Insurers predict positive outlook despite economic challenges
AS the economy contends with declining revenue over falling oil prices and depreciation of the naira, which may affect premium collection of insurance companies, the sector has the potential to grow volumes and enhance shareholders values.
Industry chieftains who spoke to The Guardian said insurance companies should device measures to increase penetration and enhance awareness on the advantages of insurance in all sectors of the economy.
The Managing Director of Consolidated Hallmark Insurance Plc, Eddie Efekoha, in his remarks said the power sector reforms that heralded transfer of ownership to the private sector, beginning with the Distribution Companies (Discos) came with much hope for a reduction in expenditure on energy in 2014.
According to him, not much progress was recorded as we continued to expend a large chunk of resources to generate our own energy. Also, the devaluation of the local currency which moved the official band to N168 to $1 shot up the rates close to the N200 to $1 mark during the year.
This impacted heavily on our expenses as practically all partners adjusted their pricing templates to reflect the new realities. However, he said, it is pertinent to mention that in spite of the difficult operating terrain, some positive developments are occurring in our industry “The regulatory environment in the Nigerian insurance market helped in no small measure, as envisaged, to minimise the incidence of outstanding premium.
Enforcement of the ‘No Premium, No Cover’ provision which commenced in 2013 was intensified during the year, hence there has been a remarkable improvement in the cash flow of underwriting companies. “We are happy to report also that conflicts with clients over periodic statement of account positions have been reduced to the barest minimum, and we are confident that reconciliations shall be purely on details and not outstanding premium”.
According to him, industry regulator – “National Insurance Commission (NAICOM) has continued to ensure strict compliance with the risk based supervision model.
This, the regulator commenced with the critical review of the management, structures and processes of the various companies. The approach considers each of the risks that companies face and through a structured process, identifies the risks that are most critical to the financial viability of the institution.
This is a sharp migration by NAICOM from the previous compliance-based supervision model. “Compliance with the International Financial Reporting Standards (IFRS) by operators has improved significantly with our company consistently emerging among the first to obtain approval of accounts from the regulator”.
Though the enforcement of the compulsory insurance classes under NAICOM’s Market Development and Restructuring Initiative (MDRI) was not very successful, he said, the regulator is unrelenting as it collaborated with the Federal Ministry of Finance to roll out plans for developing the industry.
It is our fervent hope that the new government will implement the reforms. Efekoha, who is also, Deputy Chairman of the Nigerian Insurers Association (NIA), said the industry umbrella association, NIA has also improved on the database, beginning with motor insurance where its Nigerian Insurance Industry Database (NIID) has captured over three million genuinely insured vehicles nationwide at the last count.
Efforts geared at extending the database to other classes of insurance led recently to the inclusion of marine cargo insurance.
Meanwhile, the law enforcement agencies are being equipped by the association with relevant electronic devices to ensure that the issuance of fake insurance certificates is reduced to the barest minimum.
On the performance of his company, he said, like I promised the shareholders during the yearly general meeting at Uyo, Akwa Ibom State in 2014, the loss recorded the previous year was only a temporal setback in our profitability streak, as the results presented at the last AGM show we have fully bounced back on track.
Our 2014 financial year results do not appear as robust as we expected since our company, like others in the insurance sector and other players in financial services operated under very challenging economic conditions. Our company has continued to strategise to ensure the best returns to all stakeholders.
Towards this end, our claims payment policy remains one to beat in the entire industry as our belief that satisfied customers will continue to spread the message of prompt service delivery based on their experiences.
The Group Managing Director/CEO, NEM Insurance Plc, Tope Smart, in his remarks said notwithstanding the disequilibrium in the economy, we continued the pursuit of our brand differentiation with renewed vigour.
This we did with the aim of continuing our upward push for industry leadership. In our quest for this, we are equally not unmindful of the fact that our 0perations must be in line with international best practices.
The result of this effort is already visible as shown in our figures. Also in line with this resolve, we have restructured our operations to make it very flexible and friendly in line with current realities.
For instance, we set up a customer service centre with the objective of delighting our customers. Aside the fact that this will ensure customer loyalty, we are equally sure of getting referrals from the satisfied customers.
In addition, our retail unit which handles our personal line products have been strengthened to enable us achieve our long term objective of taking insurance to the grass root, which will ultimately deepen insurance penetration in Nigeria.
Some of the pro9eucts we have introduced to the market are quite unique and simple in application. Our research unit is currently working on some new products and same will be introduced to the market on conclusion and receipt of regulatory approval.