There is poor perception of the insurance sector by the public. Despite efforts made by practitioners to change the image of the industry, most Nigerians still don’t have confidence in the sector. Many people do not know the benefits of insurance or where the closest insurance company is located. In this Special Publication on the insurance sector, The Nation showcases some insurance firms that can be trusted based on their financial results, prompt claims payment, good customer service and tailor-made products suitable for corporate organisations, households and individuals. Omobola Tolu-Kusimo reports.
Many Nigerians do not have confidence in insurance policies and the reason is not far-fetched. Once upon a time, insurers either failed to pay claims promptly or renege on their contract with their clients.
For the corporate entities, aside from the issue of trust, the sector didn’t have enough skills and capacity to carry their risks. Hence, some resorted to seeking insurance cover outside the country, while others did not bother to insure their businesses or assets.
True, the sector was faced with issues of trust among the populace. It also had the problems of low level of appreciation of insurance and infiltration by quacks. This led to apathy towards insurance. Out of the population of 180 million, only 1.5 million Nigerians have one form of insurance or the other. Of the few users of insurance, some still have the highest level of dissatisfaction with the providers of financial services. The overall result of low patronage is the sector’s low contribution to the Gross Domestic Product (GDP) at less than 0.48 per cent.
But the story has changed as insurance practitioners have been working hard to redeem the image of the sector. They now take claims payment serious, simplify the claims process for insured and pay promptly. They have also worked to improve their services and offer tailor-made products.
Amid the hardship of recession in 2016, insurers helped restore businesses and protect families of insured Nigerians through payment of claims for losses worth N119.5 billion.
This was shown in a report by the Nigeria Insurers Association (NIA) made available to reporters in Lagos.
The amount was paid by 58 insurance companies that are members of the association. They comprise 15 specialist life insurance companies, 29 non-life insurance companies, 15 composite insurance companies and two reinsurance companies.
A breakdown of the report shows that the 29 insurance companies offering non-life business paid N57.7 billion claims in the year under review, while the life business companies paid N61.87 billion.It also showed that the claims paid by the non-life companies increased from N54.65 billion in 2015 to N57.7 billion in 2016, representing an increase of 5.69 per cent while the claims for life companies increased from 50.5 per cent in 2015 to N61.8 billion in 2016, representing an increase of 15.84 per cent.
Meanwhile, the non-life and life companies recorded about N315.97 billion insurance premium income in 2016.
NIA Chairman, Eddie Efekoha stated in the report that the economy was confirmed to have slipped into recession for the first time in over two decades.
According to him, this reflected economic shocks, inconsistent economic policies, and worsening security problems across the country, particularly the Northeast and renewed attacks on oil installations in the Niger Delta regions.
The year, he said, was very challenging for the sector as it battled with low patronage, fragmented payment from major schemes, including government, as the slide in crude oil price resulted in downturn in earnings.
He said other factors that the sector contended with include high inflation rate culminating in increased expenses, unfavourable foreign exchange spell leading to high reinsurance premium paid and claims settled on relevant portfolios.
The regulatory body, the National Insurance Commission (NAICOM), in another report, said the sector lost N90 billion worth of insurance policies between 2016 and third quarter of last year as a result of recession, but the insurers still paid claims to insured Nigerians.
According to NAICOM, the sector recorded a Gross Written Premium of N325 billion in 2016, but the figure declined to N235 billion by the third quarter of last year.
Commissioner for Insurance, Mohammed Kari said the sector’s contribution to Gross Domestic Product (GDP), which defines insurance penetration level, stands at 0.48 per cent.
The leading insurance firms
In a Summary Report on Insurance Companies 2016 Financial Result, NAICOM said the performance of insurance companies was analysed based on various indices to determine the ones that made impressive outing in the year under review.
The Nation brings to you some of the companies with good performance, prompt claims payment, good customer service and tailor-made products suitable for corporate organisations, households and individuals.
Leadway Assurance Co. Limited, AIICO Insurance Plc, NEM Insurance Plc, FBN Life Insurance Limited, Consolidated Hallmark Insurance Plc (CHI), Wapic Insurance Plc, Law Union and Rock Insurance Plc, and Anchor Insurance Plc, impressed in their performance.
In the report, the Life Business Statistics shows that the sector’s total Gross Premium Income (GPI) was N124.56 billion while gross claims paid stood at N67.2 billion.
Leadway Assurance Company Limited led the pack with N31.58 billion, a GPI representing 25 per cent market share followed by AIICO Insurance with N22.17 billion representing 17.75 per cent.
