The Nation Newspaper

Tag: insurance firms

  • Fashola urges insurance firms to woo traders

    Fashola urges insurance firms to woo traders

    Insurance firms have been urged to woo traders to ensure the penetration of insurance companies into the market for the growth of the economy.

    Lagos State Governor Babtunde Fashola, who spoke while inaugurating NEM Insurance Plc Head Office in Lagos, said this would be of immense benefit to  traders whose goods were often lost to fire outbreaks in the market.

    Represented by the Commissioner for Commerce and Industry, Mrs. Olusola Owuru, the governor said the increasing cases of fire  in markets were of great concern to the government. He said fire victims always fall- back on the government for assistance, which should not be so.

    “We want the insurance industry to take over and actualise the objectives they were established to achieve,’’ Fashola said.

    The Commissioner for Insurance, Mr. Fola Daniel said the Nigeria Insurance Commission (NAICOM) would continuously strive for positive transformation in the industry, even if it would inflict temporary pains on some insurers. According to the Commissioner, the country’s insurance industry needs rapid transformation.

    “I am happy that references were made to insurance industry in other domains such as South Africa and United Kingdom that contributed 15 per cent and more to their Gross Domestic Product (GDP) but in Nigeria insurance industry only contributes less than one per cent to the GDP. These calls for all hands to be on deck to enable the industry occupy its proper position in the financial sestor. We should not be referred to as `Poor Cousins’ of the banking sector,’’ he said.

    Daniel said the state of financial assets of many insurance companies was causing great concern to the commission.

    “Financial asset of many insurance companies is of great concern to us because policy holders could call for settlement anytime,’’ he said.

    According to the commissioner, a high portion of insurance holdings in assets that cannot generate immediate cash adversely impact liquidity position. “So we need to have regulations that limit the amount of buildings and lands an insurance company can invest in. We are worried about over investment in real estate as this may run down insurance industry. The strength of any insurance company is in its liquidity,” he stressed.

    He congratulated the management of the company on building a befitting edifice for its operations, adding that it signified growth and accomplishment.

    The Chairman of NEM Insurance Plc, Mr. Adewale Telumo, said the edifice was constructed to enable the company become a leading insurance firm in the country.

    He said the company’s performance had been on the upswing, with its gross premium which was N853 million in 2006 rising to N8.9 billion in 2013.

    “The profit after tax which stood at a meager N13.6 million in 2006 rose to N544 million in 2013. A total claim of N192 million was paid in 2006 while N3.1 billion was paid in 2013,” he said.

  • Insurance firms fleecing airlines on premiums, say operators

    Domestic  airline operators are groaning under what they call the yoke of high insurance premium.

    The Nation learnt that they pay higher premiums than their foreign counterparts.

    They are said to be paying almost five times higher rates than foreign operators.

    It was learnt that the National Insurance Commission (NAICOM) said the practice amounted to undercutting the operators.

    But the development has fuelled talks that local brokers lack the financial muscle to underwrite aviation risks.

    To have a cut in the business, indigenous brokers have resorted to re-insuring airline liabilities  and passengers,  and  third party liabilities with major underwriters, such as Allianz Aviation Insurance, Aerospace Insurance and Lloyds of London.

    Insurance cover is a mandatory requirement by the Nigerian Civil Aviation Authority (NCAA) for airlines, which are required to insure their aircraft, passengers and third party liabilities.

    Domestic operators have kicked over the “exploitative” premiums, calling on the government to prevail on NAICOM to call insurance companies to order.

    But NAICOM spokesperson Rasak Salami said the airlines cannot prove the allegation.

    In a short message service ( SMS), he said: “Both  NAICOM and NCAA have investigated this allegation in the past. There is no fact to substantiate it. We have asked the airline operators of Nigeria to provide evidence but they have not.”

    The Executive Chairman of Airline Operators of Nigeria                    (AON), Captain Nogie Meggison, says indigenous airlines pay the highest insurance premiums in the world. He urged Aviation Minister Chief Osita Chidoka to look into the matter, stressing that with such high premiums, the future of domestic aviation appears bleak .

    Last year, the Nigerian Civil Aviation Authority ( NCAA) initiated meetings on how to achieve lower insurance premiums. Part of the initiative was a push for the consolidation of insurance companies to enable them underwrite aircraft risks.

    It was gathered that an aircraft valued at $10 million with crew and third party liabilities in Europe, the US, Britain or Barbados attracts a premium of between $80,000 and             $100,000 per annum, as against the   $300,000  to $600,000 charged by Nigerian brokers yearly.

