Insurers look to reviewed rates on group life, motor third party for premium growth in 2019
Insurers are hopeful that recent rate reviews on two compulsory products including group life insurance and motor third party policy will have positive impacts on their premium income this year.
They said that these policies will enable it weather the storm expected to come from economic lull, which may be exacerbated by pre and post elections risks in 2019.
Insurance regulator, the National Insurance Commission (NAICOM) had in 2019 reviewed the rates for motor third party insurance and group life insurance for employees, after it discovered a lingering price war among operators, which was undermining capacity and ability of insurance companies to meet their claims obligation.
According to Mohammed Kari, commissioner for Insurance, such rates were uncompetitive and do not help the sector to contribution meaningfully to the country’s GDP.
In the new policy, NAICOM said minimum price for motor third party policy will be N5,000.00 while the group life policy was put at 6-per mill, and therefore warned operators that companies found charging below approved rates will be sanctioned.
For later part of 2018 when this policy was put in place, the industry recorded improved premium from these classes of business and this is expected to continue in the New Year when most policies will be renewed.
Tope Smart, chairman of the Nigerian Insurers Association (NIA) said “we are hoping to have better improvement in premium this year on the backdrop of implementation of the new rates” Smart noted that these were some of the positive developments that happened in the industry in 2019, stating that renewals now are in the new rates and the industry will be better for it.
Ganiyu Musa, group managing director/ceo, Cornerstone Insurance Plc said that reforms which were driven by the National Insurance Commission (NAICOM) has helped to correct the pricing of the products and enhanced compliance of operators.
Musa who spoke in Lagos during an interview section with a select journalists said the insurance market had suffered huge losses as a result of uncompetitive pricing of these products due to unhealthy competition by operators, stating that with the intervention of NAICOM which stabilized Motor Third Party at N5, 000.00 and group life at 6 per-mill, companies have garnered resources to meet claims obligation.
“Before this policy on group life, some life businesses were getting to stress level as a result of uncompetitive pricing, while claims kept coming”.
He said today, majority of them can be able to pay their claims because premium is right, “what is the need being in business and you cannot be able to pay claims, Musa asked.
NAICOM had said that the industry at end of third quarter 2018 has grown its gross premium by 22 percent, from N258 billion during the same period in 2017 to N315 billion.
According to the commission, gross claims figure for the third quarter 2018 was N143 billion, a 30 percent increase over the N110 billion reported for the same period in 2017. Going into 2019, NAICOM said though the outlook may not be as rosy, but it sees the silver lining and is fully committed to making the most of it.
“We have set for ourselves a clear, unambiguous task: to improve the aggregate number of insurance consumer by enabling individual operators to optimally serve a much larger customer pool with a more varied basket of products. The end game for us is to increase the insurance uptake ratio among the Nigerian populace and we have a number of initiatives in place towards achieving this.”