By RITA OBODOECHINA
Stakeholders in the insurance industry have decried the harsh operating environment in which practitioners are operating in, saying that it impacted negatively on their overall performances in the 2011 financial year.
Specifically, they lamented over unhealthy rivalries among insurance operators resulting in rate cutting and other unethical devices, as well as banking reforms which have led to the draught of credit to the real sector and the middle class thus eroding their assets acquisition capabilities.
Speaking at the company’s 42nd annual general meeting in Lagos, Chairman of Niger Insurance Plc Alhaji Bala Zakariya’u said, “Although insurance ought to be a sellers’ market, but in reality the market power rests with the buyers.
“This is mainly due to cost reduction strategies of corporates coupled with the unhealthy rivalry among the insurance operators resulting in rate cutting and other unethical devises. This has made it extremely difficult for operators to play by the rules. The renewals were still effected not strictly on cash and carry basis as required by law but at terms and conditions dictated by the client.”
He added that depressed earnings of listed insurance companies and investors’ fatigue made it difficult for companies to raise funds in the capital market in 2011.
Also Chairman of Consolidated Hallmark Insurance, Mr. Ralph Ekezie, during the company’s 17th AGM in Lagos said Nigerian insurance market has continued to reel under the effects of the credit crisis in the banking industry as the second round reforms in the sector led to the draught of credit to the real sector and the middle class thus eroding their assets acquisition capabilities, adding that a considerable number of companies in the industry have thus been unable to generate gross revenues up to their operating capital.
However, they commended the reforms initiated by National Insurance Commission, NAICOM, on strengthening the operational standard within the industry and bringing accountability in operations, adding that the adoption of the International Financial Reporting Standards, IFRS by the industry regulator has further raised of their financials.