The Nation Newspaper

Tag: Insurance

  • First Bank to float insurance firm

    First Bank of Nigeria Plc has concluded plans to float a general business arm. The bank will by next month announce its position on the new underwriting firm.

    Earlier, it had established life insurance business with Sanlam Emerging Markets of South Africa.

    A source said the group has been putting together necessary requirements for the smooth take-off of the firm.

    He said: “We are still working on it, before the end of next month, we will make a formal announcement. At the moment, we can’t say much for we are bound by some level of confidentiality. When we get to that stage, we will make a formal announcement.”

    FBN Life, a joint venture between FirstBank of Nigeria Plc and Sanlam Emerging Markets of South Africa, which was licensed to transact life insurance business in Nigeria, started operations on September 1, 2010.

    In the joint venture, FirstBank of Nigeria Plc owns 65 per cent of FBN Life, while Sanlam owns 35 per cent.

    Managing Director, FirstBank of Nigeria Life Assurance Limited, Val Ojumah, said by the middle of this year, the bank would have acquired a non-life licence either by buying a non-life company or by getting a fresh licence. We are approaching the issue with both hands.”

  • CIIN takes insurance to schools

    Determined to continue with its efforts to encourage and ensure insurance awareness and penetration, the Chartered Insurance Institute of Nigeria (CIIN), the education arm of the industry in the country, in collaboration with the Federal Ministry of Education are working out ways to get states’ ministries of education enforce the introduction of insurance curriculum in secondary schools.

    President of CIIN, Dr. Wole Adetimehin, who disclosed this in an interview, said as part of the institute’s strategic action plans, it intends moving round all ministries of education across the nation to canvass the implementation of the policy.

    He said: “In our favour, the Federal Government has made insurance as one of the subjects to be examined by West African Examinations Council (WAEC) and National Examinations Council (NECO), students have to offer insurance from Senior Secondary one to three.

    “As part of our strategic action plans, we intend moving round all ministries of education across the nation to canvass the implementation of this policy. We have been to the Federal Ministry of Education and we have gotten the entire curriculum for the schools, now we are partnering the Federal Ministry of Education in enforcing or compelling all the states’ ministries of education to implement this new agenda.”

    He said the institute is already commissioning people to write text books on insurance in line with the curriculum, adding that the effort would at the same time create jobs for members of the institute.

    The Federal Government in a bid to deepen insurance awareness, last year, introduced a curriculum that would enable students acquire insurance knowledge at the secondary school level.

  • ‘Weak enforcement, culture hamper insurance penetration’

    Weak enforcement of policies and poor insurance culture among Nigerians have been identified as some of the factors inhibiting insurance penetration in the country.

    The Assistant General Manager, Corporate Communication and Brand Management, Sovereign Trust Insurance Plc, Mr Segun Bankole, lamented that had the compulsory insurance policy of the Federal Government been implemented, it would have gone a long way at chnaging the fortune of the industry for the better.

    Bankole, who spoke with The Nation in Lagos, added that poor insurance culture also formed a major stumbling block against the success of the Market Development and Restructuring Initiatives (MDRI) otherwise referred to as Compulsory insurance. He said under the circumstance, the National Insurance Commission (NAICOM) has done well but observed that there has not been proper monitoring to ensure its success.

    The programme, which started two years ago, had Group life Insurance in line with the Pencom Act 2004, Employers liability in line with the Workmen’s Compensation Act 1987, Buildings under construction-section 64 of the Insurance Act 2003,Occupiers liability insurance –section 65 of the Insurance Act 2003, Motor Third party Insurance –section 68 of the Insurance Act 2003 and Health care Professional indemnity insurance-under section 45 of the NHIS Act 1999.

    Bankole said these policies are by law compulsory and they come with sanctions. He said if those charged with enforcement in the insurance industry are empowered as their counterparts charged with monitoring money laundering or those charged with tax collection, the situation will not be what it is today. He said it is not proper to blame NAICOM as the regulator is doing all within its power to ensure the success of the industry.

    Insurance is primarily for the good of the insured, he said, wondering why people should be forced to do what is good for them.

