Nigeria at 53: Insurance sector on upward swing

As the country marks 53 years of statehood, Insurance operators and industry stakeholders said the over 90 years old industry is on the verge of a major boom, and that the upward swing the industry has been recording in the last few years is sustainable and enough reason to be hopeful, MESHACK IDEHEN writes.

The history of insurance business in Nigeria according to industry experts, dates back to the early 1900s, when major European business conglomerates particularly after the amalgamation, began establishing business footholds in the country.

Beginning with the Royal Exchange Assurance Company that commenced operations in the country in 1918, the sector in the view of analysts, has also experienced various challenges, some of which the industry is still grappling with.

Nevertheless, as the country marks its 53 years of nationhood, stakeholders are of the view that there is need to take a more cursory look at the progress the sector has made in the past few years, in order to make adequate and effective preparations for the uncertaintities of the days and years that lies ahead.

In that regards, said Outgoing President of the National Council of Registered Brokers (NCRIB), Mrs Liade Osijo, the issue of effective regulations which the insurance industry is said to be grappling with come to mind.

According to her, “apart from the wonderful and lasting job which the National Insurance Commission (NAICOM) has done to effectively regulate and grow the sector, NCRIB has on its own been charging brokers to brace up for emerging global and regulatory challenges which is confronting all professionals in the financial services sector”.

Osijo said insurance operators in Nigeria all now play within the laid down ethical and professional standards prescribed by the council as well as other regulatory institutions to which they subscribe, adding these developments are only parts of the gains the sector have made over the years.

Explaining that insurance business and operators in Nigeria are being challenged by several factors, notably poor public image and global regulatory prescriptions, the NCRIB president noted that all stakeholders, including the government have recommended evolving concerted proactive management strategies aimed at combating a return to the past.

Insisting that the industry is on an upward swing, and that regulation of Nigeria’s insurance industry has become substantially intensified in the last two decades, Managing Director of Royal Exchange Assurance Plc, Mr. Chike Mokunye, said the investment climate in the Nigerian economy, insurance wise, has been very conducive in terms of government policies.

However, he admitted there may still be some structural and institutional constraints that may affect the growth and development of the sector, particularly in issues relating to low insurance penetration at the micro level.

According to the Royal Exchange managing director, when compared to development in other parts of the world, the insurance market in Nigeria in underdeveloped and small.

“Apart from low contribution to Gross Domestic Product (GDP), insurance penetration as a percentage of GDP is small. In 2010 for instance, non-life insurance went down 0.6% and that of life insurance is about 0.1%. “If you compare it to South Africa, which is about 12.9%, you will appreciate the task insurance practitioners have to deepen the market in Nigeria. If you go back to how insurance started in Nigeria, this is a major factor. Unlike what happened in Europe where insurance was developed around a mass retail market,” Mokunye explained.

He noted that in Nigeria, insurance came in to take care of corporate entities and later on for high-net worth individuals, reiterating that the first insurance company in Nigeria (Royal Exchange) Assurance started operations in 1918 to cater for the economic interests of the British colonial companies. “That meant that the mass market was not factored in.

You will understand that you have to achieve the critical mass to drive the volume. All of our efforts right now in Nigeria are geared towards corporate entities, while the retail market is left unexplored”. e, therefore, said that the commission introduced various reforms into the industry, which were aimed at facilitating deeper market penetration and contribution to the nation’s Gross Domestic Product.

On his part, the President of Chartered Insurance Institute of Nigeria, (CIIN), Mr. Fatai Lawal, said the growth and upward swing the sector is achieving is reflected in the fact that operators are getting more people educated about the profession and business of insurance.

Lawal said the sector would be able to deepen its market and make insurance relevant in personal, business and government affairs of the nation, when the direction the sector has been going in the last couple of years is brought into consideration.

The CIIN president pointed out that the institute has even go ahead to inaugurate a committee of writers with a deadline to produce an insurance course book for the teaching of insurance in secondary schools, noting such steps have never previously been taken in the sector’s history.

According to him, “that vital step is not only desirable as part of the institute’s contribution to the body of knowledge in insurance, but also as a critical and complimentary effort in actualising the approval of insurance by the Federal Ministry of Education as a course of study for senior secondary school pupils in Nigeria.”

Speaking in the same vein, Managing Director of Law Union & Rock Insurance Plc, Mrs. Toyin Ogunseye, said her company, like most of the insurance firms in the country are now committed to Enterprise Risk Management (ERM) to ensure that the risks underwritten by the firm are professionally carried out.

Explaining that such development was not the case in the years past, she disclosed that ERM has allowed for the review of risk appetite and risk strategy, retention levels, classes of insurance, reinsurance and other risk mitigation mechanisms, thereby adding to the level of professionalism in the industry.

Making reference to the no premium ,no cover policy that was also initiated and implemented by NAICOM,in order to drive the sector forward in the right direction, Insurance Practitioner,Mr. Obasi Ngwuta,told National Mirror that that policy is the best thing that has happened to the sector since the country got independence in 1960.

Ngwuta explained that untold the coming of the no premium, no cover policy, that the sector was in complete quagmire, adding since the introduction of the policy, that the sector has picked up tremendously.

According to him, “the no premium, no cover policy is the best thing that has happened to the insurance industry in Nigeria, since independence from the british.In the United Kingdom, insurance cannot be bought or sold without premium being paid.

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