By ROSEMARY  ONUOHA

Business activities in the insurance industry in year 2014 maintained a lull trend as the effect of the ‘no premium, no cover’ introduced the previous year continued to impact on their operations.

Accordingly, insurers did business on a ‘cash and carry’ basis which drastically reduced the volume of receivables which had hitherto boosted the books of insurers.

Other major events that shaped activities in the sector in 2014 were the rebasing of the economy; collaboration with telecommunication companies; inauguration of new NIA Chairman; late submission of financial results; influx of foreign investors; as well as the introduction of microinsurance guideline.

Rebased economy

Recall that the Nigerian economy was rebased in the course of the year and this brought down the contribution of the insurance sector to the Gross Domestic Product, GDP, to 0.6 per cent from 0.7 per cent.

The downward movement elicited series of reactions from insurance operators and stakeholders in the sector, even as they called for all hands to be on deck to increase the sectors contribution to GDP. Commissioner for Insurance, Mr. Fola Daniel, while reacting to the development said that the drop calls for more dynamic strategies to deepen insurance reach among the populace.

“The industry as a matter of deliberate policy should come up with new ways of doing the business in order to achieve better result. Our marketing strategy must change, the product design and packaging must change and the approach to policy holders and their complaints must change. All hands must be on deck to ensure that the message of insurance is taking to the grassroots. The industry must move the insurance market from its present level to a higher place within the financial services sector,” Daniel said.

According to Daniel, the fundamentals for a thriving insurance industry are there in the country with a vast population, an active economy and a well capitalised industry.

Collaboration with telecommunication companies

Also, year 2014 saw series of collaboration between insurance companies and telecommunication companies. During the year, a number of insurance companies entered into partnership with telecom companies as a means of selling insurance products to their vast clientele.   Recall that Airtel Nigeria, collaborated with MicroEnsure and Cornerstone Insurance plc, two insurance providers, to launch a free insurance product which offers Airtel customers life and hospitalisation insurance with increasing benefits based on monthly airtime recharge.

FBN Life Assurance also partnered Airtel to launch a life insurance product even though FBN had an existing partnership with MTN. Also, series of insurance companies initiated online internet platforms where the public can easily gain access to insurance products and services.

New NIA Chairman

Another landmark event in the insurance sector was the inauguration of a new Chairman of the Nigerian Insurers Association, NIA, in the person of Mr. Gus Wiggle. Some operators were of the view that Wiggle’s election and inauguration came at a time when the cooperation and collaboration of insurers can no longer be described as mutual and respectful. Hence, his assumption of office came at a critical time when the sector needs revamping and the onus is on the new Chairman to set things right.

Late submission of results

During the year under review, only a handful of companies were able to submit their 2013 financial accounts before the 31th March deadline. Recall that the Insurance Act 2003 provides for submission of annual accounts not later than 30th June, the requirement by the Nigerian Stock Exchange for listed companies was 31st March 2014. NAICOM continued to complain about the attitude of insurers to submit their result late. The regulatory body said that going forward, insurance companies must comply with all requisite regulatory requirements without plea subsidies from NAICOM.

Influx of foreign investors

In the course of the year, some foreign investors showed interest in the industry particularly Old Mutual which bought into Oceanic Life as well as AXA which bought into Mansard Insurance. Old Mutual Plc, from South Africa, bought 70 per cent stake in Oceanic Life Insurance Limited and now operates under the name of Old Mutual Nigeria Life Assurance Company Limited.

The attractiveness of the insurance industry to both local and foreign investors is evidenced by the entry of major insurance companies and groups in the past years, such as Metropolitan Life, Sanlam, and NSIA.

Group NSIA, a company based in Abidjan, Cote d’Ivoire, bought 96.15 per cent equity of Diamond Bank Plc in ADIC Insurance Company Limited. Assur Africa Holding, a consortium of three European Development Finance Institutions, and two private equity firms, acquired 67.68 per cent shareholding in GTAssurance Plc and changed its name to Mansard Insurance Plc. The DFIs are FMO (Netherlands Development Finance Company), DEG (German Investment Corporation), and PROPARCO (French Development Finance Company), while the private equity firms are Development Partners International, United Kingdom and Africinvest, Tunisia.

Sanlam Emerging Markets, a group of South Africa-based investors, bought 35 per cent stake in FBN Life Assurance Limited with First Bank of Nigeria Plc owning the remaining 65 per cent.

Introduction of microinsurance guideline

In the course of the year, the microinsurance guideline from NAICOM took effect, although, a few insurance companies have come up with microinsurance products.

Microinsurance is the insurance solution for the poor to overcome the obstacle of high fees in traditional insurance products. It is characterised by low premiums and low coverage limits and designed for low-income customers normally not served by social or commercial insurance schemes. Microinsurance products are insurance products designed to be appropriate for the low-income market in relation to cost, policy terms, coverage and delivery mechanism.