Expectations from Insurance Sector
As operators in various sectors of the economy kick-off activities in the new business year, Ebere Nwoji writes on what Nigerians expect from insurance operators
The Nigeria Insurers Association (NIA), in collaboration with NAICOM, should reawaken their strength and arm themselves with the necessary tools that will ensure that their members and those they regulate pay claims with little or no stress
The insurance sector, like every other sector of the economy in the year 2017, was faced by many challenges that resulted from the lingering effects of the economic recession. The recession stagnated businesses and eroded the purchasing power of the masses thereby slowing down their demand for insurance products.
Against this backdrop, the industry operators could not achieve most of the goals they set for themselves
For insurance, the Commissioner for Insurance, Mohammed Kari, could only achieve implementation of at least two out of the six compulsory insurances slated for enforcement since 2009. He has, however, vowed to achieve the implementation these insurances this year.
Also, the regulator, in collaboration with the industry operators, was also unable to deepen insurance penetration to the level that would shore up the industry’s premium generation from N400 billion to their projected tune of N1.1 Trillion by the year 2017.
Similarly, their dream of ensuring that the industry contributes meaningfully to the Gross Domestic Product (GDP) of the economy from the present contribution of less than one per cent to at least three per cent was far from being achieved.
Indeed recent response by the industry leaders on the present level of the scoter’s contribution to the GDP shows that even key operators in the industry are currently not certain about the sector’s actual contribution to the national GDP.
The last figure given in this regard was from the immediate past Commissioner for Insurance Mr. Fola Daniel, who said the industry ‘s contribution to the GDP stood at 0.6 per cent but later reduced to 0.3 percent after the rebasing of the economy.
Recent statistics on the growth of the sector released last December by the National Bureau of Statistics (NBS) shows that the industry, during the third quarter of 2017 merely grew by 0.3 per cent. Similarly, recent financial reports of operating firms for 2016, published by the National Insurance Commission (NAICOM) shows that about 12 insurance firms are currently facing financial challenges to the extent that if the managers fail to work hard this year, they will see themselves placed under the regulator and its interim managers’ supervision and management.
Closely connected to this is the fact that a number of weak firms in the system placed under the management of interim managers for the purpose of resuscitating and returning them to financial stability and hand over to their owners, have for years now remained dormant.
The interim managers seem to be very comfortable with their new jobs while the shareholders have remained at the receiving end of losses from their invested funds.
Against this back drop, the insuring public, investors and other stakeholders in the industry are watching keenly what operators have for them in the new business year.
Having successfully come out of lingering effects of the recession that hit the country two years back , the stakeholders’ expectations from the industry are high. For instance, the investors have waited for too long to reap from their investments and eager to see results.
This being the case, all arms of the industry are expected to work together and raise the industry’s banner higher than it has been so that the public will see the need to patronise the industry and as such make it contribute significantly to the economy.
As already envisaged by the industry operators, awareness creation is key in this regard, as such, the operators should not relent in their bid to make the industry’s rebranding project work.
They should surmount all impediments to its take-off and place insurance at the front burner of both private and public sector businesses through the rebranding initiative.
The industry’s ‘catch them young’ slogan should be put into action especially by the Chartered Insurance Institute of Nigeria(CIIN), the educational arm of the industry.
To this effect, in addition to distribution of insurance text books to government senior secondary schools in the country and tertiary institutions, the inclusion of insurance as subject of study in government secondary schools and establishment of insurance departments in tertiary institutions, which the institute is already doing should be extended to private schools and to junior secondary to give the students adequate knowledge of insurance from junior level and prepare them to choose it as a subject of study in their Senior school certificate examinations.
The institute should set up monitoring and evaluation team that will follow up on the previous efforts made and additional efforts needed to achieve its goals. It needs to obtain data on number of students that write insurance in West African Examinations and it also needs to extend insurance to other examination bodies like NECO and General Certificate in Examinations (GCE).
By its establishment, the institute is the educational arm of the industry. Therefore, it should in line with the promise of one of its past presidents, Mr A A Lawal, who said the institute plays a key role in insurance education to Nigerian masses. It should realise the fact that part of the problem of the industry is most people are ignorance of what insurance is and its numerous benefits.
Currently, insurance teaching in most senior secondary schools in the country is still in principle and not in practice and is limited to public schools with exclusion of private schools. CIIN should push further to see that insurance teaching is practically done in both public and private schools in Nigeria .
However, the various arms of the industry should give financial support to the institute in this regard bearing in mind that its mass education activities across the country is for the good of the entire industry because as more insurance policies are sold, brokers will collect more commission while adjusters will have more claims to adjust in time of loss.
So in addition to NAICOM’s financial support to the institute for its mass education programmes, other arms of the industry should contribute their own quota.
Aside awareness creation, the issue of maintaining high ethical and professional standards in business conduct is of importance as this will ensure that adequate premiums are charged in each business transaction and claims paid timely without stressing the customer.
The Nigerian insuring public is still waiting to see in Nigeria insurance practitioners that willingly and responsibly pay claims when they come without delay, stress or argument.
Various complaints from the public show that operators who pay claims willingly are still very few in Nigeria. Until the few Nigerians who currently buy insurance enjoy stress -free claims payment in its practical reality, those who jettison insurance services will remain in their positions because they get discouraged by the experience of their friends who struggle to get claims from insurance operators.
The Nigeria Insurers Association (NIA), in collaboration with NAICOM, should reawaken their strength and arm themselves with the necessary tools that will ensure that their members and those they regulate pay claims with little or no stress.
