Insurance In 2018: Weak Industry, Strong CEOs

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Thursday, December 27, 2018     02:37PM / By Ekerete Ola Gam-Ikon MNIM, CPP

 

Discussions on the risks we live with in Nigeria and how to mitigate them took most of the time we had at an annual strategy session for young entrepreneurs, an initiative we started two years ago, to prepare us for the opportunities in our clime despite the negative economic indicators.  

 

"You have always wanted insurance in the news to boost public awareness. Hope you ain't disappointed with the policy hiccups that have trailed the industry within the last 2 months?" This question, by a senior Financial Consultant elicited the response he least expected from me. 

 

"Patrick, please know that what you call 'policy hiccups' does not quite matter to those who matter most in the insurance industry in Nigeria; indeed, either way they remain, and hold their offices till further notice. Only a handful of them change places as you would have noticed through the years". Seeming lost, he waited to hear more. 

 

I continued, "Many of us have forgotten how the policy to remove most of them from office, using the Code of Good Corporate Governance, was suspended and subsequently rescinded. They have become as strong as State Governors in our national polity, but in insurance parlance, they are known as Chief Executive Officers (CEOs)!"  

 

CEOs of insurance companies, including insurance brokerage firms in Nigeria, are not popular, famous or celebrated because their profession does not give them such room but they do a lot to deserve accolades that no one would give them. They have ensured many businesses survive grave losses and rebound by simply putting their signatures on claims cheques or authorizing payments. 

 

They are the authorities that the regulator, National Insurance Commission (NAICOM) recognises as the seat of responsibility, by law, not the shareholders who bring the capital or the policyholders who pay the premiums.  

 

So, when they are uncomfortable and decide to meet over the reason for such discomfort, expect the insurance industry to shake!  

 

The CEOs are getting stronger as a group that must survive a "ruthless" regulator that is determined to deliver a stronger and more respected insurance industry in Nigeria.

 

 

 

Why the discussions must change... 

 

 

The insurance industry in Nigeria will survive and thrive when CEOs begin to speak and fight for their shareholders and policyholders. There are no victories for any operator who survives the noose of the regulator but does not enjoy the confidence of other stakeholders. This is where the new story for the insurance industry in Nigeria must begin. 

 

CEOs have gained strength that no one seems to notice, over the years, but they must now see themselves more as Trustholders (Insurers, Brokers, Agents) accountable to shareholders and policyholders while navigating to survive the onslaught of NAICOM. It has been the other way round which is why the insurance sub-sector has not seen much progress this year. 

 

Unfortunately, non-payment of dividends and claims are not likely to cause them their jobs as the sanctions from NAICOM would.  

 

So, the 'policy hiccups' were not about shareholders that have not earned dividends in years past or policyholders with unsettled claims months after submission of signed discharged vouchers but the threats to the positions of the CEOs by the pronouncements of NAICOM.  

 

As you are aware, recapitalization is mostly concerned about injection of fresh capital, which usually causes changes in leadership of targeted companies and CEOs want to be allowed time to prepare for their exits.


 

Next Steps...

 

Let 2018 and its 'policy hiccups' be bygones so the regulator and Trustholders can give more attention to policyholders and shareholders. 

 

A critical question though is: Can the current structure and behaviour of the insurance industry deliver on the expectations of the policyholders and shareholders? 

 

Yes, if the CEOs agree! 

 

For shareholders to take critical investment decisions early in 2019, they will have to believe that audited financial statements, which depends on the actions of CEOs, will be ready in time for the approval of NAICOM rather than wait for the deadline of June 30. 

 

Also, CEOs can come together under its umbrella body, Nigerian Insurers Association and make a public resolution against insurance companies with overdue unsettled claims thus saving it from rising public outrage and bad publicity. 

 

When CEOs exercise their strengths in these respects, NAICOM will face the more daunting task of advising the Federal Government to pay its premiums promptly for all the huge infrastructure projects captured in the 2019 National Budget while embarking on renewed campaign, in collaboration with NCC and CBN to have more Nigerians take up insurance. 

 

Let respective stakeholders apply their strengths positively and the insurance industry in Nigeria is sure to attain greater heights!

 

A happier 2019 awaits us all.

 

About The Author

Ekerete Olawoye Gam-Ikon, MNIM, CPP is a management consultant with specialization in Strategy and Insurance. He can be reached vide telephone on +234-806-648-1111 and +234-802-585-0344 or by e-mail vide olagamola@gmail.com 

 

 

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