By Rosemary Onuoha
Insurance professionals have decided to dump the market agreement entered into by underwriters in 2009 and consider other means of doing business.
At the 2011 Chartered Insurance Institute of Nigeria (CIIN) Educational Conference in Ibadan last week, there was a consensus by professionals that the market agreement has not been beneficial to the sector because it has not been religiously implemented by underwriters.
It will be recalled that as a way of checking ethical breaches, promote discipline and improve service standards in the market, the Nigeria Insurers Association (NIA) commenced implementation of a market agreement. The agreement which stipulates infractions and penalties was signed by all the Chief Executive Officers of NIA member companies.
However, almost two years after the agreement was entered into, no company has been sanctioned for failing to abide by the agreement even when companies break it on daily basis.
Meanwhile before now, the NIA had said that implementation of the market agreement was posing a challenge to industry operators and is undergoing review.
Chairman of NIA, Mr. Olusola Ladipo-Ajayi, who made the assertion noted that the market agreement has been undergoing review with a view to enhance its effectiveness and it is the intention of the Association to continue in this manner until the desired perfection in the market service standard is achieved.
However, Vanguard investigations revealed that the inability of NIA member companies to agree on uniform pricing for risks forced the Association to commence review of the initiative leading to the eventual jettisoning by professionals last week.
Some market operators argued that the market agreement would not work because many insurance practitioners still underwrite from largely outdated and irrelevant rate books. But they said that the sector can overcome the challenge of non payment of claims only if risks are priced appropriately.
Mr. Jacques Coetzer, managing director of UBA metropolitan Life stated “If pricing is right, then the possibility of paying claims is great because at the core of claim certainty lies the balancing act in the pricing and quoting process.”
Underwriters, according to Coetzer, should underwrite each piece of business individually taking into account cover requirements and group distribution in gender, income, age and occupation as well as take deliberate decision not to involve in such sharp practices that has been the bane of the industry all along, stressing that it is very hard but it can be done.
Chairman of Cornerstone Insurance Plc, Mr. Adedotun Suleiman noted that the business of insurance is done on the basis of charging commissions which are authorised by law, but series of illegal fees that have been introduced is killing the business and giving the industry a lot of negative perception.
In his words “These unauthorised charges are corrupting the system and causing corruption to be legalised. Insurance operators should look for creative, acceptable and innovative ways of doing business.”