The Nation Newspaper

Tag: Insurance

  • Insurance regulators plan new basic capital requirement for big insurers

    Insurance regulators plan new basic capital requirement for big insurers

    The International Association of Insurance Supervisors (IAIS) is considering proposed options for the development of basic capital requirements for global systemically important insurers.

    In a document released on Monday, the IAIS is seeking feedback on these options in order to inform an upcoming field testing phase and to further support the design and development of the basic capital requirements.

    The IAIS is seeking to build wide stakeholders’ inputs into the new rules with a public consultation that will run from now till February 3, next year. Another public consultation is planned in 2014 after the global regulatory body has further developed and defined the basic capital requirement.

    In July, this year, the IAIS had released its assessment methodology and policy measures for the global systemically important insurers. The IAIS’ framework of policy measures consists of three main types of measures, including higher loss absorption capacity. It announced in July that as a foundation for the higher loss absorption requirements, the IAIS will as a first step develop the basic capital requirement to apply to all group activities, including non-insurance subsidiaries.

    The development of the basic capital requirement is the first step of a long-term project to develop risk-based, group-wide global capital standards.

    It noted that the second step is the development of high loss absorption requirements to apply to the global systemically important insurers due to be completed by the end of 2015.

    According to the global body, the higher loss absorption capacity will build on the basic capital requirement and address additional capital requirements for the major global insurers, reflecting their systemic importance in the international financial system.

    The final step is the development of a risk-based group-wide global insurance capital standard, due to be completed by the end of 2016, which will also be related to the basic capital requirement.

    “The IAIS has endorsed three substantive principles to guide the development of a “factor-based” basic capital requirement and to provide a high-level framework against which the final design will be considered. These principles are: that major risk categories should be considered, there is comparability of outcomes across jurisdictions and the basic capital requirement has resilience to stress,” according to IAIS.

    According to the implementation timetable, the new basic capital requirement is expected to become operational towards the end of 2014.

    The IAIS is scheduled to approve the basic capital requirement in September 2014 while the Financial Stability Board will review the basic capital requirement proposal between October and November 2014. The G20 is expected to subsequently endorse the basic capital requirement in November 2014.

  • Why insurance stocks are still down, by Sulaiman

    Why insurance stocks are still down, by Sulaiman

    Insurance stocks have continued to underperform the average return in the overtly bullish stock market due to the industry’s poor run of results and continued negative investor’s sentiments to the industry.

    In a review of the macroeconomic environment and insurance industry, Chairman, Cornerstone Insurance, Mr. Adedotun Sulaiman, said while the recovery at the stock market had seen substantial increase in the banking side of the financial services industry, the insurance sector has continued to underperform because of poor earnings and negative investor’s perception.

    He blamed the poor performance of the industry partly on the large number of small and commercially unviable companies.

    According to him, consolidation is not only desirable but inevitable to actualiSe the potential of the insurance industry.

    Smarting from a failed business combination bid, Sulaiman said Cornerstone Insurance will continue to explore opportunities to combine with suitable partners that share its values and bring distinct positive synergies to its business.

    In a report prepared for shareholders of Cornerstone Insurance, Sulaiman however noted the upside of the insurance sector.

    “The renewed focus on agriculture, level of investment in the power sector and growth in the wholesale and retail sectors will have significant implication for insurance and risk management services in the years ahead,” Sulaiman said.

    He noted that the reinvigoration of the Insurance Act provision on collection of premium before commencement of cover was a most significant intervention that will impact on the performance of the industry.

    Out of 29 insurance stocks quoted on the Nigerian Stock Exchange (NSE), 20 insurers have stagnated at around their nominal value of 50 kobo. This underlined the level of depreciation in the sector.

