Insurance

Insurance industry experienced higher claims payment in 2016 – Efekoha

Chairman of the Nigerian Insurers Association, NIA, who is also the Managing Director of Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha in this interview said that the economic recession compelled the insurance sector to part with more claims in 2016 than the prior year. Excerpts:


Efekoha

By Rosemary Onuoha

WHAT is the claims experience of the industry like in 2016?

On the overall, I think the industry experienced higher claims payment in 2016 than 2015. I don’t have the numbers to support it. But I have my own company internal numbers. I have also seen some publications in the press and I want to take it that the industry experienced higher claims payout in 2016 than prior year. The reasons are not farfetched.

As at December 2015, exchange rate was N199.7 to the dollar, but by the close of 2016, we all know the result. Whilst premium, for instance, was paid on the old sums insured, most of the sums insured on property especially were not reviewed in 2016. As regards life insurance which pertains to medical expenses, whilst premium was paid based on the old absolute naira, when you go to the hospital what happens?

You are charged on 2016 cost. To treat the same minor injury which would have taken maybe N5000 in 2015, in 2016 that would have cost N7000 to N10000. The same thing pertains to motor insurance. If you have a door out of four doors damaged in 2015, how much would it have cost you to replace and how much did it cost in 2016. Meantime, some of the policies that were taken in November or December 2015, were still running by November 2016 because it is a one year contract.

So the claims were processed at the exchange rate of one dollar to over N400. So expectedly, the claims amount will increase. Without pointing to any particular sector, we had some bit of fire claims in 2016 in the industry. So claims were on the increase.

What solutions can you proffer?

That is a question we need to ask ourselves. Where we need to proffer a group solution, we will proffer a group solution. Where individually we have to proffer a solution on company basis we will do so. Fortunately, we have a motor technical committee, we have the fire offices committee, we have various technical committees in the NIA and they are all working, they are all comparing notes. That is the beauty of the Association. But statistics is still lacking. The issue about statistics is that many companies have not had their accounts concluded.

The accounts ought to be approved first of all and the companies have their AGMs before the approved account can be released to the public. Until that AGM takes place, you cannot release any data to the public and the NIA cannot get such data therefore we cannot process them. We can only work with what we have. The quarterly publication are skeletal in information because there are no backups but when you look at an annual account even from what is published you can extract some data for comparison.

What to do going forward?

Insurance moves in circles as well. The soft market and the hard market are not peculiar to Nigeria. If we had very high claim season what that means is that we have to up our rates. When things are good again, we have to go soft and lower the rates. So we will respect this cyclical nature of our business.

Vanguard

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