Insurers Lament Negative Effects of Volatile Economy on Insurance Industry
The Chairman Nigeria Insurers Association (NIA), Mr Olusegun Omosehin, has said that the volatile nature of Nigeria’s economic environment and emerging risks is having negative effects on Nigerians’ appetite for insurance services, keeping insurers on their toes in search of initiatives for building public trust to win mass patronage and in search of offshore reinsurance backing for huge claims from emerging risks.
Omosehin, who stated this at press briefing in Lagos, said government policies such as fuel subsidy removal and upward review of premium on compulsory Motor Third Party insurance, has compelled many Nigerians to restrict themselves on the number of vehicles they put on the road as well as number of vehicle particulars they renew between last year and this year.
He also said the high-risk profile nature of insurance policy like kidnappings and terrorism categorised as emerging risks has limited the number of insurance firms playing on that line of business.
He said as a result of this, Insurance Chief executives have been put on their toes in search of initiatives to build public trust, credibility for patronage and offshore reinsurance backing for huge claims coming their way.
Omosehin said the macro economic situation emanating from some policies of government affected people’s life style and spending habits thereby limiting their purchasing power and appetite for some insurance policies even the compulsory insurances.
He said with the 200 per cent upward review of premium on the compulsory Motor Third Party Insurance and increase in fuel price, many Nigerians restricted the number of vehicles they put on the road and the number of vehicle particulars they renew.
He said the industry noticed this in the number of motor insurance certificates uploaded in the insurance industry data base.
According to him, in 2022, a total of 3.69 million vehicles which owners purchased policies were uploaded by the NIA while in 2023, with the announcement of upward review of the policy from the official N5000 to N15000, the number of vehicles uploaded in 2023 decreased from 3.69 million to 3.11 million.
Attributing this to initial resistance expected from consumers when prices of goods change, Omosehin said he expects change in behaviour from the insuring public this year adding that as enforcement continues, people would do the right thing .
He further attributed the decrease in the number of insurance certificate uploaded in the portal to economic situation especially fuel price increase which has compelled many Nigerians to reduce the number of vehicles they put on the road.
On emerging risk like kidnappings which has taken its toll on Nigerians in different parts of the country with popular interstate motor complies like God is Good , ABC transport and their passengers among others being prime targets, Omosehin said insurers were not complacent over that in terms of designing products that would cushion the effects but that such policy was not and could not be found on the common shelf of any insurance firm.
He said there were specific insurance firms in Nigeria covering kidnapping and other emerging risks but that it was not just for anybody because of huge premium involved.
He said the few underwriters are currently seeking reinsurance backing off shore to be able to stand the quantum of claims involved when the risk crystalises.