    Experts are worried that with the attainment of Category One Safety Rating by the United States Federal Aviation Administration (USFAA), Nigeria  ought to be considered a low risk country.

    It was learnt that NAICOM is concerned about brokers who collect huge premiums, but remit to their overseas underwriters the globally prescribed rates.

    Major insurance companies are said to be pushing for enhanced capitalisation to enable them undertake aircraft risks.

    If the move succeeds, the profiteering from airlines may continue unabated.

    “The source, who pleaded for anonymity, said: “These people are not underwriters, they cannot underwrite an accident in this industry, they don’t have the capacity as they are just brokers. All they do is collect so much money over five to 10 times of the internationally known cost and re-insure with Lloyds and others.

    “These middlemen are making business tough. We reject this in its totality. We need immediate change, so we can remove the impediment and get insured anywhere else that would be cheaper for us.”

    An operator has questioned the nature of risks some of the brokers are bandying to justify their “exorbitant” charges, arguing that the rates are untenable, since Nigeria is  Category One certified.

    “What kind of risks are you talking about? Nigeria is Category One. Therefore, a low risk country, and one of the advantages of being Category One is reduced insurance premiums. So, since we are low-risk to the international community, why should  our own country operators fleece us?” he queried.

    The operator argued that if the premiums are reduced, even foreigners will insure here “so there should be no border limit to insurance as there are none elsewhere in aviation,” he said, adding that since it is an international business, it is out of place for them to insist on Nigerian  operators insuring only in Nigeria.

    “They should leave the airlines alone to their choice as their counterparts the world over. It should be a matter of choice and not compulsion as is being practised today, especially as the use of local insurance brokers is not competitive,” he said.

    He said operators should have the option either to use a local or foreign broker, insisting that these rights should be freely exercised by the operators. He urged NCAA to maintain neutrality  in the matter.

    Another operator also called on the government to compel  NAICOM to caution insurance companies to desist from this “embarrassing and unholy exploitation”.

    He enjoined all operators to stand firm against what he termed “this shameless exploitation.”

    “You cannot force a man to buy your goods because he is your neighbour, when your goods sell at a far higher price than on the next street,” he said.

  • Seven insurance firms coming

    Seven insurance firms coming

    Seven insurance firms may soon join the industry, Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye, has said.

    Although he did not list them, he said the development would boost Market Development and Restructuring Initiative (MDRI) and bring about tremendous change in the industry.

    He said: “I know seven operators that have embraced retail insurance and they are really doing well. A particular company is ready to establish 200 offices between now and 2015. It is ready to generate 22,000 employment in the retail market.

    “There are enormous untapped business opportunities within professional and cultural groups which can boost the profitability of operators. The business culture of operators has stemmed the growth of the industry as operators are comfortable with going to brokers to collect cheques, which is unhealthy for the industry’s growth.”

    “The business culture of operators has not helped the situation. The operators like going to a broker to collect cheques, forgetting the fact that under the MDRI, there is focus on groups and alliances. For instance, a group like the Nigerian Bar Association (NBA), I am sure it has about 20,000 members, if an insurance company designs a product for all members of NBA, and each of them pays N10,000 in a year, that would amount to N200 million. “

  • 41 insurance firms yet to submit 2012 financials, says NAICOM

    41 insurance firms yet to submit 2012 financials, says NAICOM

    With less than five days to June 30 submission deadline required by the National Insurance Commission (NAICOM) for insurance companies to submit their 2012 financial statement, 41 companies are yet to comply.

    This was disclosed yesterday by the regulatory body, NAICOM in a status report of Insurance Companies 2012 Financial Statement as at Monday, June 24, 2013.

    It noted that only three companies, which include Mansard Insurance Plc, ADIC Insurance and Wapic Insurance Plc have submitted and gotten approval on their 2012 financial statement.

    The commission reported that financial statements of companies such as FBN Life Assurance Ltd, AIICO Insurance Plc and Oasis Insurance Plc are presently been queried and are as such awaiting their responses.

    Meanwhile, Consolidated Hallmark insurance whose statement has been queried by the commission and responses made is currently undergoing review.

    In the same vein, Continental Re, Law Union and Rock Insurance and NEM Insurance Plc have just submitted their statements, which are being reviewed by the commission.

    NAICOM has in recent time’s maintained strict reporting standard in the financials of insurance companies.

    Commissioner for insurance, Mr. Fola Daniel said the commission would never approve any account that fails to meet the required standard.

    There are 59 insurance companies in the country with 17 operating as life, 32 as non-life and 10 as composite.