By Bukola Adetoye
Some stakeholders have examined the progress in the insurance industry, giving it a pass mark, as Nigeria marks 58th anniversary.
They say insurance industry has done fairly well in spite its low contribution of 0.4 per cent to the nation’s Gross Domestic Product (GDP) in 2017.
In separate interviews with the News Agency of Nigeria (NAN) in Lagos on Sunday the stakeholders said the industry had grown geometrically with the total insurance premium hitting N376 billion.
NAN reports that the industry currently has over four million policy holders with total direct and indirect employment in excess of 100,000.
Deacon Tom Ogboi, a retired Director of UNIC Insurance, however, said the industry could grow and be more significant in the nation’s economy.
Ogboi said what the industry needed was to make strategic moves to have a space in the mindset of Nigerians as the risk bearer for both corporate and individuals.
“The industry needs a conducive environment supportive of its growth.
“It is regrettable that government, through legislation, has shrinked the business field of the insurance by removing pensions business, employee compensation, but it should be encouraged,” the insurance expert said.
Ogboi said that the National Insurance Commission (NAICOM) needed to be seen as being supportive of the growth of industry, but the commission’s recent actions did not indicate that.
“What the new Tier-Based Minimum Solvency Capital (TBMSC), evolved by the commission on Aug. 3, requires is fresh capital injection, but all the commission kept saying is fresh capital injection is not mandatory,” Ogboi said.
The insurance expert said that the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN). last week, said the economy was still very fragile and that the fundamentals were not there.
“The Manufactures Association of Nigeria (MAN), who are the major customers of the Industry, said manufacturers are still in recession and have lost a lot of value.
“Therefore, it is advisable to say that the timing and due process are necessary for the TBMSC to take off and for the regulator to get desired impact,” Ogboi said.
Mr Richard Borokini,, the Director-General, Chartered Insurance Institute of Nigerian (CIIN), also said though the industry had done fairly well, but there was the need to enhance its performance.
He said the industry, in the early years, was dominated by British owned insurance companies like Royal Exchange, Law Union and Rock, UNIC to mention a few.
“But we now have both indigenous and foreign companies on the market, e.g Leadway, Custodian, Axa Mansard, Zenith Insurance as bank owned insurance companies are also doing well.
“However, there is a problem of low insurance penetration due to poor insurance culture which have persisted for many years,” Borokini said.
He said that a lot needed to be done by way of enlightenment campaigns across various segments of the Nigerian insurance population.
Mr Mufutau Oyegunle, the Managing Director of LAKEG Insurance Consultancy, said the industry could grow more and become more significant in the national economy.
He advised practitioners to cut down their companies’ management expenses to enable investor get dividends.
Oyegunle also advised them to remain ethical in their day-to-day conduct to guide against sanctions of huge fines by the regulator.
“The huge fines paid by some insurance companies and management expenses have discouraged shareholders from investing more in the industry,” he said.
The Commissioner for Insurance (CFI), Alhaji Mohammed Kari, recently said the industry recorded a 6.07 per cent growth in the second quarter of 2018.
He said that the industry contributed 0.4 per cent to the nation’s Gross Domestic Product (GDP) in 2017.
Kari said that the commission was well positioned to address both internal and external forces to enable the industry increase insurance penetration and its contribution to GDP.
He said that the dearth of appropriate human capital, professional skills, poor returns on capital and too many fringe players were the main challenges of the industry.
“Incidences of rate cutting, corporate governance issue, insurance premium flight, lack of innovation in product development, lack of awareness on the part of consumers on the suitability of insurance products and low GDP per capita figures are among the challenges.
He said the commission would maintain its financial inclusion strategy to increase insurance penetration to 40 per cent by 2020.
(NAN)
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