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Tag: Insurance

  • Are insurance companies ripe for mergers?

    Are insurance companies ripe for mergers?

    With pressure arising for the need to meet the capital adequacy stipulations of  the National Insurance Commission (NAICOM) insurance firms  are being forced to embrace mergers and acquisitions as the best survival option, due to difficulty in raising funds from the capital market.

    Investigations  show that the only viable option for some of the firms, given this scenario, is to pull resources together. This is so, as most of the firms are planning to expand their businesses, a prospect  that requires higher capital adequacy ratio, which is a direct function of the amount of risks being carried, otherwise called the solvency margin.

    However, Managing Director/Chief Executive, NICON Insurance Limited, Mr. Samuel Bayode said the development may not necessarily have negative impact in the insurance industry.

    He said the injection of fresh funds and change of ownership structure would help make insurance companies more competitive in the country and in Africa in general.

    “Section 24 of the Insurance Act 2003 states that an insurer shall maintain at all times, a margin of solvency in respect of its general business; being the excess of the value of its admissible assets in Nigeria over its liabilities in Nigeria.”

    Analysts say that insurers already under NAICOM monitor for capital adequacy issues, may be up for the taking  by some enthusiastic foreign firms looking to come into the Nigerian market.

    Reviewing the economy and the insurance industry in 2014, a CEO managing one of the top insurance firms said the signs are not very good for the economy.

    The capital market lost 60 percent in 2014 and the run is still not over. There is the falling oil price, dwindling government revenue, as well as volatility in the financial markets, which suggest it will not be easy to raise funds this year.

    “This does not only affect insurance companies, it cuts across other industries that would need funding to grow operations and all that,” the CEO said.

    He further observed that some insurance companies already having capital adequacy challenges, might begin to sell off majority stake to foreign firms seeking to come into Nigeria, unless they  take to mergers.

    “Mergers will be good because consolidation will strengthen the insurance industry for better growth and value creation to the economy.”

    Thompson Barineka, director, inspectorate, NAICOM, had said the commission carries out monitoring and evaluation of the stability and health of insurance companies on a regular basis,  to ensure that they are alive and capable of meeting their obligations to policy holders.

    Barineka also said  that measures have been put in place to enable the commission oversee the activities of operators, adding that its portal for daily monitoring of the activities will soon come on stream.

    The Economist Intelligence Unit, in a report titled: ‘Insurers and society: How regulation affects the insurance industry’s ability to fulfil its role’notes that the demands of the new regime threaten to disrupt the key role played by insurers as investors in the capital markets, by pushing them towards ‘safer’ assets with lower capital charges, and away from the equities and non-investment grade debt on which much of the private industry depends for financing.

    This could be a particularly troubling outcome for businesses seeking to raise capital, given that banks remain reluctant to lend because of their own balance sheet constraints, the report said.

    The boards of SA Insurance Plc and SA Life Assurance Limited has recently  approved the merger of both companies to form a composite insurance company.

    According to the organisations’ spokesman, Nelson Egboboh, the boards’ corporate decision of combining the existing strengths of both companies was spurred by their desire to “create a bigger and financially strong composite insurance company with stronger capacity to serve its various clients and play a more dominant role in the insurance sector.”

    He said corporate action was further being taken with a focus on “delivering superior returns to the shareholders, provide much higher level of satisfactory service to our clients and to save cost of operations.”

    He explained that to give the merger plan the necessary regulatory backing, “the management has applied for and secured a”no objection consent” from the regulator, the National Insurance Commission (NAICOM).

    He said the companies are engaging the services of appropriate financial and merger experts to drive the transactions, stating that “it is our plan to complete the process before the end of the third quarter of this year.”

    Egboboh assured that “the composite company to emerge will continue to build on the success of the transaction in the months to come, providing more innovative products and delivering on its promises to clients,” noting that “with the company’s formidable management team as well as its professional and result-oriented workforce, the company was sure of achieving its set merger goals.”

    He explained that SA Insurance Plc which became quoted on the NSE in 2003 currently has shareholders’ funds of N4.7billion and asset base of N8.8billion while its affiliate company, SA Life Assurance Limited has shareholders’ fund of N2.1billion and a total asset base of N6.9billion.

    Nigeria with a population of about 166 million people has only 0.5 percent insurance penetration. This suggests that insurance in Nigeria is in an early stage. It also means Nigeria is a potential hub for expanding into West Africa; more so that Nigeria and Ghana together account for over 75 percent of the region’s GDP. There are about 1.3 million Nigerians that have insurance cover, according to a 2012 report by Enhancing Financial Inclusion & Access (EFInA). Most Nigerians have vehicle insurance while life assurance, medical, critical illness cover and livestock/agriculture insurance have extremely low uptake.

