The Nation Newspaper

Category: Insurance

  • Insurance sector weakest among others, says Kari

    The insurance sector is now the weakest link in the Nigerian economy owing to its low capital base, the Commissioner for Insurance, Mohammed Kari, has said.

    Kari, who spoke on the sideline of the 2018 Insurance Education of the Chartered Insurance Institute of Nigeria (CIIN) held in Ibadan, said the development is saddening.

    He said the sector which ought to provide risk cover for other sectors seemed to be losing its ground as parties it should secure are breaking new grounds leaving it behind.

    Citing the recent action of the Central Bank of Nigeria (CBN) to raise the capital base of Micro Finance Banks and Mortgage Guarantee Banks to N5 billion and N6 billion respectively, he said it has become crucial for insurance companies to increase their capital.

    He noted that Life insurance firms presently has N2 billion capital base; Non-Life, N3 billion; Composite N5 billion and Reinsurance N10 billion.

    He stated that insurance anywhere in the world is the mobiliser of funds and provider of security, noting that you cannot provide security if you don’t have capital.

    The Commissioner expressed worry that a sector that should insure the aviation and other high ranking sectors, should not be seen to have capital less than that of microfinance banks.

    He further stated that the consumer is supreme in the Commission’s responsibility of protection of stakeholders.

    He said: “The consumer is supreme in our responsibility of protection of stakeholders. The essence of regulation is to protect the consumer principally including the shareholders. You will be surprised that when we did the letter of categorisation and advise insurance companies. A lot of them see the need for it and they indicated where they wanted to be.

    “The Tier Based Minimum Solvency Capital (TBMSC) that we introduced to the sector does not compel any company to capitalize. It is mostly about categorisation of the companies. It is wrong for any operator to say they must be in Tier 1 category because others are there. It all depend on the model of operation. The two biggest player we have in the industry has 75 per cent of their businesses from Tier 3. So operators can survive in any Tier they find themselves. If they don’t appreciate the Tier they find themselves, then they should upgrade to the Tier that they aspire to be.

    “As a regulator, nothing in law says I cannot forbid a company from doing a Tier business which he or she has no finances for. It is an inherent duty of the regulator to do that. The CBN ruled on capital because they taught that it is the best way they can develop their regulated entities and this is the way we also think we can regulate our regulated entities. We can’t do otherwise because the operators activities at the capital market is not as buoyant. Our operators have not been paying dividend so people will put money in them. Not to shore up their capital or follow the categorisation plan is to say we don’t want to help them. But the reverse is what we are seeing now which is that they don’t want to be helped and it can’t continue like this.’’

    NAICOM had in July introduced the TBMSC structure. The Commission described it is a complimentary measure to the ongoing implementation of the Risk-Based Supervision (RBS) programme.

    The policy trust of the recapitalisation programme is to enable soundness and profitability of insurers through optimal capitalisation; support the stability of the financial system; introduction of proportionate capital that support the nature, scale and complexity of the business conducted by insurers; a 3-Level TBMSC model; specifies capital requirement for each Tier Levels, based on risk classification for each Tiers; no mandatory injection of fresh capital fund by insurers; no cancellation of licence of any operator is anticipated subject to solvency control levels and specifies intervention levels.

    Others include and specific actions to be taken by the Commission and operators on various levels of impairment of the TBMSC; to open up licensing window to interested investors at higher Tier Level; and restructuring of capital resources for improved liquidity and claims settlement.

    But some shareholders have prayed to a Federal High Court in Lagos to stop the Commission from implementing the TBMSC, a prayer which has since be granted through an injunction by the court.

  • Old Mutual seeks policy on rising cost of treating critical illnesses

    Access to quality healthcare is one of the most important factors for living a quality life and one of the most critical human needs.

    After all, health they say, is wealth and only a person in good health can create a successful enterprise.

    According to the World Health Organisation (WHO), access to healthcare is often times the lowest in Sub-Saharan Africa where residents have to pay out of their pocket for medical expenses.