    Given their historic pricing trends in January 2008, the extent of the recession in the Nigerian insurance sector loomed larger than the global economic and financial crises. In the early 2008, nearly all insurance stocks were trading in three digits, in multiples of their nominal values and considerably in competitive prices with other related stocks. Prestige Assurance and Wapic Insurance-two sectoral leaders by share prices, opened February 2008 with four-digit values at N11.40 and N10.60 respectively. Today, Prestige Assurance is stuck at 56 kobo per share while Wapic Insurance opens today at 89 kobo. Other insurance companies relate the same story. Aiico Insurance opened February 2008 at N3.43, Continental Reinsurance set out at N5.15, Cornerstone Insurance was N6.19, Crusader Insurance traded at N7.85, Custodian and Allied Insurance was N6.50, Great Nigeria Insurance opened at N3.80, Guinea Insurance’s price on board was N4.30, Lasaco Assurance was valued at N4.88, International Energy Insurance opened at N5.94 while Law Union and Rock Insurance was traded at N6.10. Other market considerations then included Linkage Assurance, N4.80; Mutual Benefits Assurance, N4.96; NEM Insurance, 4.35; Niger Insurance, N8.70; Oasis Insurance, N4.63; Royal Exchange Assurance of Nigeria, N5.43, Sovereign Trust Insurance, N4.56 while Unic Insurance opened February 2008 at N5.51 per share.

    But contrary to the largely diversify and generally upward pricing trend in early 2008, insurance stocks closed with almost a generic depressive outlook. Insurance stocks that closed at their nominal value of 50 kobo yesterday included African Alliance Insurance, Equity Assurance, Great Nigerian Insurance, Guinea Insurance, Consolidated Hallmark Insurance, Investment & Allied Assurance, Mutual Benefits Assurance, Niger Insurance, Oasis Insurance, Regency Alliance Insurance, Sovereign Trust Insurance, Standard Trust Assurance, Standard Alliance Insurance, Unic Insurance, Unity Kapital Assurance and Universal Insurance Company.Many others were around their nominal values, less than 100 kobo.

     

  • PFAs, life insurers bicker over retirees pension option

    PFAs, life insurers bicker over retirees pension option

    THE end may not be in sight yet to the furore between Pension Fund Administrators (PFAs) and insurance operators over de-marketing of the two retirement options available to retirees for drawing pension benefits.

    The products, which are under the Contributory Pension Scheme as contained in the Pension Reform Act (PRA) 2004, are Programme Withdrawal offered by the PFAs and Life Annuity by life insurance firms.

    Investigations reveal that the crisis between the PFAs and life insurers over which product a retiree should choose have continued to grow as they trade blame on de-marketing while employers are getting worried following feedbacks from their retirees.

    The life insurers believe PFAs have advantage over them as the fund is under their control and they do everything possible to make sure they keep the money and keep them away from the retirees.They alleged that PFAs also de-market annuity and force retirees to choose Programme Withdrawal in its stead.

    The PFAs have, however, denied the allegation, saying insurers are getting agitated unnecessarily.

    The PRA provides that an employee can, on retirement, make withdrawals from his Retirement Savings Account (RSA) in the form of a programmed monthly or quarterly withdrawal based on his life expectancy or buy life annuity from a life insurance company.

    The section says; “A worker with a RSA can access the money upon retirement or at 50, by opting for programmed withdrawal, which is provided by the PFAs, or annuity, which is provided by the insurance companies.”

    According to the Act, programmed withdrawal is an option that is calculated on an expected life span; meaning that the pensioner will be paid regularly for some years after which he ceases to earn income from his PFA.

    Also, the Act specifies that the annuity will be paid on a regularly by the insurance firm to the pensioner until he dies.

    Section 1.2.9 of Regulation on Administration of Retirement Terminal Benefits issued by the PenCom provides that a PFA shall not impose, coerce or influence a retiree on the choice or mode of withdrawal.

    However, regulation on annuity under Section 4.1 b of the PRA is jointly issued by National Insurance Commission (NA1COM) and the National Pension Commission (PenCom) for giving effect to the provisions of the PRA.

    According to laws on annuity, it is the responsibility of NAICOM to regulate the annuity market while it is that of PenCom to ensure that a retiree receives his/her retirement benefit promptly.

    Meanwhile, some employers have told The Nation that it has received complaints from its retirees and insurers, seeking help from them on how they could assist in making PFAs to release funds of retirees who have chosen life annuity.

    They said they have observed the rift and are worried.

    An employer said it got reports that some PFAs refused to release funds of some its retirees to life insurers after all processes have been completed.