    The insurance industry in Nigeria consists of 59 insurance companies and two reinsurance companies; 24 of them are currently listed on the Nigerian stock exchange. Although, the industry has two main types of income, investment and technical income, it contributes a mere o.56 percent to GDP, but the growth rate of the industry premium is estimated at about 18 percent per year. And the level of foreign ownership is increasing. The industry is still consolidating; there have been some mergers and acquisitions, for instance, Crusader Insurance merged with Custodian & Allied Insurance, and Assurance African Holdings acquired GT Assurance, now Mansard Insurance.

    In terms of peer country comparison in Africa, Nigeria with a population of about 166 million has 59 insurance companies, while South Africa with a population of about 52 million has 184 insurance companies; and Ghana with a population of about 25 million has 47 insurance companies. The insurance industry in South Africa and Ghana contributes 12.9 percent and one percent to their respective GDPs.

    Compared to advanced economies, the total insurance premium as a percentage of GDP for US is 14.5 percent, UK, 15 percent, Ireland 22 percent and Germany 8.9 percent. The major constraints to the Nigerian insurance industry are poor corporate governance; high default rates; low capital; low capacity and skills; cultural factors; high level of consumer’s ignorance of the advantages of insurance products; high rate of unemployment and low GDP per capita figures as well as lack of genuine property ownership documents.

    Insurance analysts said there is the need to have the practice and business of insurance penetrate the nook and crannies of the country. They said it could by doing so contribute meaningfully to the nation’s economic growth process.

    Viewed from that prism, experts and stakeholders in the industry again recently raised the issues of mergers and acquisition within the industry; a move which the National Insurance Commission (NAICOM) once promised to encouraged in the latter part of last year.

    Insisting mergers and acquisitions remains the only way by which the insurance sector in Nigeria can fully penetrate the consciousness of Nigerians, while fully becoming appreciated as an effective business support and growth strategy, other observers told our correspondent that the industry regulators should also ensure it (NAICOM) lives up to its pledge by making sure operators come together to form alliances, mergers and even acquisition that can drive the sector forward.

    Nsugbe pointed out that though NAICOM has said it was constantly encouraging mergers and acquisitions in the industry in order to breed stronger firms that can underwrite bigger risks and do business professionally, that there has been nothing much to show as having been achieved in that aspect.

    Taking the blames and challenge of low response to mergers and acquisitions proposals within the insurance sector and placing them on the shoulders of the sector, regulators, the Executive Director of City Insurance Brokers Limited, Mr. Rocky Igunbor, said the much the industry regulator can do is what it has done by attempting to create an enabling environment to make those kind of mergers/acquisitions arrangement a smooth sailing affair.

    Igunbor also blamed the operators. Some of them he said include the directors and owners of small time insurance firms responsible for drawing back the hands of the clock with their “narrow view of things”. He added those types of operators mainly play to the gallery of being in support of mergers or acquisition when there is the need to do so, while holding on, at the same time strongly to their firm’s own little space within the sector when they have to.

    The former President of the National Council of Registered Insurance Brokers (NCRIB), Mrs Liade Osijo, told journalists recently for the nation’s insurance industry to survive the current world economic recession, that stakeholders needed for further consolidation of insurance institutions into bigger and stronger underwriting firms.

    According to her, with close to 100 life, non-life and reinsurance companies operating in the country, there was no doubt that such figure is too large for optimal performance. That is why the commission should encourage mergers and acquisitions among operators in the industry.

    Making reference to the merger between Custodian & Allied Insurance Plc and Crusader Nigeria Plc, and that between African Alliance Insurance Plc with Universal Insurance Plc, as the only notable merger that took place last year despite the encouragement from the regulators, former Managing Director of Great Nigeria Insurance Company Plc, Alhaji Sani Abdulrahman, said such poor performance in the area of mergers and acquisitions was not good enough for a sector that is struggling to become more relevant in the scheme of things.

    In Nigeria AXA has made a significant inroad into the insurance market. AXA in July 2015 reincorporated Mansard Insurance Plc as AXA Mansard Insurance, to complete the acquisition and brand essence change that started late last year. The company also bought 77 per cent majority equity stake in Mansard Insurance Plc, in a major market-entry push that promises to profoundly impact the Nigerian insurance industry and already has a substantial presence in Africa including Cameroon, Gabon, Ivory Coast, Morocco, Senegal and Algeria.

    According to him, “consolidation, mergers and acquisitions have become necessary in order for the sector to meet the new and challenging environment. Companies must increasingly compete globally, they must be learn and efficient, while offering an expanding array of products to ever more discerning and demanding consumers.”

    He explained that mergers and acquisitions have remained viable options for insurance companies to remain in business, and that Nigeria insurance operators should quickly embrace the concept, if many of them are to remains afloat and continue their operation in the years to come.

    Managing Director of Global Insurance Risk Brokers Limited, Chief Rufus Kupi, said he is of the opinion “ that the number of insurance companies operating in Nigeria are too many and should be reduced not by forcing any company to close-shop, but by encouraging insurance companies to come together through mergers and acquisitions”.

