While calling on operators to shore up their capital base in the new year, irrespective of the cancellation of the recapitalisation exercise, the President, Chartered Insurance Institute of Nigeria (CIIN) , Mr. Eddie Efekoha, said, most insurance companies will still lose businesses they used to underwrite as policyholders seemed poised to transfer their risks to underwriting firms with strong capital base.
Eddie who aldo doubles as the Managing Director/CEO, Consolidated Hallmark Insurance Plc, stated that there is a particular transaction in Exxon Mobil for several years that never respected the N3 billion capitalisation, adding that operators whose capital were within this minimum were excluded from the business.
He added that recently, he was told of a broker, who said his client had informed him not to place risks with any underwriting firm with less than N9 billion as proposed in the cancelled TBMSC policy.
Efekoha posited that with such developments, it is now immaterial whether the industry regulator withdraws the TBMSC policy, adding that the policy has opened the eyes of insurance consumers.
“What I heard from our office recently was that there is a broker that said that my client has already seen that N9 billion is what is required, so please go and shore up. It is immaterial whether the commission has withdrawn from the TBMSC or not. Of course, we are all here in this market, there is a particular transaction in Exxon Mobil for several years that never respected the N3 billion capitalization and to that extent, some of us whose capital were not up to that minimum were excluded.”
Rate-cutting is expected to continue in Insurance Industry in 2019 as insurers scramble for businesses, especially, in the formal sector base.
A development that is hurting insurance industry in terms of premium income, experts said, risk-cutting is a regrettable act that must be addressed to increase insurance contribution to the nation’s Gross Domestic Product(GDP).
According to the Deputy Commissioner for Insurance, Mr. Sunday Thomas,
“There was a point in this market when 10 per cent for comprehensive insurance was sacrosanct, but later, it came down to five per cent and that became the standard. But you and I also know that there was a point that some operators were charging as low as one per cent
“Also, there was a point that 3rd party was N5, 000. You and I know that it came to a point where people were charging N1,000 and the market was producing N200 million premium income from this business. If they decide to charge N5000, what is the market likely to produce?”
This challenge, he said, must be addressed by insurers to increase the stake of the industry to pay genuine claims as and when due, noting that, when a risk underpriced, it affects the ability to promptly pay claims.
The Managing Director, NSIA Insurance Limited, Mrs. Ebelechukwu Nwachukwu, said, insurance in 2018, has grown significantly in terms of the quality of products insurers rolled out, the quality of channels of distribution, the quality of people they engaged and the commitment of insurers to grow the people, thereby, increasing insurance penetration in the country.
To her, “If we can push all of these over and over in 2019, I have no doubt at all that penetration will increase and premium will rise also. Today, the industry is paying better salary and so people are better; operators study more than any other industry I have engaged with, they are dedicated to writing examinations, attending seminars, conferences and workshops, they want to be heard and an insurance person wants to be heard intelligently.”
To the average or even the so called below average families, she said, insurance is important,urging Nigerians to insure their respective risks with insurance companies.
Spesking further, the Chairman, Nigerian Insurers Association(NIA), Mr. Tope Smart, said, the nation’s economy has been projected to expand by about 2.5 per cent in 2019, promising that insurance industry will take advantage of this expected growth.
The NIA boss who is also the Managing Director/CEO, NEM Insurance PLC, said “We have figures of the growth of about 20 per cent when you compare the figure for 2017 and 2018 and I hope 2019 will better. By the time we have the end of the year result, we will be having what I call a very positive result. The industry will continue to pioritise claims settlement and both regulator and operators are working together to put insurance companies on their toes to pay genuine claims through NIA and NAICOM complaint bureaus.”