    Still speaking on enforcement, he said if sanctions are implemented the way it is done abroad, it will go a long way in instilling the discipline of voluntary obedience.

    He said the premium required is usually very small compared to the benefits when due. He said if people know that that if they flout the insurance law, they will be heavily sanctioned as it is done abroad, they will do what they are supposed to do for their own good.

    On poor insurance culture, Bankole said it is sad to observe that a Nigerian can load up to N3,000 on his phone and waste it in a matter of minutes, but cannot invest that amount in a year in an insurance policy that can fetch him up N1 million if the policy materialises.

    He said there are policies Nigerians can invest with as little as N1,500 premium in a year and can have a benefit of over N600,000 if it falls due.

    He said for a third party motor insurance where the law demands just N5,000 premium for a year, if the sanction is as much as N100,000 on violators and are implemented, people will sit up.

     

     

     

  • ‘Take advantage of group life insurance’

    ‘Take advantage of group life insurance’

    Life assurance companies have been advised to take advantage of the Group Life Insurance Scheme in the Pension Reform Act 2004.

    The President, Nigerian Council of Registered Insurance, Mrs Laide Osijo, gave the advice when the management of Crystalife Assurance Plc, led by the Managing Director, Mrs. ‘Seyi Ifaturoti, visited the NCRIB House in Lagos.

    Osijo said the 27 life companies in the country should evolve insurance policies that would meet the needs of the teeming population as is obtained in the developed countries.

    The NCRIB chief noted that under the Act, every employer of labour is obliged to arrange for a life insurance cover for employees, and make it workable.

    Disclosing that the public sector was complying with the Act, Osijo said there are avenues for ingenious life firms to prospect the numerous private sector workers and take advantage of the Act to grow the industry.

    She said the world over, life specialist firms play major roles in economic development, adding that they possess the required professional competence to conceive life policies or welfare schemes that would, ultimately, benefit employers and employees.

    Osijo commended the on-going synergy between the National Insurance Commission (NAICOM) and the Pension Commission (PENCOM) on group life insurance and annuity, noting that it would boost the industry and improve the welfare of Nigerians.

     

  • ‘Develop micro insurance products’

    A Financial Advisor, Dr Biodun Adedipe, has urged insurance practitioners to develop micro insurance products.

    Adedipe, who is the Chief Consultant, Biodun Adedipe & Associates, told The Nation in Lagos that the industry’s policy emphasises growth and job creation.

    “It is only insurance practitioners that can develop and mainstream micro-insurance products that will benefit from the unexplored opportunities in the business environment,” he said.

    Adedipe said the practitioners should buckle up as such products would benefit more from the enforcement of the policy of ‘no premium no cover’.

    He said its enforcement would also sanitise the industry and insurance markets as well as kick- start the needed freedom of the industry.

    According to him, the issues that arise with the payment of claims when a loss is suffered will be a thing of the past.

    “All policy holders would have paid the exact premium and the insurance companies would not have any excuse as to the actual status of policy when a loss occurs,” he said.

    Adedipe enjoined the practitioners to be up to date with the market dynamics, watch the macro economy and pay attention to key government functionaries utterances into the industry.

    He said these were bound to shape and dictate the focus of the industry in the year.

  • Police pay insurance claims to families of dead officers

    Authorities of the Nigeria Police, Kano State Command, yesterday paid the sum of N1m insurance claims to the families of two policemen killed by unknown gunmen.

    Receiving the money on behalf of her family, 18-year old Binta Ahmed lamented the loss of her father, saying his untimely death brought untold sorrow and pain to her family.

    Speaking with reporters after receiving the Insurance claim from the Assistant Inspector General of Police (AIG) Zone I, Mr. David Olufemi Omojola, Binta said: “I thank the Almighty Allah and the Nigeria Police for the kind gesture. I am not the only child in the family as I have other brothers and sisters. Since the death of my father, life has never been the same again. But with this gesture, I think we can start something to better our lives, as well as cushion the pains of his absence.

    AIG Omojola emphasized that no amount of money can replace human lives like the breadwinners of the family, saying the gesture is to acknowledge the role of those killed while serving their fatherland.

    He, however, noted that the money was the insurance claims of the dead policemen, adding that the Police Force has reserved burial expenses, as well as gratuities to their next of kin.

