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By Henry Uche, [email protected]
With year 2022 already gone, its scars in the minds of many Nigerians may still linger for some months into the new year. For one, the evidences of Nigeria’s bad economy are so glaring on all sides., that many would want immediate changes coming out of the sector.
From the over N42trillion debt and expansive debt servicing obligations, to low productivity, high unemployment and underemployment, epileptic power sector, soaring inflation and exchange rates, decayed infrastructure, intolerable corruption, virtually all Nigerians including the ruling class are feeling the pain. The unprecedented insurgency, feeble private sector among others are all going down as part of the hallmark of events in 2022 that cannot be forgotten in a hurry. However, despite all these negatives besetting the country, some stakeholders in the insurance industry in separate interviews with Daily Sunstill gave kudos to the Federal Government and industry regulator – The National Insurance Commission (NAICOM) for the little progress recorded by the industry in the outgone year.
Gus Wriggle an insurance industry stalwart and a risk Manager, said the industry has fared well enough, while stressing it’s not yet uhuru. His words, “Available statistics have it that the insurance industry has fared well in 2022 that one may well conclude that things are getting better.
“Insurers are beginning to see the need to satisfy customers and people are beginning to see the need to take up insurance. I guess, the premium income for insurance companies ballooned after the end SAS because people lost so much and they begin to see the need for insurance. Again, let’s not forget that the impact of the low currency against the foreign exchange has again compelled many industries to increase the sum insured, which of course will impact on the premium payable. So on a scale of one to 10. I think the insurance industry can be scored maybe seven, six and a half seven, which I think is a good number because there is so much room for improvement”
On the risk management side of doing business in Nigeria, Wiggle said Nigeria including the government are not doing enough- proof is Nigeria’s reactive (instead of proactive measure) to emergencies. According to him, Nigerian’s culture in terms of risk management has no really improved significantly. “I say this because we are still believing that risk management is a subset of insurance, where actually insurance is the subset of risk management. With risk management it’s obvious that you will have less to insure because when you have put in place, I mean package of near full package of risk management into your operations, the possibility of losses will be so minimize that when it happens, it’s just that it had to happen, but unfortunately, we have not yet reached that level of risk management. So that’s really the challenge. Risk Management Society Or Nigeria -RIMSON will continue to drive risk management as a catalyst of the new economy that we are really looking for. Let’s not forget that Volatility, Uncertainty, Complexity and Ambiguity (VUCA) is here with us. And the earlier every organisation starts giving attention to VUCA, the better for us in terms of our business and risk management.
Expectations in 2023
Well, the Federal Government has been able to sign into law, a new bill- The Chartered Risk Management Institute of Nigeria (CRMI) Bill, 2022, that was scripted Act of the National Assembly in terms of risk management, but I think it’s just tailored mainly to the financial sector. However the government itself in their operation have not been able to build in risk management mechanism. So until they begin that process, I will say that the government is still toying with risk management, maybe they’ve not really seen the added value of risk management in every facet of their planning. Because we believe that if they have really done that, some of the challenges that we are really having would have been minimized, if not eliminated. Of course, we know the unrest is a part of this management, the government has not been able to nip it in the bud because they have not been able to address, they have not been able to scan the environment to know what is the cause, or maybe they are pretending as if they don’t know what it is.
So, as for the insurance companies, I think there will be so much to expect. I’m sure you are aware from January 1 2023, the motor premium insurance will have gone up.
The third party liability will have also gone up from 1 million to 3 million. And what needs to can happen now is to create more awareness for people to know their rights and what are the expectations from insurance companies with this increase in premium. For me, I will say it’s a good thing. It’s a welcome development. The insurance companies have been crying for this increase in third party premium and finally, a motor insurance premium in particular, and for NAICOM to have increased it, I think it is a wel come development.
The expectation now from insurance companies is to match that new premium with service, because it is not enough to just collect premium, it must go with the service. So there should be more awareness and the benefits of particular policy and I am concerned with the third party insurance cover. Yes, we are increasing from N5000 to N15,000. Yes, you have increased the liability of third party insurance from N1 million to N3 million. But how much of awareness have you created for the insurer and for the consumers, and then that should be the priority of the insurance companies in 2023.
Expectations from the government.
From the government of the day, we have seen obviously they have not really embraced risk management but we hope that the in-coming government, irrespective of the party that comes in, will put risk management in the forefront of every of their policies. At least let them allow the risk managers to evaluate and make probably prescriptions before coming up with any policies for the country irrespective of party involved.