    He explained that they, on their part issue retirement bond to retirees immediately after retirement.

    “We got a complaint from an insurance company that a particular PFA has refused to transfer a retiree’s pension fund who opted for annuity.

    “They asked for our assistance, but we told them that there is nothing we can do on our part and directed them to the regulatory authority,” the employer said.

    A retiree in the private sector said the PFA and insurers need to be matured in the way they market the products, adding that he was more confused after listening to both parties on which product to choose.

    A senior official in PenCom said the problem is an issue of mis-selling of the two products by the two parties.

    He said it was baseless for a PFA to think because he had kept the fund to a level where the employee retires, the fund must remain with them.

    He affirmed that there are excesses between the two, noting that the Commission has told them there is no need for quarelling.

    He said they expected the PFAs and insurers to be courteous in marketing the products, adding that PenCom and NAICOM have intensified efforts to ensure the laws governing the regulation on annuity as jointly issued is not disregarded.

    He said: “Whatever the PFA and insurer does in marketing the products, the decision is made by the account holder who has a right to choose what he or she would prefer as its pension options.

    “We have collaborated with NAICOM to curtail the excesses of the two. We have also embarked on enlightening and creating awareness among retirees on their rights as account holders. We told the retirees to always report to us when they feel something is not right.

    ”The issue is not for them to be at war with each other, but to sell their products without running down the other”

    Chairman, Pension Fund Operators Association of Nigeria (PenOp), Mr. Misbahu Umar Yola, said he does not believe the PFAs are deliberately holding on to pension funds of retirees who opt for annuity.

    He further said he does not think it is an issue of de-marketing annuity products as all they do is explain to retirees the advantages and disadvantages of the products.

    According to him, there may be a few bad eggs, but it is not peculiar to most PFAs in the industry.

    He said: “I do not think any PFA will compel retirees to purchase programme withdrawal or deliberately hold their fund back. Sometimes there could be delay between the period when the PFA writes to PenCom for approval to release the fund and this does not take more than two weeks.

    “There could be an incident, but this does not make it an industry problem. There are 20 PFAs and we receive thousands of applications and it is possible there could be certain issues with few of them that need to be addressed by either the retiree or the PFA before transfer of fund can be done.”

    Vice Chairman, Nigeria Insurers Association (NIA) and Managing Director, Linkage Assurance, Mr. Gus Wiggle, said there was no basis for PFA not to release a retiree’s fund to insurers.

    He added that the choice of the pensioner should be respected by the PFA.

    “I believe PenCom is doing a good job and they will come down hard on any PFA found to disregard the law. The PFA job terminates when the employee retires and their choice in choosing a retirement option should be respected,” he said.

  • Car insurance shopping declines

    Fewer consumers shopped for car insurance in the last year, but among those who looked for coverage, a greater share got at least two quotes, according to a new report from comScore, a global Internet research company headquartered in Reston, Virginia.

    In the last year, 48 per cent of consumers shopped for auto insurance, down from 52 per cent in 2012. This year was the first time the number of shoppers dropped below 50 percent in five years. The overall number of policies purchased remained flat at 3.1 million.

    Of those who shopped, 63 per cent obtained at least two quotes, up from 57 per cent last year, according to comScore. Most consumers prefer to shop online, with 67 per cent obtaining quotes from websites, up one per cent from last year and three per cent from 2011.

     

  • Over 600,000 Okada riders to access insurance benefits

    Management of the Oyo State Transporters’ Enumeration and Registration Scheme (OYSTER) has disclosed that subscribers to the scheme would begin to enjoy benefits of insurance as from next month.

    The Project Administrator, Mr. Femi Salami, disclosed this in a statement in Ibadan at the weekend.

    Insurance, registration number and free high visibility jacket are some of the benefits subscribers would derive from the scheme.

    OYSTER’s activities were suspended earlier in the week by the Oyo State House of Assembly following various allegations leveled against staff of the scheme by transporters. The scheme’s management will face the House on Thursday to provide answers to questions raised against it by stakeholders.

    Salami, however, described the suspension as a reflection of the practice of true democracy in the state.

