By Rosemary Onuoha
In recent times, Nigeria has witnessed series of natural disasters, but the insurance industry has played little or no part in assuaging the losses suffered by victims affected by these disasters. The presence of the sector is yet to be felt in the recent flooding experienced in some parts of the country and a major reason for that is the fact that most of the victims do not have insurance cover.

However the Nigerian situation is a sharp contrast to what is obtainable in developed climes where for example, according to New York City-based Marsh, Inc. global catastrophe losses reached record levels in first quarter 2011, eroding set-asides for these losses among affected insurers.  As a result, such insurers are re-emphasising comprehensive underwriting.

The Queensland floods and Cyclone Yasi cost local insurers almost $1 billion, according to the Insurance Council of Australia (ICA). The general insurance industry paid out directly to policyholders in affected communities around $960 million, and continues to pay out over $12 million to policyholders every single working day.

Insured damage

Insured damage from Hurricane Irene ranges between $2 billion and $3 billion, and the total losses will likely be about $7 billion, according to preliminary estimates by Kinetic Analysis Corp. a consulting firm. The preliminary estimate from Kinetic Analysis, based in Silver Spring, Maryland, suggests that Irene will have caused far less insured damage than the $6 billion the industry paid out after Hurricane Isabel struck the East Coast in 2003.

Back home in Nigeria, in the wake of recent flooding experienced in some parts of the country, the insurance sector which serves as a risk bearer is unperturbed because claims related to the floods have not been sent to its quarters just because of the single reason that Nigerians are averse to insurance.  In order words, a good percentage of the flood victims do not have insurance covers, consequently, they are being left to their fate.

However, stakeholders are worried about these developments because they don’t send a positive signal about the country’s insurance industry vis-a-vis what is obtainable in other climes. To these end stakeholders who gathered at this years Educational Conference agreed that it is time for the sector to take its destiny into its hands by informing the general public that it pays to be insured against such disasters

Stakeholders’ position

At the Chartered Insurance Institute of Nigeria (CIIN) Educational Conference which took place at Ibadan last week, participants agreed that the industry has a role to play to curb the menace of natural disasters in the country.

The President of the CIIN, Mr. Wole Adetimehin said that insurers cannot be on-lookers or bystanders when events with abiding implications for insurance happen in Nigeria. According to him, typical examples are the natural disasters in our environment such as the flood in Ibadan and Lagos.

In his words “These occurrences should spur us into action in promoting the efficacy of insurance. Insurance institutions should pay visits to the affected state governments and in condoling them on the disasters, also impress it on them that insurance covers exist for such disasters. By so doing, the government and the public will be better informed.

It would also be an opportunity to influence the governments to make provisions in their budgets for the necessary insurances and formulate policies that will compel institutions, house holders and the general public to embrace insurance.”

As optimistic as the CIIN president may sound, some stakeholders believe that the government will not take insurers serious except there is a change of attitude on the part of insurance operators.

Mr. Wale Oshodi said that in terms of coverage of natural disasters, insurance companies have adequate reserve to do what they are supposed to do, however there should be a review of the pricing mechanism in the industry. “Except we do something about pricing, this industry may never get there. If we must be recognised by the government of the day, we have to re-mould our character.”

Another way to get involved in the coverage of natural disasters, according to Oshodi, is to collaborate with government to develop and build infrastructure in the country.

Corroborating the position of Oshodi was the former president of CIIN, Mr. Adeyemo Adejumo who reiterated that infrastructure development within and without the sector is key in the advancement of insurance practice in the country.

Adejumo noted that ICT infrastructure should be massively deployed by insurance practitioners to aid business growth. “Insurers should invest more in Information Technology as well as have infrastructure that can look at the underwriting of somebody in Sokoto from Lagos.”

Some stakeholders argue that a major setback being experienced by some insurance companies is that most Chief Executives and Chairmen are not professionals and therefore do not run their companies professionally, even when their subordinates may have sound ideas on way of moving the business forward.

To this, Mr. Seyi Shadare called on the insurance regulator, National Insurance Commission (NAICOM) to create tenure limit for Chairmen and top management officers. “Let there be tenure position for Chief Executives and owners of insurance companies.

Most of them should do succession planning and capacity developments. NAICOM should do what CBN did with Chief Executives of banks and   should ensure that only professionals are owners and chief executives of insurance companies.”

Adetimehin stated thus “Our profession is not immune from the vagaries of economic and political challenges and the harsh business environment that has become a big treat to business and professionalism. These realities call for the charting of a common course and ensuring that we rise to the abiding challenges.

A situation whereby we continue to dissipate energies in different directions cannot augur well for our common goals and objectives. In order words there is need for a re-awakening to ensure the sustenance of the profession we all belong to.”