    In Nigeria, the average spending on health per person is valued at $216 (about N78,000) of which $159 (about N57,000) is out-of-pocket and a paltry $35 (about N12,000) coming from government’s assisted healthcare management initiatives.

    Yet, the story is not getting any better, especially as today’s economic downturn and the resultant reduction in purchasing power have combined to make access to adequate health care a distant dream for Nigerians.

    Another study by the WHO, showed that 90.2 per cent of Nigerians cannot afford to pay for medications for their ailments. What this means is that for the average Nigerian, an unexpected health challenge can cause major financial disruption leaving one with healthcare bills they often cannot afford.

    This problem can be further worsened if the ailment diagnosed is a critical illness, which globally involves very costly medicare, due to the extensive examinations, rare medications and prolonged complicated treatment process.

    Critical Illnesses are ailments that can have fatal or terminal effect on the human body. These ailments include; Stroke, Cancer, Heart Attack, Coronary Artery Disease, Hepatitis, Chronic Liver Disease, Chronic Lung Disease, Kidney Failure, Multiple Sclerosis, Paralysis / Paraplegia Muscular Dystrophy, Alzheimer’s Disease, Parkinson’s Disease, Brain Tumor, to mention but a few.

    The severity of a critical illness determines the extent of the comprehensive treatment process, hence, people are more likely to be worse hit financially, when they develop a critical illness. Those affected have to face reduced economic performance caused by low to zero productivity or job loss, thereby preventing them from meeting their daily needs and commitments. One major evidence of how deep the huge cost of treating critical illness has affected Nigerians, is the rising trend of individuals turning to online crowd funding to manage the huge bills.

    According to reports from popular online crowd funding website, GoFundMe, 1 in 3 campaigns through the website are for medical costs and there are over 250,000 medical campaigns per year raising $650 million (N235.3 billion) each year.

    One of the critical illnesses which has continued to affect the economic capabilities of Nigerians is cancer. A recent investigation revealed that 80 per cent of cancer sufferers cannot afford lifesaving procedures due to the significant challenge of paying for medical bills out-of-pocket. Based on the WHO’s data which showed that an estimated 8.8 million people in the world die from cancer annually, and 75 per cent of this deaths in the world are recorded in low- and middle income African countries.

    Reports by the Nigerian Association of Nephrology also showed that a staggering 25 million Nigerians, (about 13.9 per cent of the population) have kidney related conditions. The most common being Chronic Kidney Disease; a condition which commonly affects relatively younger individuals, most of whom are in the economically productive age group.

    What this means is that as these individuals battle to stay alive, they are at risk of facing financial difficulties as the illness limits their productivity and involvement in economic activities.

    But it is not all grim for Nigerians, said Keith Alford, the Managing Director, Old Mutual Nigeria Life Assurance Company, an affiliate of Old Mutual Limited, one of Africa’s leading financial powerhouses with over 170 years experience.

    He admonished that these shocking reports and the fearsome outlook for critical illnesses in Nigeria – in terms of severe financial exposures – can be proactively mitigated through the financial protection which insurance policies provide, specifically for critical illnesses.

    “We understand that close to 90 per cent of Nigerians lack Health Insurance, leaving nine out of every 10 Nigerians completely exposed to the huge and harsh financial impact of contracting any critical illness. We know that critical illnesses such as cancer, heart attack, stroke, kidney, and liver diseases are eternally lurking in the corners and can spring on us without warning.

    “Our desire at Old Mutual is for any patient who has any of the critical illnesses to concentrate his, or her will power to full and speedy recovery rather than double the grief with the financial burden for the expensive treatment.

    The Old Mutual insurance cover for critical illnesses should be taking the responsibility for all the financial requirement, whilst the patient devotes self to the healing process. This is the least that every hardworking Nigerian deserves. Quote

    “ Indeed, Critical Illness Plan, which can also be referred to as Critical Illness Cover, is an insurance product in which the insurer (the insurance company) is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.

