Insurance

6 underwriters’ management expenses exceed gross premium generated

. Insurers incur N264.15bn mgt expenses in 5 years

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Chuks Udo okonta

Some insurance companies are really fighting hard to remain afloat amid the harsh economic maladies, which had pushed them into incurring huge management expenses as against the low premium they generate.

According to the Nigeria Insurance Digest 2016, published by the Nigeria Insurers Association (NIA), six insurance firms in 2016 had their management expenses higher than the gross premium generated.

The firms are: Universal Insurance Plc, which generated N536. 526 million and incurred management expenses of N739,449 million, a ratio of 1.38 per cent. NICON Insurance Plc, had N92,040 million gross premium and spent N453,790 million, (4.93 per cent); Old Mutual Life Assurance Company Limited, had N1.30 billion gross premium and spent N1.83 billion, (1.41 per cent)

Others include: SpringLife Assurance Plc, had N32,000, spent N105,282 million, (3.29 per cent); UNIC Insurance Plc, had N38,769 and spent N244,929, (6.32 per cent) and Investment & Allied Insurance Plc, had N4,399 and spent N169,499, (38.53 per cent).

According to the Customer Experience Manager, Old Mutual Nigeria, Rachel Millard-Jaja, the firm’s expenses were high due to the company’s efforts to position itself for the future and gearing up for expansion.

“We invested significantly in retail mass offering and technology to cope with business growth. Higher expenses are synonymous with young organisations operating in a high inflationary environment,” she said.

The NIA maintained that management expenses include underwriting expenses; salaries; rent; and others excluding commissions paid to agents.

The umbrella body of underwriters noted that insurers incurred management expenses of N48.22 billion in 2012; N48.59 billion in 2013; N52.12 billion in 2014; N53.83 billion in 2015 and N61.39 billion in 2016. The total spent as management expenses amounted to N264.15 billion in years.

The National insurance Commission (NAICOM) in line with its regulatory priorities, which is to regulate the management expenses of insurance companies, has put a limited on the spending of some firms.

The Commissioner for Insurance, Mohammed Kari, told Inspenonline that from the observation made on financial accounts, submitted by some companies, those with huge expenditure profiles, have been mandated not to spend beyond certain limits.

He noted that the decision was taken to ensure companies do not spend unnecessarily to the extent that they would not be able to attend to claims settlement.

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