    “I want to tell you that those who lost their loved ones have not been forgotten, the Inspector General of Police, M.D. Abubakar and the Federal Government will continue to do everything possible to ameliorate their sufferings.

    “Money cannot bring back the departed souls, but what the government is doing is to at least help to reduce the burden on the shoulders of their next of kin.”

    Other beneficiaries are Idris Abubakar, N70, 000 and Mohammed Mustapha, N100, 000 for the injuries sustained during the attack, while both Binta Ahmed and Abdulrasak Mamman got N500, 000 each for losing their fathers.

     

  • Fed Govt to triple insurance market to N1tr

    Fed Govt to triple insurance market to N1tr

    The Federal Government plans to more than triple the value of its insurance market in four years by improving the reputation of the industry, Insurance Commissioner Daniel Fola said.

    “Our people don’t trust insurance,” he said in an interview with Bloomberg yesterday in Dubai. “We’ve done a considerable amount of housekeeping to make sure the companies respect the rules.”

    The value of insurance contracts should rise to about 1 trillion naira ($6.4 billion) in 2017, about 3 per cent of gross domestic product (GDP), from N300 billion now, or less than 1 per cent of GDP, he said. Penetration should increase to 22.5 per cent of the insurable population in four years from 10 percent currently, Fola said.

    Compulsory motor-vehicle insurance, which makes up most contracts now, should remain at about 10 percent by 2017, while life insurance should constitute 7 per cent, general business insurance 3 percent and petroleum companies’ insurance 2.5 per cent, he said.

    Oil and gas businesses will continue to contract international companies to insure their Nigerian operations as the capacity of local insurers is limited, Fola said. As Africa’s largest oil producer, Nigeria produced about 1.9 million barrels of crude a day in December, according to Bloomberg data.

    The Bloomberg Nigerian Stock Exchange (NSE) insurance index, a measure of the 10 most liquid insurers on the Lagos-based bourse, has gained 11 per cent so far this year, outpacing a 5.8 per cent rise in the All Share Index. (NGSEINDX) Continental Reinsurance Plc (CONTINSU) shares gained 4.9 percent today, while Aiico Insurance Plc (AIICO) was up 3.9 per cent.

     

  • Investment & Allied Insurance shops for N4b

    Investment and Allied Assurance Plc is shopping for N4billion to meet the minimum capital requirement for its operations, the Managing Director, Abayomi Rufai, has said.

    “A minimum capital injection of N4billion is required to meet the statutory capital level set for Non life insurance business in view of the present negative shareholders funds,” he added.

    He said the firm is seeking new investors.

    For these investors to come in with their funds, one of the things the firm must do is to reconstruct its shareholdings to create a window for new funds.

    He explained that it became imperative to put in place a new board, which includes members of the interim management.

    Rufai said the intervention by the National Insurance Commission (NAICOM) has helped the firm to restructure for better performance.

    “NAICOM’s intervention has impacted positively on the company, and the Commission has given assurance to potential investors that their investments are in safe hands,” he said.

    In February 2011, NAICOM took over the firm because of some irregularities, and put in place an interim management to take charge of the company’s operations.

  • ‘Why insurance firms do not settle claims promptly’

    The Commissioner, National Insurance Commission, (NAICOM) Mr Fola Daniel, has said one of the reasons insurance firms are unable to settle claims promptly is the delay or non-payment of insurance premium by the insured.

    He stated this at a sensitisation workshop on the implementation of the No-Premium-No-Cover rule as contained in the Insurance Act 2003 organised for Insurance Desk officers of Ministries, Departments and Agencies of Federal Government in Abuja.

    He said: “Most insurance companies make huge provisions for outstanding premiums in their books annually, which invariably affects their bottom-line and thus, their ability to settle claims as and at when due to the insured, make profit, pay dividend to shareholders and attract investments to enable growth”.

    He noted that the situation is unhealthy and dangerous to the insurance industry and unless it is halted, it is capable of driving the industry into extinction.

    He added: “It is regrettable that government at all levels is the major culprit in this regard. We have noticed that budgetary provisions for insurance of government assets and properties are either inadequate or in most cases not made at all.

