BY NKECHI NAECHE ESEZOBOR– In a bid to ensure insurers are able to settle corresponding claims obligations to cushion the effect of losses on Nigerian households and businesses, insurance industry regulator, the National Insurance Commission (NAICOM) on Thursday said it will issue directives to insurance companies to extend covers to strikes, riot and civil commotion.
Sunday Thomas, Commissioner for Insurance disclosed this in Abeokuta, Ogun State that the recent outbreak of protests and civil unrest across the country and the resultant losses had exposed the vulnerability of government, businesses and individuals to unforeseen events.
These incidents, he said have further reinforced the value and necessity of the insurance industry.
He said risks arising from strikes, riot and civil commotion which were redundant in the past and which by competition are mostly offered free of charge must now be adequately rated as an important product for the survival of Nigerian businesses.
He however lamented that “these incidents are likely to increase insurance claims, thereby exacerbating the already weakened liquidity and capability of insurance companies.”
The NAICOM boss said the incidents have further reinforced the need for proper underwriting to ensure insurers are able to settle corresponding claims obligations to cushion the effect of losses on Nigerian households and businesses.
“It is pertinent to note that insurance coverage for Strike, Riot and Civil Commotion clauses, which were redundant in the past and which by competition are mostly offered free of charge must now be adequately rated as an important product for the survival of Nigerian businesses.
“The Commission will be issuing directives to ensure that underwriting is strengthened to appropriately rate and charge requisite premiums so that profitability can be guaranteed and claims are settled promptly without financial strain on the companies.
The NAICOM boss added that while most losses arising from the Coronavirus pandemic are not adequately covered by existing insurance policies, it had become obvious that current insurance product offerings are not adequate to respond to emergent risks and needs of the society.
He said there is, therefore, the need for a review of conventional insurance products in order to upscale the value proposition of the Nigerian insurance industry.
“We cannot continue to ignore the impact of unforeseen events on individuals, businesses, and the insurance industry as a whole.
“As Nigeria reals in the pain of the destruction and losses suffered this year, the Nigeria insurance industry must utilise the opportunity to lead in the quick recovery and restoration of the affected businesses and also showcase its role in reinforcing the economic resilience of individuals, businesses and the economy at large.”
He went further to linked the increased propensity for claims to the suddenness of the Covid-19 pandemic which imposed immense pressure on all businesses including insurance business.
Thomas explained that claims could come from pressures faced by consumers in the form of reduced finance and business activities, lack of access to credit, expiration and wastage of perishable goods, temporary or permanent business closures and employee contract terminations, life threatening and death.
According to him pandemic had curtailed the ability of the industry to sell insurance products which in turn reduced premium income because of the traditional in-person sales and marketing.
He also disclosed that the process which may lead to the harmonization of insurance laws and practices in the West African sub-region under the auspices of the West African Insurance Supervisors Association (WAISA) and the West African Monetary Institute has commenced.
He added that the Concept Note for the establishment of the College of Insurance Supervisors for the West African Monetary Zone has been presented and is been deliberated upon.
The implication he said is that cross border transaction will be enhanced.
According to him adding the need for harmonization has been heightened by Nigeria’s signing of the AfCFTA Protocol and also the need to continue to work with our regional counterparts to realize our vision of a harmonized and integrated insurance practices in the sub-region.