FBN Life also came in the top-performing companies with a N9.91 billion, representing 7.95 per cent.
The statistics further shows that the Life companies paid huge claims. AIICO led the subsector with payment of N11.47 billion, FBN Life paid N2.06 billion and Wapic N0.66 billion
The General Business Statistics shows that the GPI for the same period under review was N201.55 billion. Leadway Assurance had N21.54 billion, representing 10.69 per cent, NEM Insurance N10.62, representing 5.27 per cent, AIICO got N7.33 billion, representing 3.64 per cent, CHI had N5.71 billion, representing 2.83 per cent, Wapic had N5.21 billion, representing 2.59 per cent, Law Union had N3.96 representing 1.96 per cent and Anchor N1.96 billion, representing 0.97 per cent.
The Non-Life companies also paid claims. Leadway paid N13.56 billion, AIICO Insurance N4.44 billion, NEM N4.13 billion, Consolidated Hallmark paid N1.76 billion, Law Union paid N1.45 billion and Wapic 0.07 billion.
‘Insured Nigerians should demand claims from insurers’
The Executive Director, Leadway Assurance Co. Limited, Ms. Adetola Adegbayi, has urged insured Nigerians to demand their claims from their insurers whenever an insured risk occurs.
Adegbayi, who stated this during a chat, noted that most Nigerians who purchased insurance policies were ignorant on when and how to make claims, adding that instead of going to their insurers to make claims, they bear the financial burden themselves.
She said as a result of the fact that some insured don’t make claims, some overambitious operators have cashed on this loopholes to rate-cut policies to unreasonable price, with the assumption that the insured will not demand for compensation.
Because of the low rate they demand on their policies, she said, they, in most cases, outbid their competitors for businesses because their rates are lower and consumers always want to go for policies with lower rates.
In the event of claims, she said, these overzealous underwriters do default, since the premium charged is not the actual value of the products.
To this end, Adegbayi stressed that rate-cutting could be fought by Nigerians, if they begin to request for claims on their insurance policies, adding that when this happens, underwriters would sit up and charge the normal rates that could sustain them when claims arise.
Explaining that an insurance company would be heavily sanctioned, if it defaulted in claims obligations, she charged Nigerians to report defaulting underwriting firms to law-enforcement agents, promising that necessary steps would be taken to pay claims to the aggrieved insured.
She said policy prizing was becoming lower and the lower the policy, the riskier the business becomes, adding: “But for the mass market products, as the volume increases, the price reduces.’’
Recipients of large insurance claims
Insurance is an arrangement for protecting a person or entity from loss or risk. The aim is to restore the insured to his or her previous state only, not for profit or gain. The insurance contract should always be a contract of indemnity only and nothing more.
According to the NIA 2016 Digest report, various insured organisations and individuals suffered losses in life and businesses, but were restored to their previous state.
For instance, under the category of Motor Claims, AIICO Insurance paid Unity Bank/Ekiti Kete Mass Transit N17.72 million for five accidents, Dangote Cement Works-Ibese N4.15million for accident, Total Nigeria Plc N5.73million for Accident and Third Party Vehicle.
AIICO also paid one Mr Asuquo N3.59 million for a Fire Incident, Animashaun Integrated Services N3.64 million for Accident, Christy Ndidiamaka N6.07 million for Theft, Rem-Bam Nigeria Limited N41.99 million for Accident and Theft.
Julius Berger Nigeria Plc had an accidental damage and was paid N12.22 million by Law Union and Rock Insurance Plc. In addition, NEM Insurance Plc paid N21.80 million to Lanre Shittu Motors Nigeria Limited for Accident.
Besides, NEM Insurance paid MP Infrastructure Limited N7.8 million for Accident, A.Y. Hussaini & Sons N6.17 million for Accident, Valentina Abuta N6.64 million for Theft, Isigwe Uzoagu N6.16 million for Accident and Ehido Nigeria Limited N5.23 million for Accident
Under the individual life claims, FBN Life paid a family N18 million benefit for the death of one Mr. Mohammed.
For the Group Life, FBN Life now FBNInsurance paid Prime Services FZE N4.16 million for death claims, Honeywell Flour Mills N11.43 million, Friesland Campina Wampco N10.51 million, Seplat Petroluem N4.034 million, Petroleum Technology Development Fund and Seplat Petroluem N4.27 million.
Also under Fire Claims category, Law Union & Rock paid N4.04 million for Explosion, Harrow Park Mini Golf Course N4.5 million for Flood and Livesstock Feeds N4.84 million for Fire Incident.
