Ebere Nwoji examines the breakthroughs and challenges recorded in the insurance industry in two years of the Muhammadu Buhari administration

“The president has been doing very well trying to put structures right. As it is today, a lot of activities have started picking up and we have seen the signs that it is going to be better and all Nigerians will be happy at the end of the day. So I want to assure you that it is going to be better from now to the year 2017”.

These were the words of the Group Managing Director, Royal Exchange Plc, Alhaji Auwalu Muktari, during an interview with THISDAY in his office shortly after president Muhammadu Buhari took up the mantle of leadership as Nigeria’s 4th democratically elected president on May 29, 2015.

Muktari had high hopes that Buhari’s administration would bring a major turnaround in the fortunes of the insurance sector. Most operators shared the same view with him.

Indeed, the industry operators were optimistic that many things left undone by past administrations in the efforts to reposition the insurance industry as a major contributor to the nation’s economic growth in the presence of decline in the price of oil, would be accomplished by the Buhari’s administration.

As Buhari clocked two years in office, industry operators and stakeholders have looked back to count their gains and achievements during these past two years.

An assessment of the performance of the industry during these two years, revealed a mixture of successes and woes in the insurance business.
According to operators, success, in the sense that the administration recognises insurance as an arm of financial services sector that can contribute meaningfully to the growth and development of the economy.

In this regard, the operators noted that the Buhari’s administration has accorded high recognition to the industry in that it has shown interest in driving insurance to the forefront of the financial services sector in Nigeria.

On the other hand, the woes were recorded in the sense that many operators, both brokers and underwriters groan under what they described as high handedness of regulators supervising their operations as well as major shrink in premium generation as a result of tough times experienced by Nigerians within the period especially the first year of the regime.

The operators also complained of heavy claims, increase in cases of fraudulent claims to the extent that some now pay claims from their reserves.

According to them, their worst experience was in settlement of dollar denominated claims as a result of weak value of the Naira to the dollar.

On the side of premium generation, the operators expressed regret that a lot of premiums were lost in transit during this period due to non-enforcement of compulsory insurances by government just as late implementation of the budget, placed both corporate and individual citizens in the country in such tight corner that they hardly consider insurance patronage.

On the positive side, the immediate past Commissioner for Insurance, Mr. Fola Daniel had in the early days of Buhari’s administration, noted that the regime was very sensitive to the fact that insurance was the key to building a virile economy and had for the first time, in the history of the country, called for the contributions of the industry to its transition committee.

Describing this as first in history for the industry from the federal government, Daniel said then: “The future holds a lot for the insurance industry under Buhari’s administration.”

However, a critical assessment of the industry’s performance during the two years of Buhari’s regime, revealed that the industry, within the period, showed signs of market discipline which stakeholders have been yearning for, as this definitely will brighten the fortunes of the industry as well as increase public confidence.

For instance, within this period, some insurance companies had been sanctioned, boards of directors had been replaced with interim managers while warning memos had been issued to some errant firms .

Also, a critical screening of operators in their various trade groups was conducted especially insurance brokers where the regulator had vowed to separate the wheat from the chaff.

For instance, in December 2015, shortly after the regime came on board, the regulator, the National Insurance Commission (NAICOM), published names of 108 insurance brokers whose operating licenses were suspended for non renewal of their licenses.
In 2016, the regulator, published names of 300 insurance brokers out of the existing over 500 brokers who were deemed fit for operation.

This earned the regulator serious criticism with many operators and industry stakeholders accusing the regulator of trying to strangle the brokers to death unnecessarily. They argued that this was capable of increasing unemployment problem in the country. The action however, put many brokers on their toes, motivating them to put their houses in order as corporate entities.

Also, within the period, NAICOM, vowed to implement to the recommendations and guidelines stipulated by the World Bank on supervision of insurance institutions.

