Non-executive directors of banks in Nigeria are poorly paid says a survey conducted by FITC for Bank Directors Association of Nigeria (BDAN).

Commissioner for Economic Planning and Budget, who also doubles as the Central Planning Committee, Lagos Economic Summit (Ehingbeti 2012), Mr. Ben Akabueze, has affirmed that the Lagos State Government was poised to lift Lagosians out of poverty through the Ehingbeti 2012 summit.

Risk pricing in the Nigerian insurance industry has always been a controversial issue. While some operators believe that rates should be regulated, others are of the opinion that there should be free pricing of risks to suit the peculiarity of the client at any point in time.

At the height of the controversy, the Nigerian Insurers Association, NIA, commenced the implementation of a market agreement as a way of checking ethical breaches, promote discipline and improve service standard in the market. The agreement which stipulates infractions and penalties for inadequate pricing of risks was signed by all the chief executive officers of NIA member companies in 2009.

Speaking in favour of rate fixing, Managing Director of Custodian & Allied Insurance Plc, Mr. Wole Oshin, in whose tenure the agreement was signed, said that the agreement represents the modest efforts by the NIA leadership to enthrone professionalism, sound ethics and best practices in the conduct of insurance business.

Managing Director of Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha, said that tariff regime is imperative because the industry is in dire need of change adding “To curtail all the confusion that arose over the years, Naicom should define what adequate premium is and is not.”

According to him the ‘no premium no cover’ dictum is open ended as such defaulters can get away with anything.

NIA Chairman, Mr. Olusola Ladipo-Ajayi, stated that tariff regime is relevant in building a virile insurance industry. In his words “We are the ones that put up this market agreement by ourselves and we are the ones that signed the agreement voluntarily so the implementation should not be difficult because it is our own regulation made by ourselves for ourselves and to be implemented by ourselves.”

But after all said and done, the market agreement was thrown out of the window, and a free pricing regime has subtly been enthroned. But there are fears, and the major fear is that, are underwriters disciplined enough to run a free pricing market?

Regrettable, administrations of insurance companies have not been particularly interesting; consequently, claims administration process is still a problem in the insurance market. A major setback to prompt settlement of claims has been the issue of inadequate pricing borne out of competition.

The need to capture as much as possible a larger market share have made operators to be at each others throat coupled with every form of unethical practice both from within and outside the industry.

The new era

With competition getting stiffer by the day, underwriters are pushing out all forms of mouth watering offers to the insuring public all in a bid to grab a larger chunk of the market share. And as it is now, they are capitalising on the free pricing platform.

Mr. Annur Sekar, Chairman/Managing Director New India Assurance Co. Ltd, which is the parent body of Prestige Assurance Plc, said that India operated a tariff regime for a long time, meaning that prices were fixed by a controlling body. But in 1998, the tariff regime was abolished and free pricing was introduced into the Indian market. According to him, Nigeria should do the same.

Another person who believes that tariffs should not be regulated is the Managing Director of Anchor Insurance Plc, Mr. Ademayowa Adeduro. For Adeduro, underwriters should remain dynamic in their product pricing. He stated that he would be ready to accept any business that appeals to his company even if every other underwriter rejects such business.

He said “Some insurance companies charge high premium rates because of the huge management expenses that they are saddled with. For an insurance firm like Anchor that runs a relatively low management expenses, we can afford to price products lower than a company that runs a very long management chain. What matters most is that an insurance firm remains in business and gives returns to investors rather than remaining rigid and in the long run fail to give returns to its investors.”

Also agreeing that tariffs should not be regulated is the Managing Director of Sovereign Trust Insurance Plc, STI, Mr. Wale Onaolapo who said that there is no specific rate for all risks and that his company will price risks as they come. According to him, clients all have their peculiarities as such one standard cannot be applied to everybody. Onaolapo reiterated that the insurance industry need to do a deeper study of the sociological make up of a client and what kind of product can suit which particular people.

For Managing Director of UBA Metropolitan Life Insurance, Jacques Coetzer, underwriters should underwrite each piece of business individually taking into account cover requirements and group distribution in gender, income, age and occupation.

Managing Director of FBN Life Assurance, Mr. Val Ojumah, also said that rating should not be controlled, adding, “I do not believe that I need to team up with anybody to control rating it is not in the best interest of the consumer. Tariffs have long died in the international market. We shouldn’t be regulating commissions and tariffs.”

The way forward

Following the failure of the market agreement, it has become obvious that the tariff regime has subtly been abolished. However, a general consensus by both operators and stakeholders alike is that underwriters must pay all genuine claims irrespective of amount of premium charged on the risk.

For Coetzer, underwriters must take deliberate decision not to get involved in such sharp practices that have been the bane of the industry all along.

Ojumah, on his part stated that insurance operators must discharge their duties with utmost professionalism while the regulator must ensure that genuine claims are paid by operators irrespective of the rate charged. He said “If we need to grow this business of insurance there are things we need to do as operators, and there are things we need to do as regulators. If an insurance company wants to pay 30 per cent commission or charge a risk at a discount, all the regulator has to ensure is that it pays that commission it says it is going to pay and make sure that it has enough reserve to cover the business, otherwise it should close shop.”

For Olusola Ladipo-Ajayi, NIA Chairman, since underwriters refused the tariff system, they can not just afford not to pay genuine claims when the need arises. He said “If underwriters like, let them give free policies. If they like, when somebody comes to their office, they should give them free policy but seal it to make it valid, then give them money rather than take money from them. They are free to do whatever they like. But when the chips are down and there is claim, they cannot escape. Because when your customer brings you to our complaint bureau, you have to do whatever the complaint bureau says.”

Review of Nigeria’s Trade Policy will ensure inflow of investments, Dr Olusegun Aganga, the Minister of Trade and Investment, has said. Aganga spoke in Abuja on Monday when he received the draft strategy for the new Nigeria Trade Policy from the Committee headed by Prof. Ademola Oyejide.

As part of efforts toward providing excellent customer services, Ecobank Nigeria has introduced Advance Account, a product that gives its beneficiaries financial freedom.