    Also the Stakeholders recently urged insurance companies quoted on the Nigerian Stock Exchange (NSE) to seek mergers and acquisitions to remain competitive in the industry.

    The stakeholders said that mergers and acquisitions would help the companies to a build formidable force in the industry and enhance investor confidence in insurance products.

    They also called for effective regulation of the sector by the National Insurance Commission (NAICOM) to eliminate activities of illegal operators and ensure strict adherence to good corporate governance.

    Mr Boniface Okezie, National Chairman, Progressive Shareholders Association of Nigeria (PSAN), said that many insurance companies were under-capitalised and needed to seek mergers and acquisitions.

    Okezie said that many insurance companies were yet to improve after the financial meltdown and should seek business combination.

    “The industry is still under the burden of heavy receivables and return on investment in the sector is very low,” Okezie said.

    He said that there was a need for business combinations for the industry to grow instead of growing under heavy debts.

    Okezie urged stakeholders in the industry to map out strategies aimed at addressing negative public perception and lack of mass participation.

    Alhaji Gbadebo Olatokunbo, founding member, Nigeria Shareholders Solidarity Association, said that investors had lost confidence in insurance stocks because of poor performance and non-declaration of dividends over the years.

    Olatokunbo said that the main aim of investment was to maximise return.

    He noted that the sector was performing below expectation in spite of huge opportunities in the country.

    Olatokunbo said that shareholders had nothing to show for their investment in insurance companies for years, adding that it contributed to foreign investors’ apathy in the stocks.

    He said that the industry had failed to contribute its quota to economic growth and development due to investors’ apathy to their products occasioned by poor payment of claims in the past.

    According to him, “investors will continue to shun insurance stocks on the Nigerian Stock Exchange (NSE) if NAICOM fails to beef up surveillance and ensure proper sanctioning of erring and illegal operators.

    He called on the commission to engage insurance directors on the need to scrutinise expenses to control excesses of managerial capitalists in line with present realities in the industry.

    Olatokunbo said that there was a need for NAICOM to do more on supervision and formulation of policies in line with the global best practice, to make the industry attractive.

  • ‘Why we need livestock insurance’

    A former Dean, Faculty of Agriculture, University of Ilorin, Kwara State, Prof Abiodun Adeloye, said a functional livestock insurance scheme will protect farmers and their assets after disasters.

    He said agriculture is a risky business exposed to volatile production and commodity prices, and ensuring a sustainable food supply for the growing population is one of the biggest global challenges today.

    However, this huge livestock industry faces a number of potential threats including floods, fires, epidemics and unavailability of fodder. Moreover, there are no customised insurance product offerings to suit the diverse needs of farmers across the industry

    He said livestock insurance will help farmers reduce their losses in crop and livestock production.

    According to him, there is need to help livestock producers limit losses in coming years.

    Some of the risks that livestock farmers face that can be insured include mortality, uncontrollable pest and disease or epidemics, snake bites, theft, natural hazards such as fire, lightening and floods among others.

    Such insurance programmes, according to him, would  insure against loss of revenue and  loss of animals. These risks, according to him,discourage a lot of people from undertaking farming.

    He said they can face such risks with protection from insurance.

    According to him, it is important for farmers to arrange appropriate insurance for their livestock.

    With a functional livestock policy, he said farmers will be encouraged to cultivate a culture of insuring their live stock. Under livestock insurance, farmers may insure their cattle, goats, sheep and camels.

  • Fed Govt must buy insurance for industry to grow

    Fed Govt must buy insurance for industry to grow

    The insurance sub-sector of the financial services industry in Nigeria is not contributing enough to the nation’s gross domestic product (GDP). The new Group Managing Director, Standard Alliance Insurance Plc, Bode Akinboye says insurance could increase its sectoral contribution if the Federal Government shows leadership by buying and paying for insurance policies. He says the sector should take advantage of the telecoms sector to reach out. He also speaks about the acquisition of strategic shares of the company through Gemrock Management Company Limited; ongoing process to merge the life and its non-life companies.  Omobola Tolu-Kusimo met him. 

    How can the insurance industry be made to drive Nigeria’s economic growth?

    One of the areas of challenge for us is distribution and you ask yourself, what has happened to telecommunication companies which from nowhere just took over every area of the economy. Insurance practitioners have a lot of work to do. We need to engage and train the workforce particularly those people popularly called agents or quasi employees in large numbers all over the country. We need to use them as a mechanism not only to popularise insurance but to generate that large numbers in small quantities, little premium but wisely spent.

    We need to make plan on the telecommunication sector so as to reach out to customers thereby using mobile devices to support our service delivery. Employment generation is one major key area in the industry. If you create employment and you succeed by generating more income, then you would have been in a very good position to get huge pool of investible fund that can then be allocated to different investment from Treasury bill which is government investment. In other countries, insurance companies are major stakeholders in the industry and Nigeria should not be an exception. Insurance companies can exist in mortgage resolution in Nigeria by helping to create residential houses for people, not only by investing but by creating product by mortgage default insurance that will enable people that may not have enough contribution to go into mortgage. Insurance would give guaranty on their behalf to mortgage institutions. These are areas that would properly position the insurance sector. This way, members of the public and all of us would benefit through impactful activities of the institution.