    He added that the suspension has shown that the scheme is being monitored by the various organs of government in the state.

    He reiterated the commitment of OYSTERS to transform the transport sector of the state and create a system that will be worthy of emulation by other states in the country.

    He further stated that the current administration is aware that over 600,000 residents in Oyo State are employed as commercial motorcyclists and it is important to protect their source of livelihood.

    “The governor has said that he will not ban commercial motorcyclists in the state, but that their activities should be well regulated to ensure safety and security of the people.

    “Commercial motorcycle operators from towns in neighbouring states i.e. Ijebu-Igbo, odeda, Bakatari,Arapaja in Ogun State and Ikire, Iwo, Gbogan in Osun State all come to the state capital daily for business, hence there is need to monitor and regulate this sector,” the statement disclosed.

    He also said the value deliveries of the scheme include free accident emergency treatment, transition of motorcycles to tricycles on major roads and the issuance of stickers and original identity cards to all motorcyclists, commercial vehicles owners and operators in the state.

  • Health insurance for Lagosians

    Health insurance for Lagosians

    Lagos residents are to enjoy a health insurance scheme, Community Based Social Health Insurance Programme (CHIBSP).

    According to the Chairman, Healthcare Providers’ Association of Nigeria (HCPAN), Lagos branch, Dr Shehu T. Akintade, at a briefing on its forthcoming Annual General Meeting (AGM), the government has concluded plans to initiate CBSHIP in the state.

    He said: “Even though it is starting as a pilot programme at designated local government areas, if Lagos gets this programme running well, other states will buy into it and plan the health of their citizens, with consequent improvement of health indices of Nigeria as a whole.”

    He continued: “HCPAN’s aim, among others, is to ensure successful operation of health insurance in Nigeria so as to improve the health indices of the nation. And also, maintain high standard of health care delivery and provide quality care for the enrollees at affordable cost.

    “To ensure the right message is passed to residents on CBSHIP, the association has strategically chosen the theme: “Community based social health insurance – practical approach in Lagos State,” for the AGM holding at Lagos University Teaching Hospital (LUTH), Idi Araba holding on Thursday.

    He said: “Not everybody is a Federal civil servant that is enrolled on NHIS. States find it difficult to key into NHIS, and Lagos is yet to as well. About two states started, but pulled out. Since inception of the NHIS, about six per cent of the population has been covered and all of this is from the Federal Government’s employees while less than two per cent is under managed care.

    “If we all states participate in this scheme, we expect about 20 per cent coverage, even though we still have large numbers from organised private sector (OPS) that are likely to come up under managed care. But we need the legislature to prompt them. For the CBSHIP, any organisation with more than 10 staff will be mandated to key intoit.”

  • Five vexatious car insurance questions

    Why must I list all household members on my policy?

    Many people wonder why insurance policies require that all licensed drivers in the house be included on their insurance policy, even if they will not be driving regularly.

    This question often arises when the driver in question is a teenager whose inclusion on the policy increases the rates.

    “If someone gets into an accident, then the insurance is going to have to pay, so the driver’s risk factors need to be calculated into the overall cost of the policy,” says Jeanne M. Salvatore, spokesperson for Insurance Information Institute.

    Why does a car have to be insured if it’s never driven?

    A car doesn’t need to be insured under certain circumstances.

    “Most states have mandatory insurance laws only for registered vehicles. If a driver is going to store a car for a very long period and not drive it, most states will allow him/her to remove the license tags [so that the vehicle legally can’t be driven] and, as such, the owner will not be required to carry insurance,” says Teresa Scharn, auto insurance product director for Nationwide Insurance.

    The problem is this: It’s possible for a car to be damaged even while sitting in your garage or driveway through vandalism, fire or storms, so be cautious about removing coverage.

    Why do married people pay less for car insurance?

    According to Kevin Conlee, director in auto line management at Allstate, “If you are married then the data shows that you have a lower propensity for future losses than single drivers with the exact same factors.”

    Sorry, single folks – the insurance statistics aren’t in your favor.

    Why do different auto insurance companies charge wildly different amounts for the same coverage?