    The implication is that if one is to be diagnosed with, or undergoes a medical procedure for any of the specified critical illnesses that the insurer covers during the length of the policy, lump sum cash will be paid to take care of the medical bills.

     

  • Staco denies alleged infractions

    The management of Staco Insurance Plc has denied the allegation of infractions following news of disagreements of some insurance firms with the House of Representatives sub-committee on Capital market.

    Acting Managing Director of the firm, Bayo Fakorede in a statement made available to journalists, reiterated the firm’s commitment to professionalism being one of the core values and determination to ensure compliance with the industry codes of corporate governance.

    He pointed out that there is no insider dealings in the company, noting that the inability of the Management to attend a scheduled meeting of the House Committee was due to an unforeseen circumstance which was duly communicated to the Sub-Committee on Capital Market.

    He said: “We have attended similar meetings in the past and thus would not intentionally make off from attending the scheduled meeting. The management of the company confirms that it anchors her operations on high ethical standards which imbibes the principles of full disclosure, accountability, transparency and respect for stakeholders’ interest.

    “This has been the manner of dealings with all regulatory authorities and the stakeholders at large, which are enshrined in regular fillings of all mandatory reports. To underscore this assertion, the Board of Directors of the company has always been at the fore front of laying down proper and good corporate governance with best practices and ensuring that there is compliance with both external and internal rules guiding the operations of the company. As a responsible corporate citizen, we want to assure all our stakeholders, the insuring public and the shareholders in particular that their investment is safe and intact with us”, he added.

  • Catastrophe, large losses hamper Africa Re’s premium growth

    Catastrophe and large losses have hampered the strong growth in premium income of Africa Reinsurance Corporation (Africa Re), the Corporation’s Group Managing Director, Mr Corneille Karekezi, has said.

    He made this known in a statement made available to journalists in Lagos.

    He said the corporation posted a premium income of US$ 577.41 million at the end of the third quarter of 2018, representing 11.65 per cent growth compared to US$ 517.15 million at the same period of last year.

    This strong performance, he said, was driven by new businesses in West and Southern Africa as well as African currencies that were relatively stable against the US dollar.

    He said: “The performance of the period was impacted by run-off of the 2017 catastrophe claims in South Africa and large property and energy losses in many of the Corporation’s markets namely: Central Africa, West Africa, South Africa and the Middle-East. This situation led to an underwriting loss of US$ 20.89 million during the period under review, an improvement from last year’s underwriting loss of US$ 24.48 million.

  • NAICOM to release state insurance policy guideline next week

    The National Insurance Commission (NAICOM) is partnering state governments to deepen insurance penetration,as the Commission will next week release the new distribution channel guidelines called the State Insurance Producer (SIP).

    Commissioner for Insurance, Mohammed Kari, who made this known at the Chartered Insurance Institute of Nigeria (CIIN) 2018 Education Seminar in Ibadan, Oyo State capital, said the operational guideline shall come into effect on January 1, 2019. To complement the SIP policy, the commission will be opening 20 new branch offices in the states across the nation with each Geo-political zone getting four branches.

    Kari noted that the SIP will be an agency of state government licensed by NAICOM to provide intermediary services as defined by the guideline issued by the commission and remunerated according to the provisions of the operational guideline.

    He said the key responsibilities of SIP include, facilitating the sale of the compulsory classes of insurance within the state jurisdiction and all classes for its principal’s insurance and that additional services and products will be considered in the future, depending on the success of the initial.

    Other duties, according to him, are exercise on defaulters the power to penalise them according to the laws of the states and maintain proper records of individuals and organisations bound by the requirements of the compulsory classes of insurance and monitoring the compliance.

    The Commissioner said once licensed, the SIP shall enter into Memorandum of Understanding (MoU) as may be sanctioned by NAICOM with approved insurance companies in its jurisdiction for the purpose of placement and management of insurance business with approved insurers, which have branch offices in the state.

