KEYNOTE ADDRESS BY THE COMMISSIONER FOR INSURANCE, MR O. S. THOMAS, AT THE CHARTERED INSURANCE INSTITUTE OF NIGERIA’S 2020 INSURANCE PROFESSIONALS FORUM
I express my gratitude to the Chartered Insurance Institute of Nigeria for offering me this platform to deliver the Keynote Address for the 2020 Insurance Professionals Forum. As you are all aware, the year 2020 has been an exceptionally difficult year for the whole world, our nation and in particular the Nigerian insurance industry. The COVID-19 pandemic unavoidably forced the closure of borders, imposition of curfews, societal lockdown and movement restrictions all of which impacted negatively businesses, jobs, and overall standard of living.
More recently, widespread protests, civil unrest and destruction of properties and others have created further socio-economic hardship and barriers for business profitability and growth. As Nigeria reals in the pain of the destruction and losses suffered this year, the Nigerian Insurance Industry must utilize the opportunity to lead in the quick recovery and restoration of the affected businesses and also showcase its role in reinforcing the economic resilience of individuals, businesses and the economy at large. Therefore, the theme of this year’s Professional’s Forum, “Defining the Future of the Insurance Industry”, is apt and timely.
The suddenness of the COVID-19 pandemic imposed immense pressure on all businesses including insurance business. Pressures faced by consumers in the form of reduced finance and business activities, lack of access to credit, expiration and wastage of perishable goods, temporary or permanent business closures and employee contract terminations, life threatening illnesses and deaths all combined to increased the propensity for claims.
In addition, one of the major challenges for insurers was the inability to market/sell insurance products to consumers which, in turn, reduced the premium income. This has necessitated the need for a robust online automated marketing and feedback system in order to reduce the dependence on in-person sales and marketing.
It is worthy to note that considering that most losses arising from the pandemic are not adequately covered by existing insurance policies, it has become obvious that current insurance product offerings are not adequate to respond to emergent risks and needs of our society. There is, therefore, the need for a review of conventional insurance products in order to upscale the value proposition of the Nigerian insurance industry. We cannot continue to ignore the impact of unforeseen events on individuals, businesses, and the insurance industry as a whole.
Furthermore, the recent outbreak of protests and civil unrest across the country and the resultant losses has exposed the vulnerability of Government, businesses and individuals to unforeseen events. These incidents have further reinforced the value and necessity of the insurance industry.
However, these incidents are likely to increase insurance claims, thereby exacerbating the already weakened liquidity and capability of insurance companies. This has reinforced the need for proper underwriting to ensure insurers are able to settle corresponding claims obligations to cushion the effect of losses on Nigerian households and businesses.
It is pertinent to note that insurance coverage for Strike, Riot and Civil Commotion (SRCC) clauses, which were redundant in the past and which by competition are mostly offered free of charge must now be adequately rated as an important product for the survival of Nigerian businesses. The Commission will be issuing directives to ensure that underwriting is strengthened to appropriately rate and charge requisite premiums so that profitability can be guaranteed and claims are settled promptly without financial strain on the companies.
It is important to also state that the work-from-home trend which is gradually becoming the norm heightened the need for digitization in the Nigerian insurance industry.
Insurance companies are now deploying technology for remote working to enable companies to expand their mode of delivery of products and services to customers. In this vein, the Commission is working on an insurance industry IT framework including cyber risk and security requirements to safeguard the confidentiality and personal data of the insuring public.
In response to the changing environment, phase 1 of the NAICOM Portal which is intended to capture all insurance policies issued across the country and also provide a link with the Commission’s licensing and other authorization processes has been concluded and is ready for deployment. The Commission is also currently working assiduously to conclude the digitization of the operations of the Commission’s support departments.
The National Insurance Commission strategic focus is market development which is anchored on Innovation, Distribution and Effective/Efficient Service Delivery. Initiatives designed to facilitate attainment of the strategic focus and which may redefine the future of the Nigerian Insurance market includes some of the following:
Enhancing the financial strength of insurance industry operators, the Insurance Bill, acceleration of automation of the Commission’s business processes, strict enforcement of the claims management processes, adoption regulatory sandbox in product development, pursue the actuarial capacity development programme, institute business continuity and sustainability framework for insurance institutions, pursue the regional integration initiative as a national policy, assist the operators seamless transition to IFRS 17, sustain the effort to put in operation the NAICOM Academy, follow other market development initiatives and continue to license new operators that will add value to the market.
A total of Four (4) new companies are being licensed to start operations before the end of the year 2020.
Let me quickly state that the process which may lead to the harmonization of insurance laws and practices in the West African sub-region under the auspices of the West African Insurance Supervisors Association (WAISA) and the West African Monetary Institute has commenced. The Concept Note for the establishment of the College of Insurance Supervisors for the West African Monetary Zone has been presented and is been deliberated upon.
The implication is that cross border transaction will be enhanced. The need for harmonization has been heightened by Nigeria’s signing of the AfCFTA Protocol and also the need to continue to work with our regional counterparts to realize our vision of a harmonized and integrated insurance practices in the sub-region.
Another programme worthy of mention and which will define the future of insurance in Nigeria is the Actuarial Capacity Development Programme. The programme is expected to develop 100 Certified Actuarial Analysts and at least 5 Associate/Fellow Actuaries in Nigeria by the year 2024. About 70 candidates have indicated interest in the Examination and a Pre-Assessment Test will be conducted to determine successful candidates that will be registered for the next diet of the examination.
The development of actuarial capacity in Nigeria is an important component of the Commission’s strategic focus and we are working with the College of Insurance & Financial Management to ensure successful implementation of the programme.
Another human capacity development is the establishment of the NAICOM Academy which was conceptualized as a knowledge management resource centre that will build the human capacity principally for the Regulator. This will commence before the end of the year 2020.
Permit me to conclude this address by stating that the Commission will continue to consult, collaborate and provide regulatory support and guidance to the insurance industry in our collective resolve to adapt to evolving dynamics and challenges in the economy.
While it is human to complain about challenges posed by natural and man-made activities, it will be more profitable for us all to know that it is in these challenges that insurance industry should find opportunities to reinvent itself.
In concluding my remarks I on behalf of His Excellency President Muhammadu Buhari GCFR want to thank the Nigerian insurance industry’s support to the Federal Government on COVID-19. The united response of the industry attracted the extraordinary commendation of His Excellency, President Muhammadu Buhari, GCFR in a national broadcast on 27th April 2020. The industry must leverage this unique opportunity to impress its relevance to governance and government initiatives.
Finally, ladies and gentlemen I take this opportunity to reiterate the need for constructive engagement to promote good ideas, resolve grievances and sustenance of unity in our industry. Internal conflicts are inevitable, but we can turn these conflicts into beneficial learning opportunities through constructive dialogue, for in this lies the future of our industry.
I thank you for your attention and I wish you all fruitful deliberations.