CEOs Decry Low Insurance Patronage

CEOs Decry Low Insurance Patronage

Ebere Nwoji

The slowdown in economic activities is taking its toll on the insurance businesses, some chief executive officers (CEOs) of companies in the sector have said.

Speaking in separate interview with THISDAY, the CEOs said the sector was still reeling under the effects of the lull in the economy that trailed the 2019 general election.

Managing Director, Anchor Insurance, Mr. Augustine Ebose, while speaking on his company’s experience, said business has not been as rewarding as it was supposed to be.

“We won’t say we haven’t started business, But is the business as rewarding as we thought? We will say No, because of the election campaigns and government is the chief motivator and you know the insurance setting is our area.

“Now that elections are over, we hope that we can start harnessing our potential in terms of premium gathering and more businesses will come.”

To the President, Nigeria Council of Registered Insurance Brokers, Mr. Shola Tinubu, there is no doubt that the industry more than any other sector, suffered disruption in smooth flow of business in the first quarter of the year.

He said this was glaring, looking at some companies’ result in the first three months of 2019, most of which he said are currently being put together.

He, however, said when operators’ efforts in developing retail markets yields fruits, government would cease to dominate activities in the sector.

He also said as the elections are over, there is hope of better year for the industry.

On his part, the Managing Director, FBN General Insurance, Bode Opadokun, also confirmed the slowdown of business in the sector.

He, however, urged operators to develop strategies to remain profitable.

On the General problem of high claims ratio against low premium income hitting the industry and how his company has managed to overcome it, Opadokun stated: “If there is anything FBN has done, it is improvement on our claims portfolio management.

“We have directed efforts to set our claims portfolios management right.

“Insurance opens shop to pay claims. Claims payment is not selling point but how fast you pay it is the main thing.”

The insurance sector had been described as the weakest link in the Nigerian economy because of the low capital base of operators.

The Commissioner for Insurance, Mohammed Kari, had explained that the sector that ought to insure critical sectors such as aviation, should not be seen to have capital base, which is even less than that of microfinance banks.

Currently capital base of life insurance firms in Nigeria is N2 billion, that of non -life is N3 billion, composite firms have N5 billion capital while reinsurers have N10 billion capital base.

Kari had added, “How can an insurance company that insures the aviation sector have capital less than that of microfinance banks? We should wake up.

“Some insurance operators argue that capital is not important. If capital has no function, how come banks bought over insurance companies that used to be owned by insurance companies?

“Insurance anywhere in the world is the mobiliser of funds and provider of security. You cannot provide security if you don’t have capital.

“How can you approach a microfinance bank of N5billion and tell them you want to give them protection. What is your capital?”

Referring to what happens in other climes, Kari had said: “Check any jurisdiction in the world, insurance companies are more capitalised than banks.

“Insurance companies own virtually all the financial sectors in the world. They fund infrastructure because they have long-term funds to fund long term business. If the insurance industry doesn’t need capital, why are they the weakest link in the financial sector?” he queried.

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