    Highlighting the benefits accruable from the SIP initiative, he maintained that it will help to meet the government’s expectations with regards to Economic Recovery and Growth Plan (ERGP) in  job creation, poverty prevention and confidence in the face of risks.

    Other benefits are: answer to the saturation in the corporate segment, improve the image of the insurance industry and brand building for individual insurance institutions.

    The NAICOM boss said insurance plays a pivotal role in financial inclusion as it reduces poverty line, helps people to manage their risk and protects them from negative adverse effect of any unforeseeable circumstances and increases access to other financial services.

    Oyo State Governor Senator Abiola Ajimobi has offered NAICOM free land to build its office in the state.

    He commended the CIIN for educating insurance practitioners and urged insurance operators to deal with negative perception people have about insurance; develop quality services and superior value to customers; introduce minimal premium and tackle the menace of quacks and fraudulent practitioners.

    He said the state has resolved to set up a Global Micro Insurance agency that will be private sector-driven.

  • ‘GNI has not erred against SEC, NAICOM rules’

    Great Nigeria Insurance Plc has never received any warning, query or sanctions regarding insider trading from the Securities and Exchange Commission (SEC) or National Insurance Commission (NAICOM), which both provide regulatory framework for the company, Managing Director of the underwriting firm, Mrs. Cecilia Osipitan, has said.

    This followed allegations by the House of Representatives Sub-Committee on Capital Market and Institutions, following the public hearing on Wednesday, October 31, 2018.

    Mrs. Osipitan in a statement  in Lagos, said the allegation by the Sub-Committee was incorrect.

    She said it has come to the notice of the Board of Directors and Management of GNI that the House of Representatives Sub-Committee on Capital Market issued a statement on Monday, November 5, 2018 threatening to authorise SEC to take over the Management of GNI.

    She assured the company’s shareholders and the public that the organisation was compliant with all the rules and guidelines of the various regulatory agencies that oversee its operations making all the allegations of insider dealings, failure to pay shareholders’ dividends, tax evasion and failure to comply with corporate governance regulations inaccurate.

    She stated that the restructuring process put in place by the Board and management has boosted the firm’s retained earnings of circa from (N2.4billion) in 2009 to (N0.59billion) in 2017. This improvement in retained earnings was achieved through organic growth only.

    She added that the firm has also been meticulous about making tax remittances to both the state and Federal Government and has up-to-date receipts to corroborate this fact.

    While allaying the fears of all stakeholders, she said the firm will ensure that the misconception regarding its operations will be resolved with the Committee.

    She explained that the inability of the firm’s representative to attend the Committee’s meeting was unavoidable and same was duly communicated to the Committee. She further stated that the firm has forwarded to the Committee written detailed responses to all questions raised to set straight earlier communicated misrepresentations and will be willing to answer further questions that may arise.

    “Great Nigeria Insurance Plc is a compliant corporate entity and is not in any way associated with any of the allegations raised in the publication,” she said.

  • CHI is law abiding, says MD

    Consolidated Hallmark Insurance(CHI) is a law-abiding firm that does not give room for sanctions, the Managing Director of the underwriting firm, Eddie Efekoha, ha said.

    He spoke during the CHI dinner and interactive session with insurance brokers on ‘Emerging InsurTech Trends: Driving Growth in a Digital World’ in Lagos.

    Efekoha, who is also the President, Chartered Insurance Institute of Nigeria(CIIN), said the firm was  professionally run and always abided by the ethical standard of insurance profession, said the firm has paid dividend seven times in the last 10 years, while it has settled all its claims.

    He noted that the firm participated in huge marine claims payment of N2.1 billion to an individual client in the insurance industry.

    He promised customers of prompt claims settlement and service delivery, adding that the firm was determined to increase insurance penetration and acceptance in the country. He  also promised its shareholders good returns on Investment.

    He applauded brokers, who have consistently become the  backbone of the company by bringing their insurance businesses to Consolidated Hallmark. He disclosed that the firm will always come out with innovative products and services that will suit the needs and yearnings of the insuring public.

