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Insurance in 2021: Optimism hinged on economic recovery, stronger enforcement

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 Sunu Assurances completes first phase of recapitalisation

By Rosemary Iwunze

Insurance operators have expressed optimism of improved turnover in 2021, citing revival of economic activities as the nation recovers from economic recession, stronger enforcement of compulsory insurance policies, as well as improved information technology system to help boost turnover within the year.

The operators are also gearing up to create products that will suit the prevailing circumstances in terms of the fallouts of the COVID-19 pandemic as part of measures to curtail the effects of the pandemic while on the other hand boosting insurance penetration.

This, according to them, is crucial as the only way to make insurance tangible and appealing to the general public is for insurance companies to pay genuine claims promptly, which will go further to change the negative perception of the public towards the insurance sector.

Operators position

Operators who spoke to Vanguard on expectations for year 2021 noted that if the right structures and world class technology are in place, the sector will record significant growth in the current year despite the challenges of year 2020.

Speaking on the development, Managing Director of Sunu Assurances Plc, Mr. Samuel Ogbodu said that if there is productivity in the economy, the sector will generate more income.

Ogbodu said: “The National Bureau of Statistics (NBS) projected that the economy will grow by three per cent in 2021 while the World Bank projected that it will grow by 1.7 per cent. Either way, if the economy grows, it will be better for us because there will be more productivity in the economy and we will generate more income. So if the economy grows, the insurance industry will benefit from it. In essence, the various projections can shape our planning in 2021.”

According to Ogbodu, for a better insurance sector, operators must ensure that the right structures as well as up to date technology must be adopted to move the sector forward.

He said: “If the right structures and world-class technology are in place, we will go from place to place.”

According to Ogbodu, enforcement of the compulsory insurance policies like third party motor insurance and buildings under construction will boost activities in the sector and consequently lead to improved turnover.

General Manager/Lead, Business Development, African Alliance insurance Plc, Mr. Steve Ajudua, said that there is potential for over N1 trillion income in the compulsory insurance products for the insurance industry and there is need for strict enforcement of that line of business.

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Ajudua said: “There are huge benefits inherent in the compulsory insurance products. It offers the industry a huge opportunity to increase insurance penetration as well as grow the economy.”

Robust and stable sector

Also speaking on the development, Chief Financial Officer of Linkage Assurance Plc, Mr Emmanuel Otitolaiye said that the industry must be robust and stable so that when they take up risks when the time to settle claims comes, there will be no problem in paying the claims.

Otitolaiye said: “There is a need for local insurance companies to develop capacity in the aspect of trading and technology and ensure that Nigeria insurance industry can stand at par with so many other insurance companies out there in the world.

“We don’t need a prophet to tell us that many insurance companies are struggling to survive. When you consider the long term viability of some of these companies, many are grossly illiquid.

“Even when there is a business opportunity, the proportion they can take will be so insignificant. In essence, the industry must be robust and stable so that when they take up risks, when the time to settle claims comes, there will be no problem in paying the claims.”

Prompt claims settlement

On her part, Managing Director/Chief Executive Officer of African Alliance Plc, Mrs. Joyce Ojemudia said that insurance is intangible, as such the only way to make insurance tangible is for insurance companies to pay genuine claims promptly.

Ojemudia said: “The products that we are selling in the insurance sector are intangible and the only way to make them tangible is to pay claims and pay promptly and this is the best advertisement that can change the negative perception of our sector in the new year and going forward.”

Ojemudia stressed that the sector should be innovative and create products that will fit the current economic and environmental situation as a fallout of the Covid-19 pandemic.

She said: “We should put modalities in place to add more value to some products to align with this year because some existing products were actually put in the market without COVID-19 in mind and nobody thought the impact of COVID-19 will be as big as this.

“So there are moves to put some products in the proper perspective that will align with the realities of the 2021 business year.”

Vanguard News Nigeria

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