OLAWOYIN: DELAY IN CLAIMS SETTLEMENT IS A SIGN OF INEFFICIENCY OF INSURERS

has already envisaged that and various terms and conditions have already been set up to take care of whatever the cicumstances there may be. So you will now move on at the time of claim into the interpretation of the terms and conditions of the policy vis a vis the circumstances that give rise to the claim. The question will now be how long does it take you to interpret the terms and conditions as contained in the policy vis a vis the circumstance that gave rise to the claim. This is where we run into trouble waters, you start hearing - there is the commom word, small prints. This is where the issue of small prints creep in. My advice is that you go through a registered insurance broker. It doesn’t matter how smart I am, if I have a case in court, I cannot represent myself. Brokers are your advocate when it comes to insurance matetrs. Brokers are expected to be groomed and know the intricacies of these terms and conditions. There are some of them that we will have to contend with prior to the occurence of the claim, that we will ask the insurers to expunge or amend so as to ensure that it is not burdensome on our clients. You don’t see this burdensomness until the risk crystalises. So some of these would have been taken care of by your advocate who suppose to be a broker prior to the occurence. When the risk eventually crystalisses, we will push to ensure that the claim is timely resolved, ie there must be a resolution before payment. For me these are the processes. I see delay in claims payment as more of inefficiency on the part of underwriters. But be that as it may, you need to know that there are internal processes in place and there is a need to comply with these internal processes. Without an internal process in place, an organisation will be open to all kind of things including fraud. Insurance industry is exposed to fraudulent claims. The cost of fraudulent claims is high in advanced world. Therefore there is a need to balance and prevent fraud.The internal control will also be put in place to cross the Ts and dot the Is. But be that as it may, I believe that we can cut out inefficiencies. All these are tied up to the issue of image. Yes we should be very aware of our image and do every thing possible to improve on it. Efforts are being made to reduce these incidences becuase it is a satisfied customer that talks about you in a positive manner. A dissatisfied customer will not be willing to be your representative going forward.

The issue of overriding commission is common among you brokers and the regulator frowns at it how can this be stopped?

It is illegal. Our rate of commission whcih is our remuneration is statutory. It is in the insurance Act 2003. So you do not have the power to negotiate further, it is sealed. You can’t put a call through and say ‘underwriter A, I have a risk here, I know it is ten per cent but you must give me 12 per cent.’ Nobody will listen to you because it is illegal. That stance is illegal. I think the regulator is doing a good job in looking at various cost elements and the cost profile. So if you do a business of X amount and your cost is Y, for company A, and company B and he does a business of L amount and the cost and expenses associated withit is M, it is easier to compare and say if this man does this based on the cost of this, why have you done this at this cost. For me, the regulator is seriously looking at the cost element and the cost profiles of all the companies within the sector and that is going to raise a lot of questions and I trust the regulator, it is going to pursue it to a logical conclusion to see how to properly position the industry into growing shareholders value, improving investors confidence and delighting all the stakeholders and we will all support the commission to achieve that.

Do you believe insurance managers who complain that the industry is over regulated?

I don’t know about over regulation. I will like to stick to regulation. Insurance industry is a regulated industry for public interst and because of the effect of a failure of that industry on the economy as well as to engender public and investors confidence. So when you put these reasons together, you will agree that there is a need for a sort of regulation. My understanding is that regulation consolidates structure and makes sure that things are done in a prescribed manner. So if our regulator believes that based on the available statistics, there are laxities here and there, it has the responsibility to move in and improve on wherever area they perceive as being weak. In order to bring confidence of investors into the country, there is a need for some form of regulation, direction,so that people can have confidence depending on the way you want to play it as an investor, you have this confidence that your money will not disapper. Do you want to play as a buyer, then you know that in terms of claims somebody is going to fulfil his promises. For me, those are the areas I am looking at regulation and we may struggle with it, but we will do well to look at those guidelines being reeled out by NAICOM from time to time and try to read them, digest them and run with them. Insurance is a global business. NAICOM belongs to a global regulatory insurance supervisors as a member. There is a standard among these global body of regulators that each regulator is to go back home and implement. I believe that NAICOM is also running along this path. So I will be surprised if we are doing anything totally different from what our peers are doing in other climes. If there is anybody that is doing anything totally different, then that probably means that we are ahead of that particular market. There could be other markets that are ahead of us because NAICOM is trying to do these things in phases. So NAICOM is preparing us for global compettion and making us to be more competitive. I’m aware that there isthmus international body called International Association of Insurance Supervisors. NAICOM is a member and is trying to align practices locally to that of global standards and you are going to be seeing a lot of policies and guidelines in that direction.

So, what is the way forward?

The way forward for me is that we need to improve on our expertise and professionalism. I believe that everything will fall into its rightful place once that is sorted out in terms of manpower development. Also there is a need for more investment in our industry. Local or international, it doesn’t really matter. Then, we require a lot of support from government. Everybody talks about contribution of insurance into the national economy but I want us to look at it in this way, which sectors of the economy is making giant stride in terms of contribution to GDP and look at the contribution of government directly or indirectly into some of those sectors, you will see that insurance is one of those sectors that receive least support from government. For insuraance to have gone this far, I think it is one of the most resilient sectors in the economy with little or no support or patronage from government. We just talked about default in premium payment, govrnment is a big spender in this economy. A finger of governmnet contribution can turn around the fortune of the industry. If governmnet is to do insurance on their asset both human and non human, maybe you will be talking of hundreds of billions of naira. That is more than half of total premium income for a year for the whole industry. Also enfrocement using various government agencies to enforce even these compulsory insurances. So for me, these are my expectations, government’s support both directly and indirectly through their various agencies and then our own . My expectation is divided into two you have endogenious and exogenous factors. Endogenous is things that the industry could do by itself I.e driving expertise, incrasing knowledge because insurance is a knowledge based industry. Improve on our human capital and incrasee investment. For us to attract investment, we need to do a lot in terms of return on the existing investors. One of the worst performers in terms of return on investment on the Nigerian stock exchange is the insurance sectro. That means that we are not delighting our shareholders. The exogenous is where government contributes in terms of doing insurance itself, walking the talk as is contained in various laws and then using various regulatory agencies to enforce compliance in terms of insurance. And once we do all that I believe that the only way to go is up.