Tuesday, December 17, 2019 / 07:58 AM / OpEd By
Ekerete Ola Gam-Ikon*
/ Header Image Credit: Toppr
Does it not seem to you, as it has to many, that
insurance had become more discussed this year than it had been in the last 10
years?
While the reason may primarily be deemed to be the
ongoing regulatory-induced recapitalization by nearly 400% for the different
categories of licences, there are other tenable reasons that can be adduced
depending on the position from which one had been viewing the insurance
industry especially in Nigeria.
For a better appreciation of this, I thought we should
consider this from the respective stakeholders' positions.
1. Policyholders
In this year, policyholders have shown that they are
more aware of their rights in the contracts of insurance they have had with
insurers either through their brokers/agents or directly.
Whether due to the demand by insurers on policyholders
to read their policy documents and/or enlightenment efforts by social media
users and insurance executives, these policyholders knew how to approach their
insurers to ensure settlement of their claims and acceptance of liabilities
unlike in previous years. Some economic analysts have attributed the rise in
policyholders' activities to the harsh operating environment we are
experiencing however it has been interesting to have more insurance actions from
policyholders, which have forced many insurers to critically review their
operating models.
Quite recently, potential and existing policyholders
have been discussing the need for insurers to adopt digital solutions to
achieve speed and convenience in their insurance experiences. They have boldly
told the regulator, National Insurance Commission, that the insurance industry
needs to quickly embrace digitization to deepen insurance penetration which has
remained at 0.3 percent and compares poorly with South Africa, Egypt and Kenya.
However, the downside of the more insurance we have
had this year is the failure of the Federal Government as a policyholder to
renew one of the largest insurance portfolios in Nigeria, the Group Life policy
for federal civil servants administered by the Office of the Head of Civil
Service of the Federation. The discussions around this has given other
policyholders better understanding of the insurance laws especially the
efficacy of the "No Premium No Cover" regime. If the Federal
Government of Nigeria cannot get insurance cover on credit, then no other
policyholder can.
2. Shareholders and
Investors
For these ones, the year started on a high note as
they were recovering from the scare of Tier-Based Minimum Capital pronounced by
NAICOM which necessitated getting a court injunction to stop the process.
However, they seem to be in a more challenging position hence the more
insurance discussions and actions we have had from them.
While insurance stocks remain one of the poorest
performing in the capital market, the leadership of the Nigerian Stock
Exchange (NSE) have expressed hope during a recent outing, that the insurance
sub-sector will likely receive about N200b during this season of
recapitalization. This position is, sadly, not quite the same for selected
market analysts who opine that the insurance sub-sector is underperforming and
unlikely to make positive returns to shareholders and investors.
We have seen even more insurance actions from foreign
investors and their advisors into the insurance sub-sector and it is in line
with the recapitalization agenda that seeks to have highly capitalized
insurance companies that can participate and retain greater share of risks
presently taken abroad due to low capacity of local insurers.
So far, the shareholders seem to be gasping for breath
as the June 2020 deadline approaches. They are required to inject more funds if
they wish to retain their operating licences but we have already observed that
"very complex and difficult" mergers and acquisitions will have to
happen for most of them to remain happy shareholders.
3. Insurers and other
Operators
Sometimes, in the course of the year, the discussions
amongst insurers, brokers, agents, loss adjusters, marine superintendents and
reinsurers, the question has been: "What more can we do to make it better
in this industry?"
From the pressures by NAICOM to the increase in claims
payable while government patronage dipped, a few insurers have created new ways
of surviving as most simply chose to follow the plans of the regulator and stay
safe from public radar.
By their recapitalization plans assessed by NAICOM
last September, the fears that many insurers will not remain as we currently
know them became evident. It is expected that as the June 2020 deadline
approaches, insurers will seek for the intervention of the Presidency on the
recapitalization issue and this might be the opportunity to appropriately
consider the amendments to the near obsolete insurance laws.
More discussions have taken place within those
insurance companies that have FAILED to pay claims and meet other obligations
to stakeholders yet retain their operating statuses, no thanks to NAICOM thereby
eroding the confidence of policyholders, quite speedily.
Like in the case of others catching cold when one
sneezes, the other arms of the insurance industry in Nigeria are less active as
the insurers struggle. Brokers and loss adjusters complained about outstanding
commissions and fees respectively while agents continue to wait for due
recognition of their contributions to premium generation.
The few good insurers are equally under pressure as
changing to adapt new customer behaviour remain a herculean task hence the hope
that microinsurance and takaful operators will be able to step up and provide
the experiences expected by today's policyholders.
One glorious moment came when Nigeria got the slot of
Vice President of African Insurance Organization and the right to host its 2020
Annual Conference in early June, and we have to ensure the recapitalization
deadline shall not affect the level of hospitality we will show to delegates
from over 50 countries!
4. Regulators
NAICOM did not only move away from "hosting
protesters" but also survived the court cases and threats to keep its
respectful place amongst financial services regulators.
Recapitalization, the "banana peel" of the
insurance industry in Nigeria appeared to have failed to help the former Commissioner
for Insurance get tenure renewal and more discussions regarding NAICOM have
bordered on when the President will announce his appointees into the vacant
positions of Deputy Commissioners for Technical and Finance.
To think that since July when the Acting Commissioner
for Insurance was elevated from the position of Deputy Commissioner Technical,
the regulatory body has been without substantive Management Team saddled with
the recapitalization project has made the discussions on insurance even more challenging.
Other self-regulatory bodies that work with NAICOM
have had shared challenges of how best to engage the public in 2019 when we saw
assets worth hundreds of billions of Naira lost to collapsed buildings, fire
incidents, reprisal attacks and natural causes.
There are public expectations that the regulatory
bodies in insurance in collaboration with other regulatory agencies would
provide better insurance experience to indeed ensure that we feel and live
safer in Nigeria.
5. The Rest of Us
Who knows what will happen in the insurance industry
in Nigeria by 2020? Hard to say, however, the regulator, NAICOM will have to do
more to protect policyholders. Just go digital!
Going digital will be the way of the new decade for
the insurance industry in Nigeria.
About the Author
Ekerete Olawoye Gam-Ikon, MNIM,
CPP is a management consultant with specialization in Strategy and
Insurance. He can be reached via telephone on +234-806-648-1111 and
+234-802-585-0344 or by e-mail vide olagamola@gmail.com
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