    Car insurance companies use different “underwriting models,” which result in different calculations of risk. For example, a person with a DUI conviction might be viewed as less “risky” by one insurer over another. That’s why it’s important to shop around. The insurer that gives your sister a great price might not be the one that gives you the good deal.

    Salvatore says that insurance companies also use price differences to compete in the marketplace.

    “One company might seek out only the best drivers and price their policies to encourage top drivers while another might focus on first-time drivers. Companies price their policies to help them compete in the market that they are looking to attract as customers,” says Salvatore.

    Why do I have to insure all my cars when I can only drive one at a time?

    State laws require insurance (or some other proof of financial responsibility) on all cars that are registered.

    But you might be able to drop coverage under special circumstances.

    “If you have a seasonal car or antique car that you never drive, then you can technically suspend coverage for the car,” Conlee says. “But if you are going to drive it, you need to have coverage for at least minimum liability limits.”

    He also notes that cars can be damaged even if they are not being driven. If you suspend coverage, you will not be able to make a claim due to a tree falling, theft, fire or other calamity.

    Why doesn’t my car insurance cover me when I drive someone else’s car?

    Policies are priced based on the specific vehicle and the members of the household who have access to the car. This is how insurers calculate their likelihood for claims payments, and that’s why insurance follows the vehicle, not the driver. While other people might occasionally borrow the car, the main risk resides with the family members who are regular drivers.

  • ‘Rising unemployment affecting insurance growth’

    Over the years, the insurance industry has been bedevilled with a myriad of problems that have hindered its growth. Omobola Tolu-Kusimo reports that rising unemployment continues to pose challenge to the industry.

    When he spoke recently about the unemployment situation in the country, everybody listened to him.

    The Team Leader, World Bank, and representative of World Bank Country representative, Prof Foluso Okunmadewa, said unemployment rate in Nigeria now stands at 22 per cent. Of this figure, youth unemployment accounts for 38 per cent.

    He urged the Federal Government to solve the problem, saying that the youth holds the key to growing the economy.

    The World Bank chief warned that achieving the set goals of Vision 20:2020 may remain a wishful thinking if youth unemployment is not checked, adding that 15 to 35-year olds account for close to 60 per cent of the country’s population.

    For the insurance industry that has been struggling to survive, this is not good news as people who are not employed cannot contemplate buying any insurance product.

    Regulator of the risk-bearing industry, the National Insurance Commission (NAICOM) said the fortunes of the industry and that of the economy will witness a boost if majority of the citizens take one form of insurance cover or the other.

    According to figures from the regulator, only 800,000 adults have insurance policies.

    NAICOM Commissioner, Fola Daniel believes the level of insurance penetration must be increased significantly such that majority of the people would have one form of insurance cover or the other for the nation’s economy to grow as expected.

    He said based on studies carried out by NAICOM, the country will attain rapid and sustained economic growth if the insurance sector’s penetration is deepened.

    But experts in the industry have said the penetration of insurance in the country is essentially tied to availability of disposable income.

    Former President of the Chartered Insurance Institute of Nigeria (CIIN), Mr. WoleAdetimehin said the state of the economy does not encourage people to buy insurance policies.

    He said going by the record of the World Bank, it is time the government began to pay more attention to its policies and projects on creating jobs in the country.

    He said: “If the records to the World Bank are true, the government of the day needs to look at ways to reduce the rating.

    “For any economy to grow, there is the need for an enabling environment. We have to reduce the rate of unemployment. When people can get jobs, insurance will sell at micro level because this will stimulate the demand for products and services in general terms.

    “These are factors that will impact on the industry. If we go by the transformation agenda of the administration of NAICOM, there should to be growth but it still need to be worked upon. NAICOM is doing a lot to grow the fortunes of the industry so it can contribute significantly to the nation’s GDP. It has embarked on sensitising the operators to embrace micro insurance. But a lot needs to be done in terms of revamping the economy.”

    Speaking about the current state of the insurance industry, Deputy Governor, Central Bank of Nigeria (CBN), Mr. Tunde Lemo said one major challenge confronting the sector is its very low level of penetration and patronage.

