By Rosemary ONUOHA

The drop in the price of crude could adversely affect the insurance industry, given the fact that insurance thrives when the economy is robust, experts have said. President of the Nigerian Council of Registered Insurance Brokers, NCRIB, Mr. Ayodapo Shoderu, who made the assertion, noted that at the level of the common man, the devalued naira will reduce the disposable income of Nigerians, further precluding them to care less about undertaking insurance.

Shoderu said, “It is most distressing that the price of the nation’s crude has dropped by about 40 per cent from the initial projected cost of $140 per barrel to about $62 per barrel. The implication of this is that there is a great pressure on the Naira as many foreign investors will feel unsafe in our equity market making many of them to divest and take out their monies.

“Similarly, our foreign reserve has continued to go down given the fact that oil is the main revenue earner for government as the nation runs a mono product economy. The only option that is open to the CBN in order to salvage the situation is to embark on devaluation of the naira as already being done.

My take is that the entire situation will also adversely affect the insurance industry, given the fact that insurance thrives when the economy is robust. At the corporate level, there is the likelihood of a bulls run on the already fragile equities of quoted insurance companies, affecting their solvency. Also, at the level of the common man, the devalued naira will reduce the disposable income of Nigerians, further precluding them to care less about undertaking insurance.” Shoderu stated.

According to him, the present challenge should make national policy makers to be more ingenious in managing the precarious economic state, while the onus is also on practitioners to be more prudent and more resourceful in running their businesses. While advising the political class, Shoderu said that the time has come for Nigeria to break the façade of mono economy and develop other latent mineral resources that the nation presently has in abundance.

He said, “We must also continually put in place strategies to promote the nation’s industrial sector so as to transform our nation from consumption-based to production-based nation. Meanwhile, in view of the forth coming general elections, Shoderu said that Nigerians must ensure that all went well.

He said, “All over the world, elections or politics are a great determinant of national economic and political advancement. Whatever happens at the realm of polity affects all other facets of national economy, of which the insurance industry is a critical component. This is why we must do all within our means as practitioners to ensure we have a robust polity.”

Shoderu therefore counselled politicians to always embrace insurance, during or after electioneering periods, adding that recent cases of attacks within the political circles have undoubtedly left them without any other option than insurance in mitigating loss of lives and properties. “It is a known fact that electioneering period is characterized by high level exposure to diverse human and material risks and this could be mitigated if the political class factor in insurance into their plans and expenditures,” Shoderu said.