     

    We have a new government in Nigeria and fortunately, we also have a new Commissioner for Insurance, heading the regulatory body, NAICOM. Incidentally, the regulator is also talking about change. What kind of sector do you foresee in the next two or three years?

    I foresee an industry that would be a significant contributor to the nation’s gross domestic product (GDP) and to national economic wellbeing. This could only happen if the change mantra from the Presidency trickles down to the industry. This means that first, government must become the number one customer of the industry and they must walk the talk. Government must buy insurance and pay for it and every other person will follow. One of the reasons why investible fund in the economy is low today is because insurance is not working. You can see what has happened to pension scheme. From almost nothing, they now have N5 trillion under management. It shows what government can do when its agents decide to go and enforce laws which is what the National Pension Commission (PenCom) has done. In our industry today, we have compulsory insurances such as Third Party Motor Insurance, Group Life and the others. Government should buy and enforce this policies and the industry will never remain the same. We believe in the quality leadership of President Muhammadu Buhari and that is why we voted for him. We believe he stands for change; he represents that change and we are expecting to see the change in the industry. We have a regulator who is very good and given that he will also key into the change mantra of the Federal Government; we expect that he would be able to encourage them as the main adviser to government to comply with the law. What makes insurance not to work today is the absence of law and order. We want government to deal with law and order in relation to enforcement and compliance with insurance laws and see what will happen to the industry. If these issue is taken care of, in the next two years we will have a solid foundation in the industry and leverage to begin to address the issue of service in new product on operation of investment capacity in the economy.

     

    The Commissioner for Insurance and other experts in the industry have identified market indiscipline and unethical practices among operators as part of the problem killing the growth of the industry. It is a fact that some insurance companies sell third party motor policy pegged at N5000 for as low as N1000. What is your take on this?

    The situation is like an industry that has engaged in self-destructive process. When you look at Potter five forces analysis that talks about value creation, there are different players in every sector. Where one side is taking much more value than the other, that industry is set to die. We want an industry where value creation is reasonably evenly well spread and that is not the case with us. Today Nigeria happens to be the only country in the world where we get the cheapest form of insurance for the poorest service. This is just a natural process. Nigeria is the only country in the world where motor insurance with the comprehensive insurance is based on one flat rate irrespective of the car you are driving, where you live, where you work and what you do. The issue of premium rating is a fundamental problem that is facing the industry and that is why we must commend NIACOM for wanting to look into some companies. The Commission has the authority under the law to approve rate for every insurance company and so it has asked the industry to agree on a rate and submit to the Commission to sign on. Once this happens, it becomes illegal to operate outside of that guideline. We must have a minimum flat rate that cannot be flouted because even the banks have interest and fixed rates approved by the Central Bank of Nigeria (CBN). This is why banks don’t run business anyhow. Our business is supposed to be scientifically driven. It is supposed to be based on the geography of data. This will help us when we are to pay claims and enable us pay the claims as at when due. NAICOM has said each company in the industry should appoint people that will scientifically determine this rate and recommend to them for approval. My submission is that there must be minimal rate for us to survive as an industry.

     

    It is more than two years now that the ‘No premium, No policy cover’ became effective in the industry. How is it working for the industry?

    It is one of the best things that has ever happened in the industry. Before now, companies lends premium and they barely collect 40 per cent of it. Insurance company’s balance sheet was carrying large amount of unpaid premium that are never paid for. Yet claims were coming from customers and they insist that you must pay. In order to bridge this gap, the regulator decided to go in accordance with what the law says which is no premium, no cover and it made sense. Insurance is a line of pulling of risk and this means you must pay your own part of the whole rate of the premium. So what the regulator wants is that before you issue any cover, premium must be received. It is good for the industry; it is good for the customer. The customer can now demand for the payment of their claim and get it as at when due while the underwriter also has the money to invest ahead of any casualty. The industry can now really defend the income they have been paid unlike what we used to having the past.

     

    You were out of the insurance industry for a while and now you are back sitting as the Group Managing Director of Standard Alliance Plc. Can you tell us what brought you back?

    I worked here in Standard Alliance from 1997 to 2009 and that was almost 13 years of non-stop activities and at that point, I thought I needed to go and refresh myself. I went to school and was also working to look at the industry. Five years after, there was an opportunity to come back as an investor manager and so I took advantage of the opportunity and came back.

     

    There is board change in the company and you are a new investor. There has also been shakeup among workers which led to some them being laid off. Can you shed more light on this recent development within the organisation?

