Category: Insurance

Bola Adegbaju

 

IT has been observed that a lot of people cannot identify or differentiate the various insurance services providers we have in Nigeria. Several times prospects talk to the wrong people. However, it is important you understand this if you want to enjoy your relationship with any of them.  I called them insurance services providers because not all of them are referred to as insurance companies and here in Nigeria, we have the various categories as classified in the table below:

1. Life Assurance Companies:

These are companies licenced by the regulator (in this case NAICOM) to underwrite or transact only life businesses and nothing more.

Note that Life Assurance policies include policies such as term assurance, wholelife, education endowment, key man, mortgage protection, credit life, annuity and grouplife.

2. Non-life Insurance Companies:

Non-life companies can also be referred to as general insurance companies. They are meant to underwrite only non-life policies.

Examples of non-life Insurance policies are motor, fire, burglary, money, marine, goods-in-transit, professional indemnity, public liability, bonds, aviation, personal accident, Combined-all-risks, machinery breakdown.

3. Composite Insurance Companies:

They are licenced to underwrite both life and non-life policies. This means they combine both policies in (1) and (2) above.

4. Health Management Organisation (hmo):

These companies are licenced to underwrite Health Insurance only and they work in partnership with hospitals. I will say they are the intermediaries between hospitals and enrollees. They operate at the State, Zonal or National levels. When you enroll with them, they give you an identity card which is the evidence of your enrolment. You must ask for the card.

5. Nigeria Social Insurance Trust Fund (nsitf):

NSITF is a government institution established under the Employees’ compensation Act. The organization is committed to the welfare of employees within the Federal Republic of Nigeria. You can contact them via their website www.nsitf.gov.ng.

For you to know the capacity of your insurance service provider and to be sure the company is strong, you may need to add the following:

(a)          Request for operating licence issued by NAICOM (for insurance companies) and NHIS (for HMOs).

Note that NSITF is the only organization established by government, for social insurance. So there is no need for any confirmation on the strength and reliability.

(b)          Request for audited financial report for insurance companies.

(c)           In case the risk is very high, request for evidence of reinsurance arrangement (this will be explained in future article). This is only applicable to insurance companies.

(d)          Check the list of licenced insurance companies released on NAICOM’s website (www.naicom.gov.ng).

(e)          Check the list of licenced Health Management Organisations from NHIS website (www.nhis.gov.ng/hmo-contacts). Be sure you are dealing with HMO that is reputable to avoid a situation in which you will be rejected by the hospital.

(f)           Know the areas the company covers whether it is State, Zonal or National.

Our Reporter

 

While other companies may be thinking of laying off staff, SUNU Assurances Nigeria Plc, a member of SUNU Group, has promoted 37 workers for their hard work and dedication.

The promotion, which took effect from last month, is part of efforts to encourage outstanding members of staff to keep up the hard work and remain dedicated and focused on the organisation’s goals.

The Managing Director, Mr. Samuel Ogbodu, said the promotions, ranged from executive to senior manager levels, in various departments.

He stated that the company, which has the vision to be a leading African insurance company recognised for excellent client services, using cutting-edge technology, motivated workforce and good business ethics to meet stakeholders’ expectations.

He said: “This is a necessary step in rewarding high-performing employees who have been the backbone of the company through the years.

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These promotions reflect SUNU Assurances’ commitment to excellence as we strive to build a high-performing team that requires we recruit, retain and recognise individuals for their sterling contributions.

The members of staff who were promoted exemplify our highest standards of integrity. They’re passionate team players who consistently develop new strategies that exceed clients’ expectations while growing our business.

“The company is in the process of finalising its recapitalisation as mandated by the National Insurance Commission.

Although the deadline for the recapitalisation exercise has been extended to December 2020, the company aims to hit its target before the set deadline.

“SUNU was incorporated as Equity Assurance Nigeria on December 13, 1984 and was licensed to underwrite all classes of general business.  It operates with a recently increased authorised share capital and shareholders fund.

SUNU Assurances is the parent company of SUNU Assurances Limited, a Ghanaian subsidiary, that started operations in Ghana in 2008.’’

