Insurance remains the backbone of the Economy

DESPITE challenges in the nation’s insurance sector such as declining premium, tough regulatory requirements, the industry remains the backbone of Nigeria’s risk management.

Industry chiefs, who spoke to The Guardian on the third quarter performances of the industry, said it was challenging because of the volatile business environment – liquidity freeze, mounting claims profile in the mist of declining premiums, which had negative effects on the bottom line of underwriting companies.

However, the insurance industry still represents an important component in the financial intermediation chain and remains the backbone of Nigeria’s risk management, said insurers.

According to industry chieftains, insurance still remained the engine room for the economic survival of any country that is, insurance exists for the survival of other businesses The relevance of insurance to national development, insurers explained, was not surprising as the reduction of effects of uncertainty and volatility helped companies operating in the sub-sectors to smoothen the economic circle and reduce the impact of crisis situation on the micro and macro levels.
“Nevertheless, while we are all justifiably proud of the significant achievements recorded by the reforms in the industry, we all know that the victory against the forces that held our industry down is still a long way off”.

The Director-General, Nigerian Insurers Association (NIA), Sunday Thomas, said that just as there are challenges, there are also opportunities in the market for the industry to exploit and match forward, if only operators will lay less emphasis on the challenges.

He said “We know the economy is having some difficulties, which tend to reduce the clientele base, but new initiatives are being evolved to subdue these challenges with the take off of the Nigeria Insurance Market Development and Restructuring Initiative (MDRI) with full implementation, the launching of Nigerian Oil and Energy risks portfolio by the association, the No premium No cover policy, the confidence measures initiated by the Nigerian Insurers Association (NIA) through the Customers complaint Bureau as a way of boosting public confidence in the market, the motor vehicle data-base project for all insured vehicles in the country with a view to having accurate data and thus minimizing fraudulent motor insurance claims, loss of vehicles by theft and, of course, the reforms in the power sector, all these initiatives will definitely create a platform of opportunities for he industry.

He said, “We have a period of transition, and it has a cost. What we have seen is the market trying to pay the price of transition, transition in regulatory appraisal of reports, transition in operations, and we strongly believe that after this period insurers books may not be as good as one would think, but we believe after that , there is going to be a lot of policy changes, thereafter we will see a better industry”.

Also, the chief executives of an underwriting company who agreed with the director-general of the association, added that competition has been very challenging, each company working to survive the difficulty in the economy, while claims profile has been on the increase, but the premium has been on the decline. According to him, there are opportunities for the industry to grow and contribute to the economy. What the industry needs is support of government as the prime mover of the economy particularly by insuring of government assets and payment of premium, to show an example to the public. Our appeal to this government of change, is to help the industry to play its proper role of risk bearer in the economy.

Source: Guardian News