    Basically, we came in here with a lot of investors and the objective was to put money in the company and have strategic interest that must be able to influence the direction of how the business is going to be managed and that involved the board and the management composition. Today, we have a new board of directors that is more or less made up of predominantly new members and we also have a new management which I am heading as a result of the new investors. There is a transformation going on and so we needed to look at people we inherited. We have met with people on ground to redeem the system. We also employed more people. We tried to inject the change mantra into the system to achieve the transformation. We are also trying to attract new workers within the financial service sector and other related sectors to help in positioning the institution. Presently, new senior hands have been hired in retail, investment portfolios, corporate strategy, quality process and technology.

     

    How are you dealing with the issue of profit making which is critical to the shareholders of the company?

    We have dealt with the issue of people which is the most important asset that can be used to drive any system in the insurance or banking sector. So how do we service our internal customers first? How do the departments relate to one another in order to be able to collectively service their external customers in streamlining their processes and documenting their processes? Having dealt with the issues of processes and product, we had to look at which product do we take out to the customers and the medium channels of getting to them. This company is almost 20 years old. We have customers that have remained in this institution through both the thick and thin and are still very satisfied with the company no matter the challenges. Presently, we are going back to the basic which is our customers. We have reassured them that we will continue to delight them. We have also backed up our return with action by paying claims mostly inherited. Confidence has being restored and business has started in the top line because we have dealt with the issue of processes. It means we have also streamlined these stages and minimised the cost of running the business. The natural thing that follows is profit when your top line is still relying on growth and you manage your cost at the barest minimum.

     ‘The issue of premium rating is a fundamental problem that is facing the industry and that is why we must commend NIACOM for wanting to look into some companies. The Commission has the authority under the law to approve rate for every insurance company and so it has asked the industry to agree on a rate and submit to the Commission to sign on. Once this happens, it becomes illegal to operate outside of that guideline. We must have a minimum flat rate that cannot be flouted because even the banks have interest and fixed rates approved by the Central Bank of Nigeria (CBN)’

    You are in the process of merging the non-life company to the life company. Why did you take the decision?

    Standard Alliance Insurance has a subsidiary which is the life insurance company, SA Life Assurance Limited while we are also doing general business. These two businesses are similar with different focus. Life is more on long term and non-life general is more on short term business and we believe that if it means combining the two businesses together to bring stability, then it is the way to go. By bringing the two businesses under the same balance sheet, you will have a structure of one board instead of two different boards and one branch per location instead of multiple branches for each of the branch. Perhaps management team is marginalised because you will have one managing director instead of two, we can have the life team, technical team and the general team. At the end of the day, you have one person coordinating the two sides of the business and you also have share facilities, shares support services, share technologies, share administration and this brings massive savings which goes straight to improve the Company. This is why we are merging the businesses together. We believe companies that are doing pretty well in the market today such as Leadway, AIICO, Mansard have this kind of structure.

     

    Can you shed more light on the merger? At what stage is it now?

    We have commenced the process of the merger. It is a process that regulatory authorities must approve. The Securities and Exchange Commission (SEC) has approved it and our regulator, the National Insurance Commission (NAICOM) has given us a no-objection approval and we are moving to the next stage which is to submit our application to Corporate Affairs Commission (CAC) to get approval for the merger.

     

    What should customers and shareholders expect from the company going forward?

    Going forward, you will see a combined force with a team that is ready to offer customers so many products from life to non-life. There will be a more coercive force out there giving quality service and with improved top line and bottom line. We expect to see a more progressive and prosperous company by the end of the year, an investment that would be worth the while for our shareholders. We want to be a dominant player in the insurance sector. The sector is still at a developmental stage in Nigeria and is contributing less than five per cent to the nation’s GDP. In South Africa, the contribution of insurance is about 15 per cent of GDP while the United States and others are between 20 and 25 per cent. So you can imagine if we can move our contribution from 0.5 per cent to 10 or 5 per cent, companies that have performed well can become number one which is open to everybody because the room for growth is massive. So only those who are ready to run the race will be able to determine in five or 10 years’ time. We are working hard, we are here with the new energy, new team that is focused and committed to do their best. This is the time for people to look at insurance stock because penny stock will become mega stock. Historically, when a sector is at the kind of level that insurance is presently is the right time and only those who can take the risk will bear the reward.

     ‘We believe in the quality leadership of President Muhammadu Buhari and that is why we voted for him. We believe he stands for change; he represents that change and we are expecting to see the change in the industry. We have a regulator who is very good and given that he will also key into the change mantra of the Federal Government; we expect that he would be able to encourage them as the main adviser to government to comply with the law. What makes insurance not to work today is the absence of law and order’

     

  • Apathy persists on third party, comprehensive insurance

    Apathy persists on third party, comprehensive insurance

    Vehicle owners are still averse to purchasing the genuine third party motor insurance certificate. This is because they believe insurance operators do not pay claims when there is one.

    For instance, a man who simply identified himself as Ojora, said he does not believe in insurance operators because they do not respond to claims.

    Narrating his experience, Ojora said he bought a brand new car for N4.2 million, and paid five per cent of the value as premium for comprehensive insurance.