Omobola Tolu-Kusimo

Linkage Assurance Plc has recorded improvements in its top and bottom-lines for the fourth quarter ended December 31, 2019, despite the harsh operating environment.

In the company’s Unaudited Fourth Quarter (Q4) report submitted to the Nigerian Stock Exchange (NSE), Linkage Assurance Plc posted a Gross Written Premium (GWP) of N6.52 billion as against N5.59 billion during the same period in 2018, indicating a 21 percent increase.

From the business generated in 2019 review period, the company also recorded a Profit BeforeTax (PBT) growth of 902 percent, moving from N134.7 million in 2018 to N1.35 billion during the review period.

Profit AfterTax (PAT) also grew to N930.24 million, a 421 percent increase from a loss position of N290.12 million during the same period in 2018.

The performance according to the company, has come from improved underwriting performance, as well as from investment returns, which saw the company coming out stronger during the review period.

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Underwriting profit rose by 149 percent to close at N375.622 million during the review period, as against loss position of N772.48 million the previous year, while investment also grew by 10 percent,  moving from N2.46 billion in 2018 to N2.71 billion in 2019.

The company’s total assets also appreciated by seven percent to close at N24.72 billion, as against N23.15 billion in 2018.

In the statement to the NSE,  Linkage Assurance Plc Managing Director/CEO, Daniel Braie, said the company will continue to refine its strategy in line with the political, economic, sociological and technological changes within our operating environment.

Braie also said the company ‘’will continue to develop innovative products, alternative channels of distributions and strategic initiatives that will enable us achieve our corporate goals and objectives.

“With a medium-to-long term perspective, the company believes that it will benefit from growth from these initiatives.

“We will consolidate on the ongoing initiatives to improve our operational efficiency so as to reduce the cost of doing business, improve business processes, eliminate wastages and achieve higher margins in our core business,’’ the company said.

Insurance operators are divided over  the National Insurance Commission’s (NAICOM’s) plan to fix rate for Group Life Insurance Policy. While some are in support, others are opposed to it, Omobola Tolu-Kusimo reports.

For two years, operators in the insurance industry  have battled rate cutting and manipulation of group life insurance policy among themselves and consumers, especially the Federal Government.

During the period, the National Insurance Commission (NAICOM) supported a fixed price of six per cent on the policy, even as it defended the operators before the Federal Government.

The Commission insisted that its circular mandating Ministries, Departments and Agencies (MDAs) to comply with the rules on group life policy.

But the struggle by the regulator and insurance companies to end the menace of rate cutting was compounded by a few Chief Executives of insurance companies who worked to frustrate the fixed price, insisting that they can offer the product at three per cent as against the six per cent stipulated by NAICOM.

During the struggle, The Nation learnt that the few companies that worked against the fixed price had gone to the extent of lobbying top government officials at the corridors of power, including the Presidency, to stop the regulator from fixing the price.

It was gathered that a meeting was held at the Villa between Vice President Yemi Osinbajo, where NAICOM, Ministry of Finance and chief executives of the few insurance companies in favour of rate cutting came face to face with each other.

According to sources in the industry, the Commission defended its actions, highlighting the dangers posed by allowing rate cutting to continue. The commission stated that non-payment of claims is one of the outright results of rate cutting.

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As the tussle went on, government workers were at the receiving end as they didn’t have cover for last year and the previous one. This meant that any worker that dies within the past two years is not covered under the life insurance policy.

A source said battling the forces against rate cutting was tough but  majority in the industry won the battle and the rate is now six per cent in every company.

He said the few operators that wanted the six per cent to be reduced were trying to sympatise with the clients.

Another source stated that the consumers who were resisting the six per cent and some operators at that time were trying to have sympathy with their clients.

He said: “The few operators were looking at how they can take three per cent. But NAICOM knowing how inimical it is to accept a cut came up with a circular and said any company that does not comply will be sanctioned.The commission even threatened to withdraw licences of any company that err in this regard.”

Another source  said the industry is very concerned that there is no group life for Federal Government workers for the past two years.

She disclosed that they were engaging the government, not just at the operator level by at the regulator level. ‘’I am very sure that very soon and early enough this year, the policy will have been incepted.

