In their continued struggle to enthrone a regime of vibrant and developed insurance sector that meets global standard, insurance sector operators have listed their expectations from the in-coming administration writes Ebere Nwoji
As Nigeria looks forward to enthroning new governments at federal, state and local government levels, hopes are high among operators of various sectors of the economy that the new regime would bring a major turn around in their operations.
Their hope is indeed high because coming from the passing administration in which the operators watched their businesses bedeviled with problems ranging from negative effects of COVID-19 pandemic, climatic change, social, political and economic downturn, security challenges inflationary challenges and continued loss of value by Naira to dollar and other currencies due to hyper inflation, the operators look upon the in coming administration as a place of refuge and a messiah that would lift them out of the unfriendly business environment that has remained inimical to their survival.
The insurance sector as part of the finance service sector of the economy is not immune from these problems and the operators are among the expectants of the needed salvation from the incoming government.
On their own, the sector operators especially the regulator, National Insurance Commission (NAICOM) said it is determined to take the industry’s fate by hand through implementation of initiatives that would make the sector move away from what it described as “One cap fit all” model of supervision to a new model that would stabilise and advance the industry.
The Commissioner for Insurance, Mr. Sunday Olorundare Thomas, in a recent interview with THISDAY said his starting point towards repositioning the industry is that he would this year direct his regulatory attention to migrating the entire insurance sector from compliance based capital supervision to risk based supervision.
He said the era of one cap fits all, in his supervisory role was over and had given way to a new era of risk-based capital model of supervision.
“It will no longer be the case. This year, we will be closing on that and before I finish the first tenure, it will be operational. We are in partnership with the multilateral institutions in our quest to evolve, this risk-based capital. Our staff members have gone through a lot of training in this area and it’s been quite helpful, ”he said.
From the insurance operators’ side, the umbrella body of insurance underwriters, the Nigeria Insurers Association (NIA), has been moving its tentacles in search of ways to make the insurance industry in Nigeria stand out among other committee of insurers across the globe.
Operators’ expectations
Chairman of the NIA Mr. Olusegun Omosehin, in a telephone chat with THISDAY highlighted six major areas of the operators’ expectations from the in-coming administration saying it would among others include ensuring the stability of the macroeconomic environment especially inflation rate, exchange rate etc. to accelerate growth in the economy.
Reduce the current level of insecurity and insurgency in some parts of the country. He noted that a safe and secure polity is a necessity for economic growth and prosperity.
He said the new administration should ensure that Nigerians have respect for, and enforcement of all existing laws that relates to insurance in Nigeria particularly all the compulsory insurances.
He said the administration should ensure support for the manufacturing and industrial sector to stimulate growth in the economy.
The administration he said should be bold to tackle the monstrous fuel subsidy issue and free up funds for development
He further said it should be providing the enabling environment to support innovation from individuals, small businesses and be deliberate about growing Nigerian owned enterprises.
Also the President Chartered Insurance Institute of Nigeria (CIIN), Mr Edwin Igbiti, said the insurance sector expects a lot from the in coming administration.
According to him, elections in developing democracies like Nigeria tend to be accompanied with tension because of the possibility of violence. So for insurance, the main concern tends to be around the impact of these potentially violent situations.
He said, of course, while insurers may take some steps to protect themselves from the impact of these events, operators also want to be mindful of the risks the customers face and provide relief where it is necessary.
“While we encourage consumers to be aware of their risks at all times, there is usually a heightened awareness of risk during these periods. What is the expectation of the insurance industry now that we have a president-elect? the CIIN president asked.
Significant challenges
In response, he said, “The new administration faces a number of significant challenges: insecurity, a flagging economy and an increasing debt burden among others. He said the government would have to take significant steps to tackle these issues and get the country on the path to double-digit growth at least.
He said insurance has a role to play here, to provide platforms for people and businesses to take risks, which ultimately increase the supply of goods and services, create jobs, and grows the economy. He said this being the case; insurance needed an environment that encouraged the types of investments the country needed to spur this growth.
