Ebere Nwoji
European market and the US market and the risk is shared with re-insurers and when there is compensation, it would be easy to pay claims. This is a shared risk,” Sanusi said. Those in the oil and gas business sound the same tune raising the question on how long will the industry continue to meddle with this low capital syndrome .
Worried by this, the new Chairman, Nigeria Insurers Association(NIA), Mr Tope Smart, recently lamented the backwardness of insurance industry among other sub-sectors of Nigerian Finance services sector.
Therefore, he vowed to raise the banner of the industry during his tenure as NIA Chairman.
“The Nigerian Insurance Industry is a key component and an important member of the Nigerian financial services sector. Insurance as we all know is the bedrock of any economy. In Nigeria, it is rather sad to note that not all have embraced this concept. This is why the penetration rate still remains about 0.5 per cent as against some other African Countries such as Kenya and South Africa with penetration levels of 2.9 per cent and 14 per cent respectively,” he stated.
The Managing Director/Chief Executive Officer, Leadway Assurance Company Limited, Mr. Oye Hassan-Odukale, said the tier-based capital increase was good for the industry.
Hassan-Odukale, who is also the Chairman of the SubCommittee on Publicity and Communication of the insurance industry’s Insurers’ Committee, said he believed the introduction of the risk-based capital in Nigeria will help to restructure the market
He said with the regime, insurers could choose which part of the consumer segment (retail, commercial or industrial) is best served based on the capital fund that is available to it.
He stated that with the new development,insurers did not have to be compelled to increase capital to underwrite risks adding that the restructuring will foster the emergence of players with capacity to become retail specialists or become specialist underwriters of big-ticket risks in critical sectors of the economy, such as the aviation and oil & gas, whilst accelerating the growth of the industry and its contributions to the Gross Domestic Product (GDP) of the country.
The Leadway Assurance boss also expressed his confidence in the initiative stating; “The news of NAICOM’s introduction of TBMSR is a positive one. I am confident that it is an initiative with potential upside for the industry to grow and take its rightful position as a formidable contributor to our national economic activities, growth and development as it is in developed economies.
“It is high time we move beyond the 0.3 per cent contribution to GDP and improve our ranking within the comity of African insurers (heavily dominated by South Africa) as measured by the African Insurance Barometer.
Overall, we should expect an improvement in the capacity and reputation of the industry on the back of unwavering market discipline, improved claims settlement, stronger local retention, increased prudence and promotion of appropriate pricing,” he added.