Chairman, Nigerian Insurers Association, NIA, and the Group Managing Director, Lasaco Assurance Plc, Rev Olusola Ladipo-Ajayi, in this interview with Favour Nnabugwu, speaks on his tenure and the need for insurers to be patient with the Nigerian Content Act, why it is important for insurers to charge adequate premium rates, and the effects of climate change on the industry and many more. Excerpts:

What is going to be your impact in the industry as the NIA chairman?

It will definitely gladden my heart to see the operators in the Nigerian insurance industry eschewing unhealthy rivalry. There should be unity in the industry. We should see ourselves as one. No part of the whole is greater than the whole.

Olusola

Our fortunes are tied to each other. If the insurance industry collapses, the Nigerian Insurers Association, NIA, as well as the Nigerian Council of Registered Insurance Brokers, NCRIB, will feel it.

Recently, there have been collaborations between the NIA and NCRIB, which encourage me that we can really work together and move the industry forward. There is no gainsaying the fact that insurance outfits are not set up for charitable purposes and this means that the insurance operators must be seen to be doing things that will ensure the profitability of their respective organisations.

It is necessary that we make our businesses profitable not only for us as professionals but also for those who are investing in insurance, because unless you are able to achieve that, you may not move forward as much. In view of the enormous capital at the disposal of all insurance companies operating in the country at present, it is only reasonable to ensure that we justify this high level of capitalisation through profit making. And that is why I believe we need to work as an industry to ensure that the market agreement signed by members of the NIA on premium ratings works.

Another issue has to do with the Consumer Complaint Bureau, which the NIA has concluded work on. It will be my responsibility to put into effect the blueprint on the bureau. The bureau is a kind of ombudsman and we are looking for a respected retired judge to be the chairman of the bureau as an unbiased arbiter. It is a kind of alternative dispute resolution mechanism, which will be at little or no cost to the customers.

The chairman of the bureau will not be an insurance person but will be a respected independent person, most likely to be a retired judge. This does not run contrary to similar efforts being made by the National Insurance Commission, NAICOM, to ensure amicable resolution of disputes between the insurance operators and the insuring public. It is just going to be another alternative. We intend to make it work faster. The whole idea is to make the public have more confidence in the insurance industry.

Some people may say that the judicial process is very slow and expensive but this consumer complaint bureau is designed to be faster. And most importantly, all members of the NIA have agreed to be bound by the decisions of the bureau, although it does not preclude customers who are not satisfied with the decision of the bureau to seek redress at the court of law.

What is the level of support from NIA members to NAICOM’s Market Development and Restructuring Initiative, MDRI?

The NIA will be collaborating further with the NAICOM on the MDRI, especially as we are aware that the initiative is designed for the good of the insurance industry in the country.

It is a good initiative and we are very grateful that the commission is not only interested in collecting levies from insurance operators, but also looking for ways and means of deepening insurance penetration in the country

NAICOM is desirous of making insurance more profitable in the country so that the industry can continue to occupy its rightful place in the nation’s economy. We shall collaborate and cooperate as much as possible with NAICOM to make the MDRI a success.

Members of the NIA recently signed a market agreement on ratings. What measures have been put in place to ensure compliance, and what strategies are there to address other challenges thereof?

Of course, I am not under an illusion that it is going to be that easy to ensure that all insurance companies will comply with the market agreement, because in a situation where you have many stakeholders, you must also understand that by the way the industry operates, any attempt by any member to expand its own market share is at the expense of the

others. And therefore, there will be a lot of intrigues. We will try to create an enabling environment for friendly competition and the only way to do that is to set rules that are acceptable to all operators. If NIA is able to achieve success in these key areas in the next few years, it will be a great pleasure for me.

There are other minor issues that will come. Of course, the issue of public policies is a major concern especially in the area of legislations that are inimical to the growth of the industry. We also have the challenge of the Employer Compensation Bill, which the NIA is trying to influence positively. It has not been easy but we will continue to do more in that area and other areas where laws are threatening the growth of insurance are being promulgated.

How would you rate the compliance level of the market agreement by all insurance companies?

There will not be any need to put provisions of the agreement together if everybody in the industry has complied. The fact that we have these provisions underlines the fact that many people have not complied.

What we have set in motion now is a mechanism by which we can do things in an orderly manner, but the effectiveness of the agreement will depend on the ability of the NIA to detect violations.

And unless our members agree to report defaulters, it is not going to be easy for us to detect infractions. But we are going to encourage them because every insurance company has a capacity. That is, there is a limit to the capacity of every insurance company and most of these big risks that really matter cannot be covered by a single insurance company alone.

What used to happen in the past is that somebody will just come to you and say company XYZ has done certain things and you are still proving stubborn here. And without verification, that person will agree to do it. But we are now encouraging ourselves to ask questions among ourselves.

I believe there has been a measure of cooperation among the chief executive officers since the market agreement became effective. There have been wider cooperation and consultations among the CEOs.

As I pointed out earlier, I am not under an illusion that it is going to be easy, but we will do everything possible to make the agreement work by education at every levels – the technical committees of the NIA, the CEOs, because all of us agreed that it was the best thing to do and that is why we must make it work.

Another thing that we will try to do is to provide statistics to back up the rates that we recommended. This is because rates are not falling from heaven and they are not harvested from the farm.

It is a function of statistics. If you look at your cost and benefits, you can determine what average rate should be. We will back up these rates by providing statistics that will help everybody to see the true picture of things.

What do you think is the problem with implementation of compulsory insurance of buildings under construction?

On the issue of compulsory insurance of buildings under construction, one of the problems we note is that the insurance industry’s regulator, NAICOM, is not a policeman and it does not have the facility to monitor all nook and cranny of this country.

At the time that we were in the committee of all stakeholders to work out the modalities for the implementation of this provision of the law, as contained in Section 65 of the Insurance Act 2003, there was a meeting involving everybody from the private and public sectors including the police, the fire brigade, Ministry of Works, insurance companies, insurance brokers, and NAICOM.

I think one of the recommendations at that time was that the fire brigade and the police could be used in that respect. I don’t think NAICOM is attempting to take up the responsibility of ensuring compliance with the law, as it relates to the mandatory insurance of buildings under construction.

How will you assess the group life insurance programme of the federal civil service scheme in the country?

Insurance rates are not static. The rates may go up today and come down tomorrow, it is experience rated. It was most unfortunate that the Head of Service rate was brought so low and my own understanding of it is that it was the lowest rate quoted by a particular insurance company, which was foisted on the market. They have seen that the rate itself was a mistake and I cannot see that rate standing the test of time, because experience itself will show that the rate is inadequate.

So, we don’t have to worry about that. The rates are calculated and they are based on projections and all that. Life assurance rates especially are based on actuarial computations and once those computations are wrong, it will be obvious to everybody.

It is not a statutory provision that will take a long time going to the National Assembly to change, but experience will show us whether the rate is correct or not. It is an aberration and will be corrected in no long time.