“We know this because letters were released towards the end of last year to people that are supposed to lead and this will cover workers for 2019 into 2020. It’s unfortunate that the policy wasn’t incepted for two years and this means we won’t be able to entertain a claim from them within this period based on ‘no premium, no cover’”.

Our Reporter

Anchor Insurance Company Limited plans to generate N10 billion premium income this year, Managing Director/Chief Executive Officer, Ebose Augustine has said.

He spoke during the company’s interactive session with reporters in Lagos.

Augustine said the firm is bracing up to play big in post recapitalisation.

He stated that Akwa Ibom State government, which owns 61 per cent stake in the company, has, through right issues, injected N9.6 billion in the firm.

He disclosed that the company hopes to raise its capital to N11.6 billion post recapitalisation.

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He further said the firm grew its premium income to N5 billion in 2019, adding that to achieve the set target for 2020, the firm has concluded plans to increase its branch network across the country; leverage the use of technology to sell its products and improve on its agency system to reach esteemed customers.

He said: “The company has so far achieved about 85 per cent of the new minimum capital required to remain afloat post recapitalisation.

“We paid N1.3 billion claims in 2019, even as we have automated our claims system making it possible for claimants to access their claims without coming to the firm.”

Our Reporter

Cornerstone Insurance Plc shares have grown by 125 percent, thus becoming the best performing stock in the year ended December 31, 2019, the Managing Director, Ganiyu Musa, has said.

He spoke when he led the company’s management team to the Nigerian Stock Exchange to perform the closing gong ceremony.

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Musa said the company is looking forward to achieving greater heights this year.

‘’We are going to build on the impressive results of our 2018 financial year,’’ he added.

Our Reporter

The Lagos Chamber of Commerce and Industry (LCCI) has promised to collaborate with the Nigerian Council of Registered Insurance Brokers (NCRIB) to accelerate advocacy for insurance awareness and acceptance by critical segments of the nation’s society.

LCCI President, Mrs. Olubunmi Toki gave this assurance when a delegation led by NCRIB President, Dr. Bola Onigbogi, paid the chamber a visit.

She noted that insurance, which plays catalytic roles in national economies of most nations is at the butt of Nigeria’s financial services sector, partly due to poor advocacy and strategies for growing the sector and promised that the LCCI would accelerate its interest in strengthening the industry’s public awareness initiatives.

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Earlier, Mrs Onigbogi applauded the roles of the LCCI in being the vocal voice for the nation’s economy and advocated the support of the chamber in the new direction of the council towards strategic engagement and image management under the new management of the council’s leadership.

Onigbogi said insurance brokers who are the professional intermediaries in the insurance value chain, could be engaged by the chamber to strengthen the businesses of its member companies, especially in the area of risk management and insurance.

Our Reporter

AM Best has revised the outlooks of AXA Mansard Insurance Plc to stable from negative and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-”.

AM Best is a global credit rating agency with over 100 years’ history of providing quantitative and qualitative assessment for Insurance companies, with its Credit Rating Methodology.

In a statement made available by AXA Mansard, the ratings reflect AXA Mansard’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect rating enhancement from the AXA Group.

The company statement read: “According to AM Best, the revision in outlooks to stable reflects AM Best’s expectation that AXA Mansard’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), will remain at the strongest level over the medium term, benefiting from the de-risking of its investment portfolio, and that the company’s underwriting performance will gradually improve.

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“AXA Mansard’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by BCAR. Capital consumption is significantly influenced by the company’s real estate holdings, which in 2018 equated to 73 per cent of its capital and surplus. However, AM Best expects that AXA Mansard will significantly reduce its allocation to real estate over the medium term, which would have a positive impact on its future BCAR.

“The balance sheet strength assessment also considers AXA Mansard’s exposure to the high levels of economic, political and financial system risks that are associated with operating in Nigeria. The company’s overall operating performance has been driven by its investment results in recent years, and the company’s five-year (2014-2018) weighted average return on equity of 10 per cent should be viewed in light of inflation in Nigeria, which has ranged between 8 per cent and 17 per cent over the same period.