    “Besides, where the provisions are made, payments of premium to insurance companies are either delayed for months or the funds redeployed to meet other needs by ministries, departments and agencies of government which is in clear breach of Section 50 (1) of the Insurance Act 2003.”

    The workshop was meant to appraise the MDAs on the modalities for the implementation and enforcement of the rule in order to avoid gaps in the insurance covers of government assets.

     

  • ‘Insurance is more unpopular among the elite’

    ‘Insurance is more unpopular among the elite’

    As important as insurance is, at the corporate and personal levels, many are still averse to it.This feeling is prevalent among the least expected segment of the society – the educated. In this interview with SIMEON EBULU and ESHIET UYOATTA, the Managing Director, Royal Exchange Prudential Life, Wale Banmore, speaks on the challenges and prospects in the sector, saying the future holds much promise for stakeholders. Excerpts:

    Technology plays a key role in today’s business. How have you employed information technology (IT) to achieve your goal?

    As far as any service industry is concerned, if you want to make an edge, you have to invest in IT. Though I may not be able to give you figures right way, I can assure you Royal Exchange as a group has invested so much in technology.

    In the life aspect, we at Prudential Life pioneered the e-payment business in insurance in Nigeria. We upload our products onto a platform where people don’t need to pay by cash; all you need is to pay by recharge card. You buy our recharge card which has a pin number and you are automatically credited in our office. Wherever you are, you get an alert that your policy has been loaded with so much amount.

    In this regard, every other company is just following us. It is four years since we started it and has given us an edge over others. As a company, we are always trying to put an edge to it. We have some other innovations which will come on stream in the next few months, all aimed at making the process even more simpler.

    To what extent have you employed e-transaction and claims payment to drive the business?

    Claims payment is the real essence of insurance. The payments are in form of savings. We have a very robust IT platform that takes care of all these items. By the time any customer comes on maturity, all we do is go to our IT, print out every detail of your transactions and send it to you to cross-check with your record at home, or you come for reconciliation. The process is very smooth and rewarding.

    Have you had issues arising from this, issues, such as knowledge gap between your customers and the IT platform?

    We have never had any issues with our clients. Where interests are calculated and there seem to be an area of disagreement, all a client does is simply come into our office with his observations and they are promptly sorted out.The system is working 100 per cent. This is so because most of the customers, at inception are educated; they understand how the system works. If any marketer comes to you, after marketing the different products, you are the one to indicate which product you want to buy. We discourage in totality, the use or exchange of cash, based on experience. You know the morality aspect of giving cash to individuals. There are a lot of temptations and this is one of the reasons we employed the IT platform to take care of our e-business.

    How have you fared so far?

    As of last year, our total premium at the Prudential Life was about N672 million, but for this year, we have already recorded over N1 billion in premiums. This is a giant leap considering where we are coming from.

    What is responsible for the leap?

    It is about being focused. As a team, we try as much as possible to examine where we are coming from. What enabled our growth is being focused and being proactive to the market. We try as much as possible to make our service delivery key to our clients by trying to revolutionise our processes, and knowing what our customers need.

    NAICOM said less than 10 per cent of Nigerians have insurance cover, either general or life. What is your opinion?

    It is true. It is actually less than eight per cent. Records actually show that less than six per cent of Nigerians have any form of insurance coverage. Insurance penetration in Nigeria is surprisingly low. You cannot trace it to education, in the whole of Africa we are leading in terms of education but it is even more unpopular among the elite.

    In Nigeria, based on my experience, it is even easier to sell insurance to the semi- literates and even the illiterates than to the educated. People that don’t buy insurance in this country are the literates, except of course at the corporate level, where they take insurance to protect their businesses and properties, but can hardly take a life cover for themselves.

    Now what we do is, if you pay premium regularly and suddenly, we don’t see you in a month or two, somebody will come to find out what is wrong.

    In the past, most firms did not bother to check, so there was a lot of residual money with insurance companies, not because they did not want to pay, but because they did not go ahead to look for who to pay to.

    If the wife or son of the late policy holder knows that their late father had a policy and never bothered to go and check, they will just carry the wrong notion that insurance don’t pay claims and the notion is still carried around even today.