They should ensure that operators charge adequately and pay claims as and when due. Available information from marketers show that some company marketers charge as low as N1000 on third party motor insurance despite the Nigeria Insurance Industry Data Base(NIID) and this explains why claims on this policy is often not paid. Such firms hide behind the fact that the insuring public is not aware that claim on third party motor insurance is payable and when it occurs they take advantage of ignorance of the victim to deny him of the claims.
The above two bodies should create awareness on the need for the public to pay the right premium and to demand for claims when the need arises.
NAICOM should provide this needed intervention effort to ensure that unprofessional practices like price wars, rate cutting among others, which have been existing in the industry over the years, are controlled to the barest minimum.
By its establishment, the commission has the mandate to ensure effective administration, supervision, regulation and control of insurance business in Nigeria.
The commission has the duty to establish standards for the conduct of insurance business this year in order to improve on the existing standard and ensure that operators conduct their business better than they did last year.
NAICOM is to determine whether there is need to increase insurance rates this year and should as such approve rates of insurance premiums to be paid in respect of all classes of insurance business.
From the financial reports of insurance companies for 2016 published recently, it has been discovered that indebtedness by both government, insurance brokers and individual buyers is gradually finding its way back to the industry despite the implementation of the ‘no premium no cover law.
According to the report, from non-life segment of the business, outstanding premium due from brokers, agents, sundry debtors and others to underwriters amounted to N92.98 billion. Out of the above outstanding premium, non-life operators were owed N84.48 billion and life operators N8.58 billion. A breakdown of the figures revealed that agents and brokers owed N1.96 billion, sundry debtors, N15.29 billion and others N75.81 billion.
The NIA, which is the umbrella body of insurance underwriters in the country was established in 1971 to promote and uphold the universally accepted standards of business ethics and professional integrity among its members, using modern technology in maintaining and disseminating information globally. There has been crusade over the years by public speakers against unethical practices among insurance underwriters. The NIA as the umbrella body should tighten its belt in disowning or delisting operators who indulge in any form of unethical practices. It should also caution its members who still drag the image of the industry into the mud through repudiation of genuine claims.
The Nigeria Council of Registered Insurance Brokers (NCRIB) is the umbrella association of all registered insurance brokers in Nigeria who are by law expected to be registered by it before they can be licensed to operate in the Nigerian insurance market by the NAICOM.
The council has as its objectives the duty to establish and maintain a central organisation for insurance brokers and generally do all such things as may, from time to time elevate their status and safeguard and advance their interest and procure their general efficiency and proper professional conduct, with a view to ensuring for the community, the existence of a class of insurance brokers who can be relied upon as being trustworthy and duly qualified to perform their responsible duties. The new president of the association should be awake in doing this.
He should keenly watch over legislation affecting insurance brokers, and to promote, or support and assist in any legitimate manner, the carrying into effect of any legislation having for its object the common interest of members, of the council and the general public.
On the other hand, the objectives of establishing the Institute of Loss Adjusters of Nigeria (ILAN) was to establish and sustain a professional body of practicing loss adjusters of Nigeria. It has the responsibility of engaging in activities that will ensure the general welfare and public well-being of insurance loss adjusters and to take necessary actions for the advancement of education in the field of loss adjusting in Nigeria. The objectives should be pursued by the institute by establishing and maintaining institutions, libraries, schools, and recreation centres for the succour, assistance or education of its members, and the public in Nigeria in loss adjusting.
Similarly, the Association of Registered Insurance Agents (ARIEN) members have the responsibility of promoting and selling grassroots insurance resting on their shoulders. They have numerous members scattered all over the country and are closer to the masses more than the brokers and the underwriters. They should therefore, use this opportunity to market insurance to Nigerian masses and in doing that protect the image of the industry by not presenting themselves in bad light.
They should make use of relevant technologies to spread insurance to all Nigerians. They should establish branches in rural areas to pursue the federal government 10 million farmers insurance scheme by marketing micro insurance scheme to farmers in rural areas. ARIEN should also rise up to the challenge of keying to the model marketing tool like those of information technology in selling insurance to the grass root through the education of its members and enlisting of young graduate who are more versatile in the use of modern technology in the sale of insurance. The association should ensure that its members do not further dent the industry’s image through misbehaviors like absconding with premium they supposed to remit to insurance firms and non documentation of policy contracts of their clients.
Risk Surveyors Association of Nigeria (RISAN) is an association of corporate bodies and individuals performing the duties of risk surveyors in the fields of risk management, risk surveying, loss prevention, risk controls, etc in relation to fire technology, safety devices, engineering, business information and other risk of both industrial, commercial and personal lines.
RISAN provides continuous education for its members and inculcate in them the virtues of maintaining good business relationship with clients when giving professional advice on risks.
One of the areas insurers are not getting things right in Nigeria is in the area of educating Nigerians on how to stay safe and avoid risks. The result of this is that insurance industry is prone to claims emanating from avoidable risks.
The risk surveyors should, during the year, make their position and services more prominent and accessible than the previous years. Many don’t understand their position and place in the insurance industry they should therefore tell people where they are and what they can do to help in reducing the burden of claims from avoidable risks coming the way of insurers.
Industry observers are of the view that the insurance sector stands better chance of performing optimally if these bodies live up to their expectation in their regulatory functions and business conducts.
Aside from awareness creation, the issue of maintaining high ethical and professional standards in business conduct is of importance as this will ensure that adequate premiums are charged in each business transaction and claims paid timely without stressing the customer