Cashless policy and naira redesign
“I don’t think the cashless policy and Naira redesign will affect insurance. I think for me, it’s all part of risk management. The less cash in the system, the better. Cash issupposed to be recycled in the banks and not at homes. So if we operate a cashless society, is a part of risk management, which is very welcome. And I think that will encourage people, the abuse of the naira has been so much. Sometimes you see Naira currency, and you are afraid to touch them because of the bacteria that may be associated with some of the abuses. Again, you see in parties people throwing money on the floor, as if it’s raining.
To me these are all abuses and with a cashless society, I think we will have been able to address that bit of it. But unfortunately, some of the market women need to be educated to create the awareness where we should be able to do things, do things with less cash and more of cards. There is going to be need for plenty of Point of Sale- (POS).
And there are going to be so much adjustments that we’ll need to do but on the whole it’s a welcome development,” he maintained.
Insurance Agents
For the Association of Registered Insurance Agents of Nigeria (ARIAN) the government has not done very bad, howbeit there is room for improvement. Speaking with its president, Kunle Odewunmi, he said, “We had our challenges like many others, for instance, convincing people to pick insurance policy you know, but we believe we can do better next year. For us, we know how to walk around challenges. We remain auspicious for 2023 but for the first quarter, this administration must prove their worth because this is their last chance.
The new Naira notes injection
It would affect us definitely. The Cashless policy/ Naira Notes redesigning would make our relationship with the informal sector in particular to be more taxing. The informal sector as a big player would you be adversely affected. The Okada, riders, the petty traders, artisans, etc. Since we sell micro insurance products to them (where some of them pay weekly or daily, monthly premium it means we (Agents) shall be going about with Point Of Sale (POS). But we shall find our ways around things.
Expectations from FG in Q1 2023
“2023 election is critical no doubt. It would affect us as agents and the industry.
First, NAICOM did well by increasing third Party motor insurance from N5,000 to N15,000 and a N3 million Third Party Property Damage (TPPD) limit for private motor vehicles; N5 million limit for own goods, with premium of N20,000; staff bus premium, N20,000 and TPPD, N3 million, however we must make the public understand why they should be risk conscious and hedge against it.
“On security, the federal government has not done well among other critical sectors. So they need to improve in security. We cannot move about to meet the people who need insurance products. So we expect more support from the Federal Government but more importantly, state governments should support our state chapters in every way possible knowing that insurance in becoming indispensable, following the flood incident for instance, so our job as insurance agents is needed more than ever, thus, the state governors must provide security for us to move in and do the needful,”
Lost Adjusters
For the Lost Adjusters in the insurance value chain, it has experience has been a sad one. Speaking with an erstwhile president of Institute of Loss Adjusters of Nigeria (ILAN) Mr. Ralph Opara, he said, Lost Adjusters in Nigeria are at loss when compared with other stakeholders in the insurance value chain.
According to him, they have always been at the receiving end who goes groaning while other stakeholders like the Registered Brokers go home smiling. “For us in 2022, we have not busy as we were in previous years, because whatever affects the Underwriters affects us too. Like other corporate organizations in the country, the insurance industry had a scaled down operations this year, some closed down certain lines of businesses, so as a result, there was a scaled down cover and Premiums. When there are scaled down operations, there would be a scale down in the number of claims, as a result we were affected- not busy as usual. If a company is a client of an insurance company, and the issuer closed down a line of business completely, the insurance company has lost business and by extension, there is scaled down claims and no work for Lost Adjusters. So we are affected badly. However, there was sufficient to keep us afloat.
On expectations within the first quarter of 2023
We have a lot of agitations / issues that need to be addressed. We’re not happy the way and manner NAICOM treats us, we are not equally happy how underwriters treats us unlike the way they treat insurance Brokers, let’s reserve this for next time. Some insurance policyholders who pleaded anonymity said their experience with their insurer were refreshing and would continue to do business with them going forward. One (male) said, “My insurer has proven to be faithful and prompt in Claims payment”
Another (Female) said, the Federal Government and NAICOM are doing well to ensure that insurance companies do what they are mandated to by law. So I have insurance policy for my children education and some personal properties, and I’m not regretting it” she maintained.
All efforts to speak with the Nigerian Council of Registered Insurance Brokers (NCRIB) proved futile.
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