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The Chairman, Nigerian Insurers Association (NIA) Tope Smart in this interview highlighted the achievement recorded by his administration and other sundry issues shaping the insurance industry. Chuks Udo Okonta reports.
You came into the leadership of NIA when the industry was under trial in terms of response to payment of claims, how much were you able to address this situation during your tenure?
This issue has been largely addressed as I constituted a disciplinary committee and defaulting companies were invited to face the committee and errant members were given a deadline to pay their claims or face expulsion. With this, the response of our members have improved significantly.
What support is NIA offering members during this COVID-19 challenge to ensure they survive the recapitalisation?
We have engaged our regulator (National Insurance Commission) to consider the disruption to the process of capitalisation account of COVID-19. Through our engagement, NAICOM has amended the original recapitalization circular by extending and segmenting the process into two phases. Members now have up to 30th September, 2021 to comply with the new capital requirements.
With COVID-19 disrupting global businesses, what can the insurance market in Nigeria do differently to improve lives of policy holders and deepen insurance penetration?
Despite the pandemic and the lockdown, our members have continued to meet their claim obligations even during the lockdown as our members worked through out the period albeit remotely. Our policy holders were quite impressed with this, and this action has given them more confidence in the Insurance Industry.
With the recognition of the Industry by the Federal Government. What should the Industry do to fully maximize its benefits?
The Industry will continue to partner with Governments at various levels in the task of nation building. We will ensure that the benefits of Insurance are made available to all the policy holders so that we can continue to perform our role as the bedrock of the economy.
NAICOM said it will come up with fresh guidelines on recapitalisation after COVID-19. However, some NIA members said they would have been better off with Tier Based. Is NIA likely going to request that the Tier Based Model be revisited in place of share capital increase, as a way of suggestion to NIACOM in the new guidelines?
The Tier based capital introduced by NAICOM was no doubt a very good model but it failed because of the way the model was implemented. Frankly speaking, I see it as a very good model that will enable operators play according to their different capacities. Also, the model is aspirational in nature. The fact that you are a tier 2 company today does not preclude you from aspiring to be a Tier 1 company which can be achieved if you bring in additional capital. Unfortunately, we can’t go back to it as NAICOM has moved from there to Minimum Paid Up Capital.
Customers are still complaining of poor service delivery. From the NIA view point, what should companies do?
Technology is one of the ways to improve service delivery. At our recent retreat, we advised our members to upscale their technology in order to improve service delivery.
What are the major achievements the Industry recorded in the last two years?
With all sense of modesty, the Insurance Industry has achieved a lot in the last two years. I will attempt to highlight a few of them. For me, the greatest achievement is the recognition of the Insurance Sector by no less a person than the President and Commander in Chief of the Armed Forces of Nigeria, President Muhammadu Buhari. This is the first time in the history of the Insurance Industry in Nigeria that our sector will get the attention and commendation of the No. 1 citizen of Nigeria. This is a big deal and we are building on this so that Insurance Industry can take its’ proper place in the configuration of the country. This is not a mean feat when you look at how the sector has been bastardized in the past. With this by the grace of God, I have achieved the “Insurance first” slogan of my agenda. Apart from this, other achievements are as follows:
a. Our intervention with respect to COVID-19 came in two parts
i. We arranged a Life Insurance Cover for up to 5,000 health and frontline workers all over the Federation.
ii. We collaborated with other stake holders in the Industry and donated the sum of N500 million to the Federal Government to further contain the spread of Corona Virus.
b. As mentioned earlier, we worked tirelessly, towards the construction of NIA building and it has reached an advanced stage.
c. On recapitalisation, we are in full support of the exercise and we embarked on various engagements with critical stakeholders such as NAICOM and Nigerian Stock Exchange (NSE). We used the opportunity of our engagement with NSE to solicit the support of Capital Market Operators for our members.
