By Rosemary Onuoha
Insurance operators have lamented the act of granting indiscriminate discounts on premium rate by some companies saying the action is part of the reason why the sector is still crawling.
They however blamed this practice on the lack of cooperation amongst underwriters in the insurance industry.
Speaking on the condition of anonymity, the Chief Executive Officer (CEO) of an insurance company said that the lack of cooperation has been the bane of the sector all along.
The CEO said, “The insurance industry lacks cooperation. It is a winner takes it all type of industry and that is what we promote. That is why you will see companies’ reducing premium by 50 percent in order for them to carry the risk 100 percent. Meanwhile they could as well have charged the old premium, which is higher, and take like 50 percent of the risk and let other companies’ share 50 percent.
“The industry could have been better with a higher premium rate but what do we do, we go and reduce premium by 50 percent because they want to take the whole business. Insurance is not practiced that way.”
According to him, a lot of companies are weak because they give out outrageous premium discounts over the years, hence recapitalization is the only way to salvage the industry.
“Today, some brokers will still take quotes from companies that can no longer pay claims and when they get that rate, they go to the ones that can pay claims and tell them to participate. So if recapitalization is the only way to address some of the ills, so be it.”
According to him, the industry need to increase the level of trust the public has in the insurance sector and this can be done by grooming the upcoming professionals to do insurance in the right way.
He said, “If I tell you that this issue of corporation is going to be resolved in my time, I am not sure. The issue remains that we can’t find a perfect market. But can it be improved? The answer is yes. How do we address the gap in the level of trust that outsiders have in us? It is not for those of us who want to bow out of the industry soon. It is a case for the young ones, the millennials that are organized. That is why we have been training the millenials to be innovative. When they come up with innovations, they might not produce immediate result but the result will come at the future and at that time, the millennials are the leaders of the industry.
“Unfortunately, I don’t see the lack of cooperation being resolved in the nearest future because some of the projects some of us wanted to undertake at an industry level could not see the light of day because we had divergent views. But would the projects have taken the industry to a higher level? The answer is yes.”
Speaking in the same vein, Executive Director of Allianz Nigeria, Mr. Owolabi Salami said that it is about time that insurance chief executives ask themselves the critical question of where they are missing it. “Why should this industry be N400 billion and not N2 trillion, where are we missing it”, Salami said.
“Every management team of every insurance company now needs to build a business case that will justify additional capital and if you can’t assure your shareholders that you can create value for them if they give you more money, I don’t think they will give you,” Salami stated.