    He however regrets that he was subjected to a lot of hassles when it was time to get paid for claims after his car’s involvement in an accident. Besides, his insured sum was reduced by 10 per cent for reasons he still claims not to understand.

    Similarly, another source, who declined to be mentioned, also expressed regrets at the handling of his insurance claims by his insurer.

    “I will never have anything to do with insurance companies or their operators because when I had a problem, they refused to pay claim,” he lamented.

    For Godwin Ejembi, a staff member of the Nigeria Ports Authority (NPA), Lagos, insurance firms and their operators, are not to be trusted. This is because several times, they run foul of the agrements they have entered into with their clients. Although he said a few of them are credible, majority, he insisted, were fraudulent.

    “When there is an accident, they ask you to produce all sorts of  proofs and documents- things they never ask you for when you are buying the policy from them,” he lamented, adding that insurance companies take advantage of their clients. He, therefore, urged insurance brokers to ensure more clarity in their transactions with their clients, especially when they go out to prospect for clients.

    But it is not all knocks for the operators. Damilare Shoye, a civil servant, explained that there are advantages of insurance which should be a enough reason for Nigerians to imbibe the insurance culture.

    “We need to forget about the negative perception they have about the insurance industry in the past.

    “They need to know that things are changing now. We voted for change and we are already feeling it in our lives. We need to change from our thoughts about the past and be positive about the future. The industry also need to enlighten the public about what insurance is all about.”

  • NAICOM insists on deadline for oustanding insurance claims

    NAICOM insists on deadline for oustanding insurance claims

    The Commissioner for Insurance, Alhaji Kari Muhammad, has said that NAICOM will not go back on the Sept 30 deadline for insurance companies to clear all outstanding claims of policy holders.

    Muhammad said in an interview with the News Agency of Nigeria (NAN) in Lagos on Sunday that National Insurance Commission (NAICOM) would enforce the deadline on effective claims management.

    “ Other reasons for implementing such deadline and sanctions are effective trade practices and fair treatment of policy holders and intending consumers,’’ he said.

    Muhammad said for Nigeria’s insurance industry to be relevant, the prescribed standard of practice set by the commission should be implemented.

    He said the claims Management Guidelines document requires each insurer to develop, document and implement claims management and payment policies.

    The commissioner expressed dissatisfaction with large numbers of unpaid claims by insurance firms, including those with robust capital bases.

    Muhammad said if the situation was allowed to continue, the growth of the industry would be stalled, noting that the current industry level was still below 35 per cent.

    “Also, policy buyers and intending ones will easily lose confidence in the sector as it deepens the poor image of insurance practice in Nigeria,’’ he said.

    Muhammad said NAICOM was determined to check bad practices in the industry through effective claims management and ensure adherence to global standards.

    He commended his predecessor in office, Mr Fola Daniel, for designing policies that encouraged growth in the industry.

  • Embrace insurance, Lagosians urged

    • ARIAN, NIA on road show

    Lagosians have been urged to embrace insurance. A lawmaker in Lagos State, Hon. Rotimi Olowo, made the call during a visit to the state House of Assembly by some insurance operators.

    They later embarked on a road show to promote insurance awareness among the people of the state.

    The event organised by the Association of Registered Insurance Agents of Nigeria (ARIAN) featured the officers of the Nigerian Police and that of the Federal Road Safety Commission (FRSC), who stopped vehicle owners at Ikeja to check if they had genuine motor insurance policies.

    The insurance companies that embarked on the road show were AIICO Insurance Plc, Royal Exchange Insurance, Niger Insurance Plc, Leadway Assurance Co.Ltd, Lasaco Assurance Plc, Mutual Benefit Assurance Ltd.

    Olowo promised to help the operators in legislation to promote the insurance business. He said insurance is a life-saving business hence the need for the public to embrace it. He advised the firms in the state to do more campaigns on insurance awareness. He also said there was the need for every business in the state to be insured.

    He called on police, FRSC and Vehicle Inspection Operation (VIO) officers on the road must ensure that all vehicles have a third party insurance.

    He asked the operators to stop unscrupulous elements in the state from selling fake insurance to the people.

    ARIAN President, Gbadebo Olamerun, said the event was held to draw attention to the evils of fake insurance policies in the state and how they could be eradicated. He said most vehicle owners do not have genuine motor insurance policies.

    Director-General, Nigerian Insurers Association (NIA), Sunday Thomas, praised the state government for embracing insurance in the state.

    He pleaded with the government to assist the sector by ensuring that it makes insurance a compulsory practice in the state.

  • Insurance premium tax rise’ll add £35 a year extra to bills

    The United Kingdom (UK) insurance sector has reacted with disappointment to the rise in insurance premium tax (IPT) announced by Chancellor George Osborne in the budget

    Motorists can anticipate a rise in their annual insurance premiums of between £12 and £13.

