KEYNOTE ADDRESS BY THE MINISTER OF FINANCE, MRS KEMI ADEOSUN AT THE WEST AFRICAN INSURANCE COMPANIES ASSOCIATION (WAICA) EDUCATIONAL CONFERENCE 2016 HELD ON MONDAY 25TH APRIL, 2016 AT EKO HOTEL AND SUITE, LAGOS.
1. It is my pleasure to deliver this keynote address and to warmly welcome you to Lagos on behalf of the President and people of the Federal Republic of Nigeria. I am delighted to be part of this conference with the theme “The Practice of Insurance in a Challenged Economy”. I must commend the West African Insurance Companies Association (WAICA) for the choice of theme which I think is apt in view of the prevailing challenges in the global economy.
2. The administration of His Excellency President Muhammadu Buhari is very committed to diversifying and developing the Nigerian economy and we believe insurance is a strategic tool that should be effectively utilized towards the attainment of that goal. Insurance is of value to society in several ways but the general awareness of the contributions of insurance to the overall economy and society is low. Policymakers, policyholders and the general public typically only value insurance once a loss has incurred and compensation is expected. We must address this perception to enable positive and progressive development of the industry.
3. In more advanced economies, insurance companies are a major source of long-term capital and have a dominant share in total financial assets. They provide funding for end-of-service indemnity, life insurance benefits, annuity and gratuity. They also increase the depth and liquidity in stock markets and bond markets. Insurance sectors of West African countries should be supported to replicate this and deepen their respective roles within the broader financial services sector.
4. Indeed, there is a strong link between insurance market development and economic development. The commonly used index of measuring the development of insurance in an economy is market penetration which is the ratio of total insurance premiums to the Gross Domestic Product. Sadly, this is less than 1% in Nigeria. As a Government, we are committed to identifying the challenges and taking steps to address the current poor performance of insurance in the country.
5. It is on this premise that in February, earlier this year, I inaugurated the Consolidated Insurance Bill Review Committee in a move that seeks to make the bill conform to the ideals of contemporary insurance practice as well as facilitate public awareness and consumer protection. We are optimistic that the work on the bill and its eventual passage to law would positively change the face of insurance regulation and practice in our country, Nigeria.
6. I yet again call on the Nigerian Insurance Industry to take this opportunity to fully cooperate with the committee to come up with a draft that would be the impetus for rapid growth not only for their sector but the Nation and in particular all consumers of insurance services alike.
7. You should always endeavour to reflect on the ideals of the founding fathers of this association and consistently assess performance to identify where remedial action may be required. A cursory review of the objectives would indicate success as far as regional collaboration is concerned. The achievement of the West African Insurance Institute (WAII) is a great example of this. The Institute has survived war, insurrection and uncertainty to continue to exist. I was told it is now fully established in Banjul, the Gambia after its move from Monrovia, Liberia. Not only has it continued to excel in its educational endeavour, I learnt it has even produced a President of a great country in our sub-region.
8. Another notable achievement is the establishment of the WAICA Reinsurance Corporation Plc. The resilience and tenacity displayed toward the formation of this company is commendable. I learnt the company has significantly boosted Reinsurance capacity in the sub-region. Despite this achievement, it is common knowledge that there is still a reinsurance capacity gap in our countries and the sub-region generally. I challenge you, especially our various regulators, to create the appropriate regulatory framework and incentives to attract the desired capacity to this sub-region. It is actions like this that would ensure success in a “Challenged Economy”
9. Late last year I presented a keynote address at the signing ceremony of the Multilateral Memorandum of Understanding (MMOU) and the formation of the West African Insurance Supervisors Association (WAISA), between your regulators in Abuja. This is a positive development in the true spirit of sub-regional cooperation. Collaboration on the part of regulators is not only desirable but necessary. As your companies grow across country borders it is important to ensure the regulators share information on these companies and their operations to safeguard reputation and protect against the infringement of international laws like the Anti Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulation.
10. In Conclusion, we are all aware of the significant challenges facing our various societies today, thus making the role of insurance ever more vital in the sustenance of our economies. I believe the outcome of this conference will inspire both operators and regulators here to drive the development of innovative products to address the diverse needs of the customer and thus serve to increase market penetration. This would no doubt facilitate the growth and deepening of the insurance market in the sub region.
11. On this note I declare this Conference open.
12. Thank you and may God bless our efforts.
Honourable Minister of Finance