Expert Lists Challenges of Insurance Industry

Insurance expert  and Deputy Managing Director of Linkage Assurance Plc  Dr Pius Apere  has listed the challenges facing Nigerian insurance industry, adding that these have reduced the industry’s  contributions to the Gross Domestic Product(GDP)  of the economy to as low as less than one percent.
Apere who is also an actuarial scientist  and a chartered insurer in a statement made available to THISDAY  highlighted the industry’s challenges as human capacity development, information

technology problem, risk and capital management problem, market development challenges, product pricing problem, product innovation and poor image  perception problem.

Speaking on the human capacity problem of the industry, Apere said human capacity  and capital development are  key drivers and critical determinants to success of any company and industry.
He described capacity development as  the critical skills required and how such skills are harnessed efficiently in the organisation to attain corporate objectives.
He noted that there is a general shortage of skilled professionals  in the insurance industry such as underwriters, brokers, actuaries.
Tracing the reasons for this Apere said generally, there is inadequate and irregular training of staff including IT staff as well as  board of directors of companies within the insurance industry relative to the banking industry.
He observed that majority of the insurance companies attract low skilled personnel due to inadequate remuneration package and hence they are unable to retain competent employees.
Furthermore, he said the insurance industry does not support or embrace contribution of other non-insurance special skills adding that they place emphasis on technical skills as against specialised business skills.
According to him, this restricts the growth and development of non-insurance skilled professionals within the insurance industry.
“The lack of training of board of directors on basic insurance operations results in inadequate supervision of executive management activities by the board,
“The demand for actuaries in the Nigerian financial services industry became more pronounced following the introduction of IFRS. Incidentally, in the insurance industry, every insurance company 
needs to have an actuary, as IFRS requires that every entity’s balance sheet reflects true and fair representation of the obligations (e.g. to policyholders). Thus, the dearth of actuaries in Nigeria 
would not only affect the insurance companies’ operations but also the oversight functions of the regulatory body.

Furthermore, there is lack of awareness about the actuarial profession and what actuaries can do”, he noted.

He noted that some special insurance risks (such as aviation, oil & gas etc.) are not fully underwritten by domestic insurers because of lack of local professional underwriters.
Proffering solution to this, Apere said there is need for engagement of adequate staff with professional background to carry out oversight functions.
He also said that the CIIN in addition to other efforts  should ensure that insurance professionals live up to the bidding of true professional in word and in deed, adding that the CIIN should constantly review and expand its curriculum beyond core insurance courses in order to build knowledge capacity.
On information technology challenges, the insurance expert said many companies in the insurance industry do not have a fully automated and/or integrated computer software system adding that only few companies make use of integrated business application and IT infrastructure to drive business value).
Against this backdrop, he noted that insurance data and document management system is relatively poor compared to other sectors in the economy.
According to him,lack of information architecture and standardisation of insurance data including lack of local expertise in the field of insurance IT solutions means that manual operations are still prevalent leading to delays in services provided such as claims settlement, fraudulent practices, mistakes and errors in the entire business operations.