directors and officers are coming under heightened scrutiny from a wide range of stakeholders, with litigation risk a primary concern.

“This comes against the backdrop of a stabilizing D&O marketplace, although capacity is still tight in some segments and many companies would like to buy more limits than the industry can offer. The market remediation has advanced, including our own portfolio at AGCS, and this will gradually ease the pressure that some of our clients are facing.

“We are adopting a cautious and disciplined underwriting approach and need to remain wary about the current volatile business environment and closely monitor loss trend patterns. However, the D&O insurance space is slowly, but surely, offering opportunities for profitable growth again in selected pockets – and we are eager to pursue these”, he added.

In advancing its commitment to driving entrepreneurship through the upskilling of the youth, Leadway Assurance Company Limited has donated a state-of-the-art Entrepreneurship Development Centre to the Federal University of Technology Akure (FUTA) Akure, Ondo State.

The edifice, built to improve the learning experience of students, is equipped with a world-class information technology facility, laboratories, lecture theatre and a standard amphitheatre, seminar, and meeting rooms, was inaugurated during the 38th Convocation of the university.

At the inauguration, Leadway Assurance MD/CEO Mr. Tunde Hassan-Odukale said the donation was part of the organisation’s commitment to promoting entrepreneurship, driving continuous education, and improving the learning environment for students to expose them to the realities in the business world.

He said: “This donation was made to the university to advance entrepreneurship particularly for graduating students such that it inducts them into the real business world and supports their ambitions. For the undergraduates also who are still studying, it would expose them to happenings in the business environment as entrepreneurs both in the local environment and the country at large,” Hassan-Odukale said.

The Chancellor, Emir of Katagum, Bauchi State, Alhaji Umar Faruk II, while inaugurating the building, said: “This intervention will help strengthen the hope and resolve of the students that they can express their creativity to birth ideas that would transform lives and humanity. Leadway Assurance has created a pathway for them to excel in a serene environment, access learning from seasoned professionals and develop themselves to become leaders in their field.”

The Pro-Chancellor, Ambassador Godknows Boladei Igali, said: “I am pleased with the support from Leadway Assurance because of the criticality of entrepreneurship for an economy to thrive. The building will be of great impact to the great minds we nurture at this institution, and it will be of immense benefit not only to the immediate community but the country.”