    Insurance pays claims, but because policy holders/beneficiaries do not know how to go about collecting their money, they say insurance firms don’t pay. Now there is consciousness that insurance firms pay claims, that is why our claims level is very high because of awareness among the people. When people pay premium, they know when to come and collect their claims.

    President Paul Kagame of Rwanda, while in Nigeria recently, said 94 per cent of Rwandans are covered by life policy. What percentage of Nigerians are covered by life policy?

    I don’t have the figure as it were. Our percentage, or figure of those covered by life policy can be given by the industry regulator because they are the ones that collate these data. We have not had that kind of data in the last one or two years. On the whole, it is still less that 10 per cent in Nigeria, whether life or general. If you go to other African countries, it is alarming the level of awareness in those countries, even with the level of education when compared with Nigeria. In Kenya, South Africa etc, there is a high level insurance awareness. They are just conscious of insurance.

    Nobody will buy a car and put it on the road in Rwanda without insurance, but there are a million cars in Nigeria travelling from one end of the country to another without insurance coverage.

    How are you try to contain this level of ignorance?

    The ignorance level in the past few years has actually reduced. There have been a lot of education/information dissemination in the country though the press by industry regulators – NAICOM and NIA. There have been a lot of seminars, advertisements, outreaches, all aimed at educating Nigeria on insurance. Our company has engaged in so many programmes this year. We sponsored one of the youth programmes in Lagos State, we organised workshop for them. I even sponsored one of the leadership programmes in Lagos. It is all about trying to educate people at that early stage. When they have that awareness early in life, when they grow up, they will appreciate insurance.

    About 70 per cent of Nigerians reside in the villages and insurance seems to be a city issue. What are you doing to reach out to this critical percentage of our population?

    For my company, we have branches in all the states of the Federation. Apart from that, we have a lot of marketing outreaches in terms of agents who reside in these rural areas. The issue of infrastructure is still a challenge in the country. You and I know how many villages have electricity supply. So even if you do advertisement, how do the people in the villages have access to the advertisement to see what is going on? There is a limit to which you can go from house to house, door to door, advertising insurance. In villages in South Africa, no matter how few the people who live there, the houses have electricity and television. So, when you advertise, they are aware and are able to follow up. Despite the challenges we encounter in Nigeria, we still try to be physically present in most of the local governments and state capitals.

    Nigerians embrace banking without being forced, but are not embracing insurance. Why?

    It is quite unfortunate, the two (bank and insurance) came from the same Britain together, but I don’t know at what point banking got far ahead of insurance. Now we are trying to catch up. I still believe it is a cultural thing. Even our educated people, when they are abroad, they don’t joke with insurance, but the moment they are back, they careless about insurance.

    Is it something to do with enforcement?

    We have a problem of enforcement. It has been our major challenge. We have always had laws, rules and regulations, but the fact remains that we have never had enforcement.

    In most of these countries that record good insurance awareness, they have enforcement. In Nigeria, we don’t have enforcement. Somebody in Kenya, South Africa, etc cannot drive a car up to a kilometre without being arrested if he doesn’t have insurance. But in Nigeria, people drive from Lagos to Kano, and all over the country without insurance and without molestation. In other countries the police have gadgets that will indicate that a vehicle does not have an insurance, but here in Nigeria, there is no such thing.

    NIA came up with a similar idea. What has become of it?

    It is still in the pipeline. I can assure you because it will go a long way to ensure enforcement. Look at life insurance, the law says employers of labour that have up to five workers must take group life policy to provide for them. How many factories, employers with 10, 20, 30 and more workers are operating without the policy.

    Nobody goes to that factory to find out whether the group life policy has been obeyed by these employers or not.

    Who is to do that?

    Insurance cannot enforce. It is an organ of government that is supposed to do that. Insurance companies cannot go to a factory and demand to see whether the factory owners/manager has complied with the group life policy.

    Agencies of the government go to these factories to inspect what they do, whether they do it right, collect taxes and ask for other payments, but do not ask to see the insurance policy for group life for the workers. No agency of the government asks these questions. That is why our union, the Nigeria Insurance Association (NIA), should not only be agitating for increment in premium. Other benefits of life that Nigerians are losing are so many. So many Nigerian employees are dying on their jobs without being adequately compensated. The employer will be doing himself a big favour if they subscribe to the group life policy.

