By Cynthia Alo
Insurers have warned against the devastating impact of another lockdown on the insurance industry.
The warning is coming on the heels of a similar position by the Central Bank of Nigeria, CBN, which warned that imposing another lockdown will be catastrophic to the economy.
While noting the necessity of the decision of the National Insurance Commission, NAICOM, to suspend the recapitalisation exercise indefinitely in view of weakened economy, they averred that most insurance companies are yet to overcome the harsh impact of the first lockdown on their operations, hence imposing another lockdown will be devastating to the industry.
In a chat with Vanguard, an insurance expert, Ekerete Gam-Ikon said that the industry might be experiencing hard times resulting from the first wave of the COVID-19 pandemic only to be hit by the second wave.
He said: “With respect to the recapitalisation exercise, it was necessary that the regulator, NAICOM, suspended it. However, it should deal decisively with insurers that have unfulfilled obligations to policyholders and employees.”
He said that harsh is the word that best describes the effect the second wave would have on the insurance industry considering previous experience during the first wave of the lockdown.
He noted that should there be a second lockdown, it will be most devastating on Nigeria and Nigerians essentially because the country is too weak both in the current state of the economy and the capacity to respond to the challenges associated with the pandemic.
On his part, Managing Director, Old Mutual General Insurance Company Nigeria Limited, Mr Olalekan Oyinlade said: “Obviously there would be apathy on the part of investors, be it institutional or individuals.
The rule in time of crisis of this nature is to hold a cautious approach to investment. The historical performance of the insurance sector has not been too fantastic when compared to other sectors hence raising of capital could be challenging for some operators whether from existing shareholders, capital market or private equity.”
He also noted that the effect on the national and sub-national economies amid a second wave of COVID-19 would definitely spell disaster for the economy and it may lead to an all-time recession that could last for years.
“The associated crisis of such a situation is better imagined,” he added.