    According to the CBN chief, non-life insurance penetration stood around one-half per cent or only one-seventh of the average penetration of the Organisation for Economic Co-operation and Development (OECD) countries in 2010 while life insurance penetration is even lower at around 0.2 per cent.

    Lemo said: “The comparison remains the same when a better measurement of insurance utilisation is used, which takes into consideration dependence on the economic development of the country as well as the benchmark insurance penetration against the world insurance penetration average (BMIP) for the non-life sector.

    “The Nigerian BMIP value indicates that the insurance industry is underdeveloped with only 43 per cent of the world average insurance penetration at the Nigerian 2010 GDP per capital level, placing Nigeria at the bottom of comparable countries, such as Angola, Ghana, Kenya, Morocco and South Africa, with the exception of Egypt.”

  • The changing face of insurance

    • Insurers in race for survival

    It has been a year like no other for the insurance industry. It has been rules, rules and rules. To the National Insurance Commission (NAICOM), the rules will positively impact on the fortunes of the industry, but operators fear that they will create uncertainty. the reality is that many of the operators are struggling to survive. OMOBOLA TOLU-KUSIMO reports that only the strongest will emerge by the end of this year.

     

    FOR insurers, it has been a year of strict rules. The National Insurance Commission (NAICOM) introduced these rules to make insurance firms sit up: The rules may have become imperative because of the challenges faced by the firms, many of which are struggling to survive.

    Towards this end, NAICOM strengthened its supervisory and enforcement rules by ensuring that financial information, such as returns and solvency are accurate.

    NAICOM also strengthened its supervision of insurance and reinsurance companies and brokers. It also moved to tackle money laundering and the financing of terrorism, among others.

    It mandated the adoption of International Financial Reporting Standard (IFRS) from last year; and set up the oil and gas policy guidelines.

    But the major challenge of insurers is the very low level of penetration and patronage in the country.

    Following the recapitalisation of the industry in 2007, insurance premium income, which represents about one per cent of the country’s gross domestic product (GDP), has grown from N105 billion in 2007 to N300 billion this year.

    The industry total assets have risen steadily to N635 billion while the number of operators in the sector has similarly increased remarkably over the period. The sector now has 2,250 insurance agents, 579 insurance brokers, 66 loss adjusters, 57 insurance companies, and reinsurance companies.

    Other developments that have taken place and include the enforcement of compliance with compulsory insurance in line with the Insurance Act 2003, the sanitisation and modernisation of insurance agency system, wiping out of fake insurance institutions, and introduction of risk-based supervision of institutions under the Commission.

    To facilitate financial inclusion, NAICOM created avenues for micro-insurance, agricultural insurance and Takaful insurance (an Islamic insurance policy) to evolve. The establishment of a complaint bureau by the commission is with the primary objective of addressing genuine complaints from customers.

    A code of corporate governance was also put in place to strengthen governance in the companies.

    The commission also embarked on public enlightenment campaign to educate the public on insurance. It strengthened its relationship with other regulators, both within and outside the country through the signing of Memorandum of Uunderstanding (MoU) and enhanced collaboration in pursuing mutually beneficial interests.

    According to NAICOM, these initiatives aligned with the strategic objectives to be achieved by the sector as articulated in Vision 20:2020.

    The objectives are to ensure insurance credibility and protect policy holders; embark on risk-based capitalisation of insurance companies; embed the governance and risk management framework for the insurance companies and to diversify and integrate insurance products into financial services for long term financing.

    To achieve these objectives it was envisaged that there would be increased financial literacy and awareness, human capital development and attraction of expertise, integrated and linked Information Technology (IT) systems, improved legal and regulatory framework.

    Director of Inspectorate, NAICOM, Mr Barineka Thompson said insurance regulators have done well in the past decades, adding that the regulators recognised that operators should not be strangulated with too many rules, but must be determined to do everything to protect the rights of policyholders.

    He said: “The commission believes that regulators should not over regulate but there should be proportionate regulation, so companies do not go out of circulation.

    “Primarily, the role of the regulator is to preserve the interest of the insured. The fallout of the recent economic meltdown across the globe justified the conservatism of insurance regulators and operators. We tightened the knots and not a laissez faire attitude.”