    It is not easy to write individual cheques of say N10 million or N20 million for employees, while if you have taken a group life insurance for your workers, you would have paid, may be as low as N200,000 and then when the disaster occurs, the insurer would have taken over the responsibility. You could pay as little as N200,000 and when the man dies, you could collect compensation of say N15 million, that’s the essence of insurance.

    Do you raise these issues with your clients?

    When we market, we always do, but the fact remains that some of them want to cut costs. When factories or organisations in Nigeria want to cut costs, one of the major areas they look at is insurance, it is really unfortunate. This is as a result of lack of enforcement. If a company has 10 vehicles and doesn’t bother about insurance, it is because he knows, his vehicles will not be impounded for lack of insurance. But if he knows his vehicles will be impounded for lack of insurance, he will insure them.

    What’s the impact of the economic environment on the sector?

    It has really affected insurance, but things are looking up. We all know the economy dictates the purchasing power of the people. When organisations or individuals want to adjust, the first item they look out for is insurance. It is as a result of the scarce economic resources. Directly or indirectly, insurance thrives on the economy. When the economy is booming, insurance thrives, but when it is the other way round, people will try to adjust, including the government.

    A lot of their properties are not insured. Go to the government secretariat, you will see a lot of their damaged vehicles abandoned there. They don’t care about them because they did not take insurance cover for those vehicles or other state properties. Even as at now, only very few states have group life insurance for their workers.

    For those that have it, their workers know that when they die, their families have something to fall back on.

    When you go out to sell, who are your target?

    We want to go fully into retail. My target is the individual, the corporate market is almost saturated. Individuals are our target. We can no longer rely on government account, that is why we are driving our retail account very aggressively, especially the high networth and the middle class who can still spare something out of the little they are collecting as salaries or as income.

    Nigeria has about 160 million people. What strategy do you have in place to reach the people?

    The strategy we have in place is product-wise. We designed several products for people of the different strata in the society. We have products meant for the executives, middle level workers, people like drivers and others. That is the major strategy we have.

    We make sure all our products are tailored towards the high networth people, the middle class people, the lower class people, and whoever in the society, and make sure we speak their language too. We speak to them at their levels.

    For our population of say 160 million, if just about 25 million of them are fully insured, there will be no complaints in the industry. But I can assure you, the economy is key; the economy has to be buoyant for people to have extra to put into insurance.

    At the Nigeria Stock Exchange, insurance stocks are the least performing.Why?

    We all know what happened at the capital market. It is quite unfortunate. If we look back to when the capital market was very active, the shares of the insurance stock were all going up. The crash at the capital market was very unfortunate on the insurance companies because it was at a time people were buying more of our shares,

    If you look at it now, it will be a source of concern, but the fact remains that insurance companies have not been making that kind of profit to pay dividends. You can only ask to buy more shares if you are paying dividend.

    For us in Royal Exchange Prudential Life, we paid dividends this year to our shareholders. The issue mainly is because most insurance companies have not been declaring dividends. It is only when you make profit, you plough back some into the operations of the company, then you can spare some to make the shareholders happy.

    But things are really looking up in the industry. I am sure very soon, the share price of our company will rise. The major reason the insurance stocks at the capital market is at nominal value is because insurance companies have not been paying dividends to shareholders in the past few years after the capital market crashed.

    Has ownership structure affected the level of acceptability of insurance companies?

    Ownership structure is not the main issue. If we want to invest in a company, the major thing you look out for is the ability to get returns, and you have to be conscious of the people driving it and the historical background of everyman there.

    But even if the company is family owned, but is doing fine, investors don’t have that fear, it its performance that determines why people want to put their money into their stocks. In our own company, we don’t have that problem because we are an old British company that Nigerians bought into and become shareholders.

    Our historical background is there for all to see.

    We still have insurance that are owned by close families, but they are in the minority, even the ones owned by the banks are in the minority too. That is not an economic factor that people do not have confidence in insurance companies. What happened at the capital market was a major factor.