    The industry estimated the increase in the basic rate of IPT from six per cent to 9.5 per cent from November, this year would add between £10 and £12 to the average buildings and contents policy, and £12 to £13 to a yearly motor insurance bill.

    Price comparison website moneysupermarket.com said an average two-car household could expect to pay around £35 extra a year for home and car insurance.

    AA Insurance said the “outrageous hike” could backfire “by leading to an increase in uninsured drivers”.

    Huw Evans, Director-General of the Association of British Insurers, said: “It’s very disappointing to see a more than 50 per cent tax increase being imposed on consumers, especially when the insurance industry and government has worked so hard in recent years to bring down the cost of essential insurance.”

    Steve White, chief executive officer, British Insurance Brokers’ Association, said his organisation was extremely disappointed.

    “The government has been working with the industry to reduce the cost of insurance for consumers including a summit chaired by the prime minister. It therefore seems counterintuitive to be taking measures which will add to the cost effectively taxing protection. We hope the government will review this rise and correct it in further budgets,” he said.

    Alexis Roberts, partner in the insurance team at law firm Pinsent Masons, said insurers would be concerned on how the change could have a negative effect on sales.

    Naomi Saragoussi, health and protection lead at PwC, warned private medical insurance would be the cover worst affected. “This will result in private medical premiums increasing by between 7.5 per cent and 15.5 per cent a year. It will also impact employees’ taxable benefit, as IPT is included in an employee’s overall P11D liability,” she said.

    “An increase in premiums due to an increase in IPT may result in some individuals and companies unable to afford private medical cover, increasing pressure on the NHS.”

    Her colleague Ben Flockton, insurance tax partner, added: “Insurers will also be concerned about whether this represents part of a gradual move towards aligning the IPT rate with the VAT rate, something we have already seen in other EU member states.

    “On a more positive note, the announcement of transitional provisions around the rate rise should allow insurers to manage the change with less difficulty than in 2011. Insurers’ concerns around the way that change was implemented have been recognised.”

    But Pinsent Masons’ Roberts added that greater regulation of claims management companies, which are perceived to drive up insurers’ costs, would be welcomed by the sector.

  • Wapic introduces motor insurance, group life products

    Wapic Insurance Plc and Wapic Life Assurance Limited have re-introduced motor insurance product suite and group life insurance product aimed at meeting Nigerians budget and life style flexibility, the Group Managing Director of the company, Ashish Desai has said.

    He stated the motor insurance product suite has been rebranded and is now called “Moov” while the group life policy has been re-designed to address critical consumer needs while keeping them adequately protected against the financial impact of life’s risks whilst in employment

    Unveiling the value propositions for Moov and group life in Lagos, Desai said Moov, the motor insurance product in its new form has been designed to meet the yearnings of customers for budget and life style flexibility.

    An integral feature of the new product, he noted, is the fact that the consumers can custom-create their motor insurance cover.

    He said: “The motor product comes in four variants, which include Moov to cover third part motor insurance; Moov Plus for third party, fire and theft; Moov Prestige to cover basic comprehensive insurance while Moov Luxury is the maximum motor cover available.

    “Within each option, there is a menu of covers from which customers can make a choice based on their needs and budget. Each cover is priced separately while the customer can work out the cost using the online calculator provided. The company has also made the product more accessible for the insuring public as there are now various product purchase channels available to consumers.”

    He stressed that the launch of these products, further reinforce their commitment to excellence in customer service.

    Managing Director, Wapic Life, Niyi Onifade further explained that Group Life Insurance product is a compulsory class of cover for all employers with three or more employees.

    He said with this in mind, the life business, Wapic Life Assurance Limited, had similarly revamped this product to meet the needs of employers through simplified documentation, seamless payment process and enjoyable claim settlement for the benefit of their employees

  • Africa contributes 1.5% to global insurance premium

    African contribution to the world insurance gross premium is only 1.5 per cent, President, African Insurance Organiation (AIO), Jean-Baptistery Ntukamazina, has said.

    Speaking yesterday at the ongoing 42nd Conference and General Assembly of the African Insurance Organistion (AIO) in Tunisia, he said conflicts in Africa have cost continent billions of dollars.

    This year’s conference with over 1000 delegates in attendance has African insurance facing mass events as its theme.

    Ntukamazina lamented that a report by Oxfam compared African countries afflicted by conflict with those at peace, saying nations at war have, on the average, 50 per cent more infant mortality rate; 15 per cent more undernourished people and life expectancy reduced by five years while indirect deaths are 14 times higher than deaths in countries in combat.

    The research by Oxfam, Saferworld and the International Action Network on Small Arms, estimates that conflict shrinks economies by 15 per cent on average.

    The AIO chief said insurers are important actors of Africa’s economy.

    He said: “We all know that mass events are serious threat on economic activity; we know how wars and violent conflicts create inflation, increase debts, reduce investment, cause unemployment along with thousands of innocent victims. This serves to say this year’s theme of the conference is accurate and timely.

