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Mounting concerns over slow growth of insurance industry

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Insurance, IICCBy Cynthia Alo

The continued sluggish growth of the insurance industry has triggered rising concerns among insurers and other stakeholders in the industry.

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These concerns came to the fore at a shareholders’ interactive session and a consumers’ interactive session organised recently by National Insurance Commission (NAICOM) in Lagos to identify and address factors impeding the growth of the industry.

In addition to highlighting the factors impeding the growth of the industry, stakeholders who spoke at the two sessions called for urgent measures to complement the increase in capital base to fast track the growth of the industry and make it competitive with its foreign peers.

Speaking at the shareholders’ interactive session, a member of Independent Shareholders Association, Alhaji Odenike identified over-regulation as one of the impediments to the growth of the industry.

He said: “NAICOM should take it easy with the insurance companies so that they don’t pull some of them out of business. Also, the penalty for an infraction is too much. They should reduce the fines because the charges come from the company’s profit which in turn affect dividend paid to shareholders.”

On his part, Mr. Williams Adebayo, a shareholder with Greenwich Shareholders Association of Nigeria,  cited rate cutting as a major challenge stressing that this malpractice hinders the growth of  indigenous companies, and undermines their ability to  compete  with their foreign owned peers.

He said:  “Some of these indigenous companies cannot compete effectively with other insurance companies that have foreign parent investors. This is making them undercut to woo customers to their sides. Where an insurance company that has foreign parents decides to throw away two percent because the parent can afford to push up, the indigenous ones can’t try it.”

According to him, recapitalization of the industry would create a common ground for the indigenous companies to stand a chance to do better than their foreign owned peers.

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In addition to the above is the unwillingness of local insurers to pay claims as at when due. This featured prominently in comments made by stakeholders who attended the NAICOM organised consumers’ interactive session.

Speaking at the session, Chief Operating Officer of Air Peace Mrs. Oluwatoyin Olajide, accused one of the top insurance companies of delay in claims payment since 2017 which caused Air Peace to lose over $200.

She said that underwriters didn’t pay fully for the loss adding, “It is a challenge to get insurance companies to pay your claims when you have issues later. They do not want to pay claims.”

Also speaking, Chairman of Skyjet, an aviation service provider, Alhaji Kashim Shettima accused another insurer of lack of claims payment.

Shettima said that he prefers to insure with foreign insurers  as they are quick in settling claims and very professional in handling aviation business.

He said: “When I had a case of window shatter, I contacted my local underwriter, they came to inspect and after that, I didn’t hear from them again. Only to find out that the insurer had to go to the foreign insurer to get the claims. Currently, I have a $700,000 outstanding claim and the insurer does not want to pay.

“We need to understand that we want to insure with the indigenous companies but not for aviation business because it is a serious business that any atom of issue could cause serious damage. I can insure my motor, house or shops but not aviation,” he said.

This accusation was however challenged by the  President, Chartered Insurance Institute of Nigeria, CIIN, Mr. Eddie Efekoha.

He said: “Many people have enjoyed or processed successful claims from the insurance industry but in the case of speed, yes it can be better but to say that the insurance industry is not paying claims, that  is not a problem I don’t want to believe.”

“Just like the airlines are in business to make a profit, insurance companies are in business to make a profit. We have been using our capital to subsidise our clients’ claims because premiums are going down and claims are increasing, so, what do we do? It’s not your fault, it’s our fault because the competition is forcing us to do so many things but as I said our consumers are kings and I believe we can resolve all these problems.

On the issue of undercutting, Acting Commissioner for Insurance, Mr. Sunday Thomas said the practice was due to that fact that the law allows insurance companies to fix the rate for policies not included in the list of compulsory insurances.

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Speaking at the shareholders’ interactive session,  Thomas, who was represented by the Director, Policy & Regulation of NAICOM, stressed that part of the objectives of  the recapitalization exercise  is to enhance the ability of  local insurers to compete with their  foreign   counterparts by  being able to assume  major risks in the country. “One of the ways insurance companies can grow is by increasing their liquidity and investment funds”, he added.


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