    He further said that regulatory agenda and renewed need for increased growth, cost reductions, profitability and return on capital remained central themes for insurers and practitioners.

    He noted that being able to respond appropriately to the challenges in the industry would mark out the successful insurers in this new era.

    It will also define in the next few years, the direction of the industry and mark it out as another period to rise to the challenge, he said.

    Director-General, Nigeria Insurers Association of Nigeria, Mr Thomas Sunday said the benefits of the economy would only serve sector and enhance its ability to realise its potential when discipline and high ethical standard is given a priority.

    He urged operators to uphold ethical standards to get public confidence needed to boost the sector.

    He said insurers must comply with the code of conduct of the profession and other relevant laws and regulations, adding that they must also act with the highest ethical standards and integrity.

    “Insurance operators must act in the best interest of their clients and provide a high standard of service while treating the insuring public fairly. The benefits of ethical conduct will make the industry to become more attractive to investors while corporate risk exposure will be reduced.”

    Stating the characteristics of insurance, he explained that insurance is a means of financial intermediation.

    “Its operations involve exchange of things of unequal value and the article traded is a promise. Assets are held in trust while the supply chain involves people of various interests which at times could be conflicting,” he added.

    But the President of the Chartered Insurance Institute of Nigeria (CIIN), Mr Fatai Lawal, differs. According to him, the review of regulatory and operational guidelines in response to the volatile environment will not help the growth of the industry

    He lamented that operators are also under the pressure of business owners to deliver huge returns on their investment, an uphill task for any manager who must not cut corners or compromise professional event.

    An expert, Mr Muftau Oyegunle said accepting that shaping the future of the industry lies with every one would make a difference.

    Ostensibly referring to the avalanche of regulations, he said: “However, unacceptable things may be (with the industry) today, making conscious efforts to improve on the spot we are privileged to occupy at the moment in the industry, is the panacea for a better tomorrow.

    “The insurance landscape is constantly in flux and the forces shaping the industry in the next five years will differ from those that shaped it over the past few years.”

    He identified forces that would challenge the strategies of insurance carriers in the country.

    “These forces are shifts in growth from mature to emerging markets, increases in the development and consumption of technology; an escalation of both risk and regulation; changes in consumer behaviour; and in the competitive landscape. These will create a sea of challenges in which today’s high performers and those that are aspiring to be high performers in the future will need to navigate.

    “For our economic survival and that of our companies, we need to collaborate technologically to move the industry forward. The foreign companies are gradually positioning themselves for the mass products and it will be unfortunate if the companies lose out. Although these forces might not be new, what is new is their intensity and the speed at which they will take effect.”

    He also said the critical factors that will shape the future of the industry are technology, innovation; know-how, collaboration and service delivery.

    He noted that the availability of credit to individuals and business organisations with ease and low interest rate is necessary to accelerate economic growth, particularly the mortgage industry. Accurate population census and national identity card are factors while the review of the Land Use decree will also be an enabler, he added.

    According to him, the impact of the ‘No Premium No Cover’ enforcement is an example of what legislation can do to the industry as most underwriters have reported better cash flow position.

    The questions are: What happens if the Third Party Insurance Act is enforced? Can the Federal Government become a disciplined buyer and state and local governments partner with the industry on specific products?

    Micro insurance, health insurance, agricultural insurance and other products that would benefit the masses would require government’s critical support for success, he added.

     

  • FG bans issuance of new Insurance licence

    …suspends further budgetary allocation to NAICOM
     
     The federal government has ordered the National Insurance Commission (NAICOM) not to issue new insurance licences to investors.
    Instead, any investor desiring to own an insurance company in Nigeria is free to acquire some of the distressed insurance companies recapitalize them and start running the company.
    This order was handed down Tuesday  by the Minister of state for Finance Dr. Yerima Lawan Ngama  at the inauguration of the board of NAICOM in Abuja.
    Ngama lamented that there were many distressed insurance companies littering the field across the country, such distressed insurance companies he said should be taken over.
    He urged local and foreign investors “to buy two or three of these distressed insurance companies, merge them together, recapitalize them and run the companies.”