THURSDAY, 08 JULY 2010 BY JOSHUA NSE
The code of good corporate governance and market agreement introduced by the industry regulators may have started to rub positively on the financial performance of the underwriting companies in the industry.
The new code of ethics introduced by the National Insurance Commission (NAICOM) and the Nigerian Insurers Association (NIA) to instill transparency, sound ethics and best practices in the conduct of insurance business in Nigeria may have started to boost the profitability of underwriting firms.For instance, the industry witnessed a substantial growth in volume of business written in year 2009, with a recorded gross premium income of N200 billion as against N150 billion recorded in 2008, representing an increase of 33.5 per cent.
Also, the industry during the period paid claims to individuals and corporate organisations of more than N55.41 billion as against N35.3 billion in the previous year.Addressing members at the 39th yearly general meeting of the association in Lagos, the immediate past chairman, Mr. Wole Oshin, said that underwriting companies have once again demonstrated that the industry remains the toast of investors in the years ahead.
According to him, “The volume of business written by insurance companies grew from N150.259 billion in 2008 to about N200 billion in 2009. This represents an estimated increase of 33.5 per cent and this is expected to be surpassed in 2010 as companies continue to evolve dynamic strategies to expand the frontiers of their business.”
He believes that once the critical issues of insurance awareness, product development and distribution are addressed, coupled with the implementation of NAICOM’s Market Development and Restructuring Initiative (MDRI), which emphasises the enforcement of compulsory insurance, the industry will take its well deserved position in the financial services sector of the economy.Besides, Oshin said that the market agreement signed by the member companies represents the modest efforts by the leadership of the association to enthrone professionalism, sound ethics and best practices in the conduct of insurance business.
He explained that the idea behind the market agreement is novel and noble and it is expected that strict compliance will boost the industry premium, solvency and further develop the market. “My appeal at this juncture is for members to strictly adhere to the market agreement so that we can make insurance practice better and more beneficial to the policy holders and the society at large.”Meanwhile, the market agreement, which had been signed and sealed by the 52 strong member companies of the association is in seven parts, each taking care of specific subjects.
Schedule one is titled: Code of practice on rating of fire, motor and Workmen Compensation Insurance under this schedule, issues relating to underwriting rates, excessive commission, prohibition of payment of overriding commission to brokers, consult the lead, co-insurance reports and complaints as well as disciplinary procedure.Schedule two deals with the code of practice on collection of premium and service standard agreement/ethical conduct while schedule three is on service standard.
According to the NIA, “the idea behind the market agreement is novel and noble and it is expected that strict compliance will boost industry premium and further develop the market. It is only when adequate rates are charged that the insurance companies can generate enough premium to invest in other market development initiatives.”