Insurance

NAIC mgt expenses exceed gross premium income

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Chuks Udo Okonta

The Nigerian Agricultural Insurance Corporation (NAIC) in 2015 wrote a gross premium income of N1.04 billion, but had management expenses of N1.10 billion, a ratio of 1.07 per cent, this necessitates the need for the Federal Government to urgently refocus the operations of the firm which was established to help promote agriculture through mitigating risks in the sector.

According to the 2015 Nigeria Insurance Digest produced by the Nigerian Insurers Association (NIA), the firm paid total claims of N206,270,000 to the few insured it provided insurance cover. The claims was far from the huge risks suffered by people in its primary focus the agriculture sector.

The Digest noted that company made a net profit of N231,390,000 in 2011; loss of -N156,122,000, in 2012; N685,892,000 in 2013; N394,950,000 in 2015 and -N194,264,000 (loss).

According to the former Acting Managing Director and Chief Executive Officer of NAIC, Bashir Binji, the firm has a lot of dissatisfied customers.

Binji, who said this in an interview with a national newspaper, noted that the firm is also contending with exaggerated claims and claims that are non-existent.

“Yes, a lot. We receive such complaints all the time because insurance contract is a bit complex and technical. There are so many things that need to be put in place for a farmer to access compensation. So we have a lot of dissatisfied customers, a lot of exaggerated claims and a lot of claims that are non-existent. But there are certain conditions that a farmer must meet before we can pay for a claim. There has to be a cover in place, you must pay premium. A loss must occur within the period of insurance and farmers must also follow the approved agronomic practices. If it is violated, there must be penalty.

“Notification is also very important. In our policy document, it is stated that problems should be reported between 72 hours for livestock and seven days for crops. So, if it is not within the time frame, that is a violation of policy condition of notification,” he said.

Industry watchers are of the belief that the firm should do more to improve the nation’s agriculture sector. According to them, a company with a lot of dissatisfied customers, cannot stand the test of time, as the customers would always discourage other potential customers from insuring their lives and properties.

Some months ago, the Nigeria Cassava Growers Association (NCGA), made a public call on NAIC, to compensate farmers whose insured farmlands were destroyed by herdsmen in various states.
President of the association, Pastor Segun Adewumi, who made the the appeal in Lagos, lamented that most of the destroyed farmlands were set up with huge loans from banks collected by some members of the association.
According to him, those loans are due for repayment but the farms which were supposed to yield returns for the offset of the loans have been destroyed by herdsmen.
The national president said the association had written to NAIC for compensation but had yet to receive positive reply.
He said: “We insured our farms across the nation with NAIC. We wrote to NAIC and presented those whose were affected by the clash but they wrote to us and told us that the insurance does not cover malicious damages.
So we are on our own and then the banks are expecting the repayment of the loans,” he said.
He said that flooding was also one of the major setback being experienced by some cassava growers across the country.
Adewumi said the association was yet to enumerate the level of damage caused by flood to their farms in 2016.
The national president appealed to the Federal Government to urgently tackle the issue to encourage more yields.
NAIC boss noted that the firm is considering the development of a product to insure cattle to mitigate damages that often arise from their invasion of farm lands.

“We are having so many requests for that type of insurance. It is part of what we are looking at under our new product development. What we want to do now is to insure the cattle, not the farms, so that the cattle can have a liability insurance, whereby if they go into someone’s farm and they destroy it, we will compensate. It is something we are working on,” he said

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