d. Unfavourable Insurance Law: We pursued with renewed vigor, the tax law which was unfavourable to the Insurance Industry. We escalated the issue up to the National Assembly and thank God, the tax law has finally been amended through the year 2020 Finance Bill.
e. In the area of Corporate Social Responsibility, we carried out a renovation of the school hall of Baptist Junior Secondary School in Obanikoro. The school authorities were quite delighted with us on this initiative.
f. In the area of professionalism, we are working with another arm of the Industry to develop a framework to ensure that the business of Insurance is done with utmost professionalism. The implementation of this will soon start.
g. Promotion of Nigeria Insurance Industry Database (NIID) and Nigeria Insurance Industry Platform (NIIP). We developed these platforms to eradicate parallel markets from our environment.
The economy is projected to go into recession by the end of 2020. What measures should insurers adopt to cushion the impacts on their operations?
Ans. My advice is that this is the time to eliminate unreasonable expenses and conserve resources as much as possible in preparation for economic downturn. In addition, the risk management mechanism of each company must be activated in order to withstand the headwinds that may come.
The Insurance Industry has a new Commissioner. What three projects should he focus on to transform the market?
Once again, let me use this opportunity to congratulate the new Commissioner for Insurance, Sunday Thomas on his appointment as the Commissioner for Insurance. He is a thorough bred professional and a round peg in a round hole. For me, his priority should be market development. He should come up with strategies to develop the market. By so doing, we shall increase market penetration and also increase our contribution to the GDP. The second area is to focus on confidence building in the minds of the insuring public. Insurance Companies must meet their obligations as and when due. Once this is done, members of the public will be motivated towards embracing insurance. Rules should be designed and companies who fail to play by the rules should be sanctioned.
The third area of focus should be on digital technology. Technological advancement at NAICOM and also at the level of operators should be a front burner issue for the Commission.
What are the challenges encountered in the course of your tenure as NIA Chairman?
I faced a number of challenges during my tenure as Chairman. I will highlight a few of them.
a. The first was getting every player to key into some laudable initiatives I considered very germane to the upliftment of the Industry. Some of our members allowed their selfish motives to override the overall corporate interest of the Industry. Until we are able to promote corporate interest over our individual parochial interests, the Industry may not be able to reach its full potentials.
b. The second one was having to sacrifice the interest of NEM because of my position as the Chairman of the Association. This I did in a number of ways but I have no regret whatsoever because each time I had to take these decisions, I was focused on the bigger picture.
c. Another challenge was that I had to share my time and devoted more time for the affairs of the Association. As a leader, you have to be there for your members. Most of the time, I had to sacrifice my time, energy and also resources in the overall interest of the Industry.
What is the progress of NIA building?
We are making significant progress with regards to NIA building. But for the lockdown on account of COVID-19, the edifice would have reached about 80% per cent completion by now. Notwithstanding, our contractors have mobilized to site after the relaxation of the lockdown and work on the edifice is progressing.
Share your best moments with us?
Despite all the challenges, I must admit that I enjoyed my time as Chairman of the Association. The fact that given the time limit, I was able to achieve some of my dreams for the Industry gave me so much joy. The intervention initiative of NIA/Industry for which the President personally acknowledged was one of the best moments of my Chairmanship. I received several calls from within and outside the Country on this landmark. Aside this, as Chairman, I had and enjoyed a very good relationship with our Regulator. By the grace of God, I was able to get a lot of concessions from the Commission for our members without any rancor. This gave me so much joy and fulfilment. I believe that these modest achievements I recorded have enabled me to take the Industry to a new level by the grace of God.
I cannot conclude without giving all the glory to the Almighty God without whom all of these would not have been possible. May His name be praised forever. I will also use this opportunity to thank my wife and children for the sacrifices they made even when it was not convenient for them.
Also, I thank the Board of NEM and all my colleagues who gave me all the support even when I had to sacrifice the interest of NEM because of the Industry. I must equally thank all my colleagues in the Industry for the massive support I enjoyed during my tenure. They were all there at critical times.