    “But, for our different economies to prosper, we need favourable political environment, security and good governance. That is why our political leaders should understand that the prosperity of their different nations is among their first responsibility. The promising Africa cannot arise without peace, security and good governance.”

    According to him, Africa attracts unusual interest from abroad, adding that the future is promising.

    He said resources boom and economic growth, industrialisation, infrastructure development, rapid urbanisation, rising employment levels, demographic, social change, technology, environmental change, regulatory change and hopefully political stability are factors that would drive the future of the continent.

    He said Africa has one-third of global mineral reserves and represents one tenth of the global oil reserves, two-thirds of the world’s diamonds produced

    He also said 27 per cent of the world’s arable lands is in Africa and 60 per cent of the world’s uncultivated arable lands is in the continent.

    Based on this scenario, he said insurers must take advantage of the opportunities and benefit from the growth in various sectors because the predicted positive changes of African economies will impact on healthcare services, housing and urban infrastructure, protection of assets and increased savings, among others.

    These are the opportunities we have to tap into by proposing new products, increasing insurance penetration, improving distribution techniques and cost-cutting. He said because the profession is risk-taking, professionals can boost, push and support other businesses by mitigating their risks and hence ameliorate the lives of our populations.

  • Traders: why we shun insurance

    Traders: why we shun insurance

    •Say operators not sincere

    Traders are averse to insuring their properties despite suffering heavy losses in fires in Lagos in the past one month, it has been learnt.

    Traders, according to the News Agency of Nigeria (NAN), lost goods worth billions of naira to fires which gutted five markets.

    According to NAN, many of the traders said they would not insure their businesses because the insurers were not sincere.

    Mr Lekan Oguntunde, the market leader of Oluwagbemi Market on Lagos Island, said most insurance companies did not pay claims in time whenever tragedy occurred.

    He said: “The experience of few of our members that registered with them is unpleasant. These insurance companies are diligent in collecting premiums but when it is time for compensation, they will start demanding for unnecessary things.

    “One of our members was asked to bring receipts for goods bought many years before the fire that gutted his shop.’’

    A fire victim at Ereko Market on Lagos Island, Mrs Remix Bakinson, said Nigerians lacked confidence in insurance companies.

    Bakinson said she stopped insuring her business five years ago because she did not see the need for it.

    “All that insurance people are concerned about is the collection of premiums, after that, nothing else. At least, they should be able to tell us what happens to the money if no losses are recorded after a period of time,” he said.

    She said she regretted not insuring her business, adding that she lost goods worth billions of naira to the fire.

    Mr Silva Okereke, leader of fabric sellers at the market, said he distrusted insurance companies because of their high premiums, especially, for comprehensive insurance.

    According to Okereke, the companies demand up to N500,000 yearly on businesses valued at N5 million.

    He said: “This is just too high; some of us collected loans from the bank to float our businesses and we are still repaying with interest. We pay almost five million naira per annum as rent on our shops; this is apart from other expenses.

    “So, it will be good if insurance companies can bring down the premium they demand.”

    Mr Olanrewaju Onigemo, Secretary-General of Electronics Market Traders Association at Alaba, Lagos, said the traders had not thought of insuring the market.

    Onigemo said insurance operators had not been visiting them regularly.

    “The last insurance company that was here came five years ago and we introduced the company to our members, afterwards we did not see them again.

    “Our members lack enlightenment; they find it hard to inculcate other things into their business apart from buying and selling.

    “Also, Insurance operators ask too many questions and are not sincere; so they can hardly get five out of 100 persons selling here at Alaba, to buy their policies.

    “We learnt our lessons from people who took comprehensive insurance, if an insured car is involved in an accident today, the compensation will be paid after three  years,’’ Onigemo said.

    He advised insurance companies to mobilise and penetrate the markets.

    Mr Mohammed Abdul, Secretary-General of Perishable Food Sellers Association at Mile 12 market, said it was wrong to force people to take an insurance policy.

    Abdul said some traders had not taken up any policy because of their religious beliefs.

    He recalled that some companies had come to the market to sell their products but most traders were not interested.

    Reacting, President of the Nigeria Insurers Association (NIA) Mr Godwin Wiggle said it had taken measures to encourage people to accept its policies, especially in micro-businesses.

    “We have developed robust micro insurance products that will address the needs of market people.

    “We have strategised and sensitised our members to enter Nigerian markets in full force,’’ Wiggle said.

    The association, he said, would continue to improve on its enlightenment to reach people.

    Mr Ayodapo Shoderu, President, Nigerian Council of Registered Insurance Brokers (NCRIB), said the council was working hard to promote high ethical standards among its members.

    Shoderu said anything short of this was unacceptable, adding that the council will not defend any member that violates insurance broking operation standards.

    “Let me reiterate the call for compulsory insurance for all Nigerian markets and public edifices, as enshrined in the legal provision under Insurance Act 2003 (section 64 and 65) of insurance of public buildings”, he said.