The insurance industry, in the face of the economic recession plaguing businesses in Nigeria, is faced with two critical challenges.
These are challenges of huge claims coming the way of the industry operators in 2016 in particular as a result of negative impact of climatic change and the challenge of improving their capacity building to insure huge businesses locally in place of current trend of ceding such risks abroad.
The Group Managing Director, Royal Exchange Plc, Alhaji Auwalu Muktari, who disclosed this in an interview with THISDAY in his office in Lagos, said against the backdrop of the economic recession , premium generation has not really been a serious problem to insurers but huge claims experience coming their way particularly this year as a result of negative effects of climatic change.
The Royal Exchange boss, said: “In the year 2016, we envisaged a lot of claims coming our way due to climatic change. There has been heavy rain in the northern part of the country, before now, it has not been like that. With the climate change, there is heavy rain in the north this year.
We have not seen that before in the north we have only seen it in the south so they are not prepared for it. So many houses have been affected; also the terrorists activities have caused a lot of pipeline vandalism, the terrorists activities in the north, in form of Boko Haram, many police, soldiers were killed, and these have group life cover. Houses were damaged; all these brought a lot of claims to the industry in the current year. There are a lot of factors that have affected claims rate in this 2016.”
On the way forward for the industry, Muktari, said the most important thing is how to increase operators’ capacity of doing businesses so that the industry will have larger capacity to accommodate more risks instead of ceding huge risks outside the local market.
He said with improved capacity, operators can focus and reposition the industry so that they can retain more risk in the local market and with retention of more businesses locally, there will be creation of more jobs for the teeming population of Nigerian youths.
He said with improved capacity, there will also be rapid growth of the insurance industry, and there will be a lot of funds for shareholders to enjoy and the industry will become one of the greatest industry in Africa and part of the world in general.
Speaking on the impact of the recession on premium generated by the industry, Muktari said insurance is not isolated from the real effects of the recession.
According to him, the industry has been part of the economy and what affects the Economy affects the industry.
He however said despite this, his company did excellently well this year in terms of premium generation.
“If I am to talk particularly for my company Royal Exchange, I will say that we are doing very well business wise. In fact, I can even tell you I am doing better than I did in 2015 despite the challenges and economic crisis in the country. But still we can do better if situations were normal and things were in the right position. We can do better if everything is going well with other sectors of the economy”, he stated.