“Underwriting performance has been modest, with the company reporting a five-year average non-life combined ratio of 107 per cent, impacted by its high but declining expense ratio, which fell to 39% in 2018 from 54 per cent in 2014. Although a rapidly growing health insurance portfolio is negatively impacting the company’s loss ratio, it has been profitable for the company due to its low expense ratio. Over the medium term, AM Best expects growth of the health book of business to improve the company’s technical results.”

“AXA Mansard is a composite insurer concentrated in the Nigerian market. The company has an aggressive growth strategy within the health insurance line, which in 2018 led to it becoming a market leader in this segment. With support from the AXA Group, the company continues to take positive steps to improve and embed risk management throughout its operations, and AM Best expects the company to continue to evolve its risk management capabilities”, the company added.

As the new 7.5 per cent Value Added Tax (VAT) rate comes into effect this month, insurance firms’owners are decrying the increase that will accrue from brokers’vatable commission. Omobola Tolu-Kusimo writes

 

Before now, insurers bore the five per cent Value Added Tax (VAT) for brokers on every commission they earned. The insurers pay the VAT to the Federal Inland Revenue Service (FIRS).

Although the premium received from brokered business for insurers is not vatable, the commission earned by brokers is.

But with the increase of VAT rate at 7.5 per cent from five per cent based on the new Finance Bill, insurers’ burden has risen.

This is coming at a time insurers are grappling with how to meet up with the new minimum capital required to recapitalise before next  December 31, as ordered by  the National Insurance Commission (NAICOM).

NAICOM, on May 20, last year, mandated the 58 insurance firms and two reinsurance firms in the country to increase their paid-up share capital. The minimum paid-up share capital of a Life insurance company was raised from N2 billion to N8 billion; Non-Life insurance from N3 billion to N10 billion and Composite insurance from N5 billion to N18 billion. Re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

While the operators are thankful to the Federal Government for relieving the industry of a 12-year tax burden in the former Income Tax Act, they are not too happy with the increase of the VAT from five per cent to 7.5 per cent.

The new VAT rate is another aspect of the new Finance Bill that has become contentious for them.

The Managing Director, Anchor Insurance Limited, Ebose Augustine, said the brokers’ commission will now be vatable for 7.5 per cent, which will increase their expenses.

“Also, any money the brokers earn has to leave the industry and go back to the government. Our overheads and other expense will increase. We are not against this because we will not say money should not go to the government. We are not anti-people.

“But we are asking the government to practise what they preach by making deliberate plan to help the industry by enforcing the compulsory insurance. When the BVN was introduced, many people didn’t take it seriously until the government gave a deadline, saying accounts of those who fail to the necessary things will be forfeited. This helped government to recover a lot of looted funds. So, why will people not take insurance? Why will insurance be a sub sector? We want government to help make the industry grow.”

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The Chief Finance Officer, LASACO Assurance Plc, Akinwale Sofile, said the new VAT  would affect our business.

He said: “Section 16 in the former Income Tax Act is not favourable to the industry, which we have been fighting since 2007 and which has been taken care of in the new Finance Bill. Somehow, the 7.5 per cent Value Added tax (VAT) is another aspect of the new Finance Bill that has become contentious for insurers.

“The new rate will affect our business. The first reason is because we pay VAT on behalf of brokers. Premium is not vatable but the commission earned  by brokers is vatable. Unfortunately, because the brokers deduct their commission before paying the insurance companies going by regulation, understanding and market agreement between the insurers and the brokers, the companies agreed to pay the VAT on their behalf.

“So, it means we will be paying 7.5 per cent for brokers and this is the only aspect of the Bill that will increase our overhead. But for tax, it is something that has lightened our burden as far as Company Income Tax is concerned. We will now pay tax as other companies are being taxed.”

The Executive Secretary, Nigerian Council of Registered Insurance Brokers, Fatai Adegbenro, said the tax review is a good development for insurance industry as the amounts incurred on the unnecessary taxes would now be injected into the operations of the insurance companies.

He, however, affirmed that the VAT paid by insurers on behalf of brokers will rise as a result of the new rate.

But he pointed out that the increase was still below what is paid in the United Kingdom and United States.

“There has been an agreement between the insurers and brokers on payment of VAT to pay the  tax on behalf of brokers.They bear the cost so they may complain that the increase is not good for them,’’ he said.