The commission, had within the two years of Buhari’s administration, commenced the full implementation of the Risk Based Supervision Model. Before the implementation of the model, the commission had informed the operators that in exercise of the powers conferred on it by section 49 of the insurance act of 1997, it had released what it termed Market Conduct and Business Practice Guidelines for all insurance institutions in Nigeria.
The commission also released another document tagged: ‘Prudential Guidelines for Insurers and Reinsurers in Nigeria’.

Brandishing to the insurers the 78 page market conduct and business guidelines at a forum in Abuja, NAICOM, warned the operators that the booklet, contains framework for fair policies and procedures, effective claims management, trade practices and fair treatment of customers.

According to the commission, the guidelines also contained operations, pricing, commissions and associated returns as well as foreign facultative reinsurance placements for reinsurance brokers.

Also, within the period, there have been signs of implementation of professionalism and values among operators by the regulator.

There had been crusades on this by past administrations in the commission prior to now, but Buhari’s government appears to have showed pronounced zeal for practical implementation of professionalism and sound ethical conduct by the regulator.

The Commissioner for Insurance, Alhaji Mohammed Kari, had within the period under review, called for what he described as professional re-awakening and embracing of professionalism and core values among insurance industry practitioners in order to correct wrong perceptions on insurance by Nigerians.

According to him, the re-awakening effort among insurers has become necessary to ensure that only trained personnel are allowed to practice insurance in Nigeria.

The commission, though penchant about professionalism within the industry, realised the importance of deepening insurance penetration to enable operators earn more premium.
To achieve this, the regulator appointed alternative channels of distribution and those he described as referrals to help in distribution of insurance products nationwide.
It further strengthened the use of agents in insurance product distribution.

Under Buhari’s regime through the effort of Kari, there is increased supervision and monitoring of operators’ activities to ensure that the firms are run in most efficient way that protects policy holders’ interest and guarantees returns to investors.

To this effect, the Commssion is currently perfecting plans to ensure that all insurance policies issued in Nigeria are assigned identification numbers. The commission said this will be made possible through the use of its much awaited portal system which will soon be in use.

The portal system is an electronic gadget designed for effective supervision and monitoring of the industry operators’ activities. Director, Research Strategy and Information Technology of NAICOM Adamu Balanti, said with the portal system, the commission would not only achieve effective monitoring and supervision of the operating firms’ activities, but would showcase to Nigerians every insurance policy written and the names of companies that insured them.

But in spite of all these, the operators said there are still lots of challenges the Buhari administration is expected to address.

Top on the list is payment of premium for insurance of federal government’s employees.

As at present, the federal government is yet to pay the industry’s premium for 2016 group life insurance of its employees that was due for payment since July last year. By July this year, the government will have two years outstanding premium for its workers’ group life insurance and the industry operators are not happy about the development.

Also, the enforcement of compulsory insurance, which is expected to lift the industry as a result of the expected high patronage is another thing requiring government attention. Till date, Buhari’s administration is still silent on this; though some state governments, like Lagos, has started scratching the surface of the compulsory insurance policy but it is expected that the federal government is the main authority that will drive it.

The operators also said they are yet to realise their dream of having all airline operators insure every aircraft that flies into Nigeria, although recently, the Nigerian Civilian Aviation Authority (NCAA), said all Aircraft that fly into Nigeria have insurance cover. The insurers observed that some airline operators hardly buy insurance for their aircraft and some where they buy, prefer to patronise foreign insurers rather than indigenous insurers there by going against the local content law of the federal government.

Against this backdrop, the operators have appealed to the Buhari’s administration to cover up the gap. Making the appeal, a past president of the Nigerian Council of Registered Insurance Brokers, Mr. Ayodapo Shoderu urged the administration to ensure that henceforth, no airline operates without adequate insurance cover especially from a registered indigenous insurer.

“They should also ensure that no airline operator is allowed to operate without adequate insurance cover. Adequate insurance will guarantee that in case of any unfortunate incident, the bereaved families will have something to fall back on”, he said.

Also, the insurers said they have not seen any sign of seriousness from the present administration on the issue of insurance of its assets to set good example to the populace.

Overall, the operators admitted they have seen signs of good days ahead and expressed the hope that the future would be better for the industry.