    The recent threat by the National Assembly to instruct Securities and Exchange Commission(SEC) to close down the firm, he said, was an uniformed decision, adding that his firm had done nothing wrong to warrant such.

    He said: “As a company, we always tried to improve  to deliver exceptional services to our clients. We have paid all our claims in the last 11 years. Nobody has taken us to court on the account of non-settlement of claims. On a year-on-year basis, the claims we have paid has continued to increase, yet, we have been paying them. We will not relent in the discharge of its duties as expected as we are judicious in the way we invest and utilise shareholders’ funds though we  the company might not have declared bogus profit, we have consistently declared profits over time.

    “To increase our bottom line and reap from the huge insurance potentials in the country, we have redeveloped our strategy, leveraging on technology to give better and seamless services to its relevant stakeholders.

    “We might not have big capital, but we have the competence. We are the leader in Aviation, Marine and in Oil and Gas insurance businesses and the industry can attest to that. Very recently, we have paid a major claim. On the 19th of April, 2018, we have a marine claim of N2.1 billion of which we are the lead insurer and before October, 2018, the claim was paid. We don’t value investment income over that of claims, even though, we need it to reward our shareholders,” he added.

  • Industry roadmap crucial to financial inclusion target, others, says NAICOM

    The National Insurance Commission (NAICOM) has said its road map on the insurance industry, if well implemented, will position the industry to answer substantially to its assigned role in the national financial inclusion strategy.

    Commissioner for Insurance Mohammed Kari, who spoke while presenting a paper at an insurance forum in Abeokuta, the Ogun State capital, said the insurance industry needed to capture more Nigerians to have protection for the industry and meet its target under the National Financial Inclusion strategy.

    Worried that insurance penetration is still very low at 0.5 per cent, he said a study adapted from EFInA on Access to “Financial Services in Nigeria, 2016 Survey”, showed that while 20 per cent of Nigerians have not thought of getting insurance cover, 19 per cent do not believe in insurance.

    In the same vein, 15 per cent cannot afford to pay for insurance, 15 per cent said they have nothing to insure, 10 per cent does not know the benefits of having one, 11 per cent does not know where to get one, seven per cent believes insurers are cheats and do not settle claims while three per cent will not insure for religious reasons.

    Overall, he said, awareness and education constitute 60 per cent reasons for Nigerians not having insurance while poverty constitutes 30 per cent, failure of insurance constitutes seven per cent and belief system constituted three per cent.

    He said strategic issues for inclusive insurance market would include unsuitable products and services; fake insurance certificates; poor claims payments; insurance fraud; high expense ratio; weak IT environment and low data quality.

    Speaking on the implication of  EFInA findings for financial inclusion and the challenges, he said: “Financial institutions are short-term oriented and not disposed to investing in innovation that financial inclusion requires.

    “Low-income people are suffering from greater levels of poverty, less employment and income-generating opportunities; more concerned about survival and marginal economic activities.

    “The opportunities are, however, that the fact that there are large numbers of unbanked people that do not have Insurance too; market for a broad range of relevant products and services (micro-insurance, micro-pensions, etc.) via all channels channels; Small and Medium Scale Enterprises (SMEs), agricultural producers, households and individuals, especially those in the informal sector; and women and youth (under-served groups)”.

    The Commissioner, who lamented that the Commission has attempted three times to implement a roadmap for the industry, noted that it is yet to work because of time spent on development, stakeholder’s commitment and focus, stressing that the iindustry’s strategic intent is to establish, develop and maintain a  fair, safe, stable and inclusive  insurance market for the protection of beneficiaries of insurance contracts, competitive returns to investors and optimal contribution to Nigeria’s economic development

    “Nigeria has an abysmally low insurance penetration when compared to its peers and other benchmarks jurisdictions. Therefore, with the necessary and sufficient interventions, the current level of insurance penetration 0.5 per cent can be substantially improved upon.

