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2019 Outlook for Nigerian Insurance Industry

Insurance	7455 VIEWS
Insurance
7455 VIEWS

Thursday, January 10, 2019 9.58 AM / Bukola Akinyele for Proshare WebTV

Proshare WebTV’s ,Bukola Akinyele recently sat to hold a chat with Mr. Ekerete Ola Gam-Ikon a Consultant on insurance matters, to give his perspective on the 2019 Outlook for the Nigerian Insurance Industry.

On assessment of the performance of Insurance sector in 2018, Gam-Ikon was of the view that:

“the industry's performance in 2018 was a general improvement. This was essentially because of a growing level of awareness about the importance of Insurance; citizens have become more sensitive to the need for risk protection notwithstanding some negative views prompted by the regulatory body, the National Insurance Commission, NAICOM's policy reversals towards the end of last year.”

Speaking further, he noted that in terms of Gross Premium Written, the insurance industry will score poorly by the time all the results are collated and approved by NAICOM. It may have recorded some percentile improvement but it could still be rated as underperforming as a result of the stagnant position of the industry's contribution to GDP.

Gam- Ikon noted that weak corporate governance was significantly evident in 2018 despite efforts by NAICOM to improve governance discipline by operators.

When Insurers refuse to go bust

“It is surprising that no insurance company has had its operating licence suspended or withdrawn in the face of failures to honour obligations; even those whose situation got and were under the management of NAICOM somehow survived” he said.

Looking at the suspension and subsequent cancellation of the recapitalization process by NAICOM, Ikon said it was traceable to the declaration by the regulator that no company will lose its operating licence whereas the weak financial state of these insurers was already public knowledge.

He opined that policyholders engaged in different fora, including the NAICOM-organized customers forum, returned a "Vote of No Confidence" on insurers and urged the regulator to pay more attention to outstanding claims and adoption of mobile technology to drive insurance penetration.

Gam-Ikon lauded improvement in product development but observed that distribution channels suffered a setback , with the delay in announcing regulatory guidelines for aggregators.

In the overall assessment of the insurance sector in 2018, he stressed that the insurance industry was financially weak, economically underperforming and socially inactive.

Assessing the insurance industry in Nigeria, he said it was weak because of the challenges in the ease of doing business in the country.

The sector diseases according to him are mainly "exclusiveness", data lethargy, claims mismanagement and inability to win the interest of decision makers and managers of the economy.

The Insurance Consultant noted that, insurance industry in Nigeria needs a strong voice in government to explain to citizens that insurance has value, mainly as a wealth protection mechanism.

He made a case for Insurance to be sold on diverse active channels and platforms as "add-ons" preferably in collaboration with other sector champions, and this is where CEOs of insurance companies and brokerage firms should spend their time.

An eye on 2019

Gam-Ikon listed the following as the likely game changers for the industry in 2019;

New players that will enter the industry either via acquisition or new licences
Refocus of NAICOM more on policyholders especially those with unsettled claims owed by evidently weak companies; and determination of its management status at some insurance companies
Mobile telephony services with the introduction of mobile money operations by telcos
NAICOM effectively collaborating with CBN to drive compliance through existing bancassurance partnerships
Launching of a Data Portal at NAICOM that will provide information on insured by age, gender and geography to enhance the engagement of investors and operators

If these developments pan out in the new year, Gam-Ikon believes that 2019 will prove to be a better year for the Insurance industry than its immediate predecessor, 2018.