He said this would be beneficial to all Nigerians and the insurance industry as well.
Igbiti said in terms of indices that contributed to the growth of the industry, the industry needed indices that contributed to growth, as he added that the overall state of the economy has a lot to do with the strength of the industry.
He noted that increasing income per capita and disposable income contributed positively to insurance growth, adding that high inflation reduced disposable income and reduced growth of the industry.
“A high rate of saving also increases growth of the insurance industry – saving is essentially deferring consumption and insurance products fulfill this as well. Increased investment in production capacity, which reduces inflation by increasing supply, and generates jobs leads to growth in the insurance industry as well”.
He said the incoming administration should through its policies and programmes put in place an environment that would ensure the achievement of the aforementioned.
The Executive Secretary Nigerian Council of Registered Insurance Brokers, Mr Tope Adaramola, said the incoming administration must ensure that there was better adherence of government at all levels to compulsory insurance.
“There would be significant improvement in the solvency of insurance industry, translating in better contribution to the GDP if this is done.
“Government should also consider insurance as a critical component of financial or economic recovery initiatives. It is appropriate for insurance professionals to be more involved in government’s machinery since there is a risk component in all social and economic endeavours.
“It is believed that when government gives clout to the industry, they would be relieved of the burden of spending hard earned expenditure on disasters and risks the victims could have undertaken by themselves”.
He cited instance of the palliatives often given after disasters have occurred, adding that such monies could have been preserved by government and spent on other social benefits for the people.
According to him, here lies the place of our industry in returning our economy to vibrancy under the new regime.
Adhering to recommendations
The insurers believe that if the incoming administration acts along the line of the above recommendations, with the efforts being made by the insurers themselves, the industry would be better for it and the entire economy would stabilise.
In their efforts, Omosehin had during his investiture speech as NIA Chairman mandated the operators to henceforth play the role of catalysts in protecting the future of Nigeria economy through support of innovations in the new business world the country found itself in order to deliver prosperity.
Omosehin, also urged the insurers to be deliberate in technological investment and innovations in order to leverage on the advantages to improve on accessibility, affordability, adequacy, awareness and availability of insurance products.
He said the insurers had the tools to do this noting that in the new business world thrown up by the COVID-19 pandemic and its like challenges, insurers’ roles were clearly defined but were yet to be occupied.
“By embracing the new and emerging world and the associated challenges, steer the ship of growth and innovation quickly to provide the buffer required for the economy to thrive not impending by clinging on to the past, ”he charged.
Thomas, pointing out the achievement recorded by the operators despite the downturn in the economy, recalled that the industry was committed to his care with market production of about N320 billion, but that between that time and now, the industry’s market production has grown to N730 billion.
He said he was deputy commissioner until around August 2019. When he was appointed Acting commissioner, recalling that the market production in terms of premium was about N400 to N520 billion. But by 2022, the market recorded more than N730 billion.
Insisting that his administration was still not satisfied yet, until he has achieved the N1 trillion target. The NAICOM helmsman said he expected that with the enabling environment to be created by the incoming administration, the industry would hit the N1 trillion premium income target and surpass it.
He said total asset of the industry moved from about N1.3 trillion in 2018 to about N2.5 trillion in 2022.
“We are making progress but looking at our economy, these, to me, are small numbers. I will also say that our methodology is also changing. Inspection used to be compliance-based with a checklist. But now, the world has moved to risk-based supervision. We started that last year. Some companies have tasted what it means to have risk-based supervision environment. It has been quite revealing about the operations of these institutions. We are taking it to a new level, risk-based capital. If you know the history of capital in this country, it has been an issue and we want to remove that. You can trade, for instance, as a motor third party insurance company, based on your capital. Then, if you want to trade in the highly volatile business environment of oil and gas, you also must provide the needed capital to be able to run at that level. That is where we are going now,” Thomas stated.