    “To be an innovative insurance market in Africa noted for high level of capacity, transparency, efficiency, stability and inclusi-veness supporting the economic growth agenda of the country and attaining optimal  rate of insurance penetration at all times,” he said.

  • Google, Accel and Jay Z invest in life insurance start-up Ethos valued over $100m

    Ethos has raised $35 million in a funding round led by Accel and backed by Google Ventures.

    That investment has been valued at more than $100 million, a CNBC report said..

    Ethos has seen a more than 400 per cent jump in revenue, customers and applications in the last four months.

    It is a start-up, which can process life insurance applications in a matter of minutes, and  has raised $35 million in a funding round led by Accel and backed by Google’s venture capital arm.

    The latest investment raises the San Francisco-based firm’s total funding to over $46 million, and  the firm is now valued at more than $100 million.

    The deal, which marks Ethos’ second major round of investment, saw Accel’s partner, Nate Niparko, join the firm’s board of directors, while Google Ventures General partner, Tyson Clark, will act as an advisor to the board.

    Existing investors, Sequoia Capital and Arrive, the venture fund of United States’ rapper Jay Z’s entertainment firm, Roc Nation, also  participated in the funding round.

    Accel’s Niparko said the insurance sector is a $1 trillion industry that is still largely dependent on pen and paper, pushy salespeople, doctor office visits, and legacy systems.

    He said this is why “we believe there is a tremendous opportunity to simplify the process through technology and that’s exactly what Ethos has built”.

    He highlighted other bets the firm has made on insurance technology start-ups like Shift Technology, which uses artificial intelligence to detect fraudulent insurance claims, and The Zebra, a car insurance marketplace.

    “We believe that Ethos is the first player in the life insurance space that’s truly poised to make a difference in how Americans purchase and interact with their insurance provider,” Niparko added.

    Ethos, which uses data analytics to predict a person’s life expectancy, said it is able to cut the time normally taken to apply for life insurance policies from 10 weeks to just 10 minutes, and that insurance claims are paid out “within weeks.” It also claims that more than 99 per cent of its customers do not require a medical examination or blood test in order to get a policy.

  • CIIN holds seminar on insurance penetration

    The Chartered Insurance Institute of Nigeria (CIIN) is advocating penetration through value creation at its upcoming education seminar billed for November 7 to November 9, at the Premier Hotel Ibadan, Oyo State.

    The seminar, with the theme: “Increasing Insurance Penetration through value creation”,  is slated to have as guest speaker, Rector, College of Insurance and Financial Management, Dr Yeside Oyetayo. There is a sterling line up of discussants, such as Dr. Rufus Olubunmi Olumide of NEM Insurance PLC; Mr. Joseph Oladokun of Mutual Benefit Assurance Plc; Mr. Lekan Oguntunde of Sovereign Trust Insurance Plc and a representative of NAICOM to do justice to the theme paper.

    The seminar is also scheduled to have Commissioner for Insurance Mohammed Kari, the Olubadan of Ibadanland; His Imperial Majesty, Oba Saliu Akanmu Adetunji and notable government functionaries and top industrialists.

    Education Committee Chairman and CIIN Council member Sir M. O Oyegunle said the choice of the theme was borne out of the need to intensify the clamour for insurance practitioners to use value as the focal point of their service offerings.

    He said: “Insurance companies have to revamp their value proposition and hinge implementation on promoting excellent customer experience. This will greatly improve market penetration and equally increase the number of persons who embrace insurance and have positive assertions.

    “In this age where market saturation is prevalent, offering customers the right value proposition is the difference between just surviving or thriving in the Insurance Industry.”

    He urged Insurance practitioners to ensure attendance and participation in order to obtain the full benefits of the seminar.

    “The education seminar is one of the annual education programmes organised by the CIIN, the body established by statute to determine the standard of skill and knowledge required for the professional and ethical practice of the business of insurance in Nigeria,” he added.