Operators in the insurance industry have expressed optimism that the federal government’s target of N1 trillion insurance premium income is realisable.
They, however, differed on 2017 as the set year based on some key factors.
Managers of insurance companies who spoke exclusively to LEADERSHIP Sunday noted that the total premium income of the industry was currently below N400 billion, saying the premium target of N1 trillion could be achieved if government, insurance operators and Nigerians could work together as critical stakeholders to realise it.
They said the continuous low insurance appetite among Nigerians and governments at all levels as well as the activities of fake insurance racketeers in the sector remain a stumbling block to realise this high ambition.
With little or no enforcement of insurance laws by law enforcement agencies and the inability of most states to domesticate insurance laws, the N1 trillion target, market observers said, could be a tall dream.
Moreover, the 2003 guidelines, considered to be obsolete, which still remains the guiding principles of insurance business in the country, is described as a clog in the wheel of progress as it is silent on who should prosecute insurance defaulters.
The development has made most Nigerians shun insurance products and services, even as most of the 58 underwriters were said to have done little in the area of insurance advocacy, sensitisation and education of Nigerian.
With the low capacity of most insurers to underwrite huge risk businesses in aviation, oil and gas and maritime sectors, allowing players in these sectors to turn to foreign insurers, the sector has continued to lose hundreds of billions of naira on a yearly basis to capital flight which robs the industry of the expected premium income.
If the N1 trillion insurance premium income target must be realised, insurance operators said relevant stakeholders must address the challenges.
The managing director, Universal Insurance PLC, Mr. Ben Ujoataonu, said the premium target is realisable if all stakeholders work towards it, but may not happen in the current year.
“It is all about the growth in the economy itself because if the economic indices are right, the corporate organisations will grow their businesses. As they grow their business, there will be need for insurance. The individual on a micro level will have enough disposable income at which they will now begin to buy insurance”, he said.
He, however, said as things stand now, most Nigerians could barely feed themselves as well as meet their immediate needs as inflation rates and the cost of living remain high.
“So, it is difficult for an individual to take care of his immediate needs talk less of now buying insurance. The corporate organisations are struggling under the weight of recession, but I think it is something that is achievable, if the economic situation improves”, he pointed out.
In the same vein, the managing director, Linkage Assurance PLC, Dr. Pius Apere, said the N1 trillion premium income target was not realiseable this year, taking into consideration the high rate of rate-cutting in the insurance industry which, according to him, is mainly surviving on the brokers’ market.
Dubbing the current insurance products as recycled products, he charged his colleagues to leverage on the untapped potentials in the retail market through launching of retail products that could actually drive the premium income.
Apere said, “Insurance industry is just recycling products; recycling in the sense that some operators are cutting rates and so, the real premium is actually going down because of rate-cutting. It is only when they go into retail marketing through micro-insurance that insurance penetration could be deepened and the N1 trillion premium target could be realised”.
On her part, the managing director, Nigeria Reinsurance Corporation, Lady Isioma Chukwuma, said the N1 trillion premium income was not realistic, especially when the insurance penetration was still low.
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Chukwuma, who is also the president, Chartered Insurance Institute of Nigeria (CIIN) said, “Sincerely speaking, I don’t think it is realistic enough because the penetration of insurance is still very low in the country. But that is not to say we are not trying, I am optimistic that we can improve on what we already have as the total premium income of the industry”.
On his own part, the managing director of Anchor Insurance Limited, Mr. Mayowa Adeduro, said though the target was a good vision, it could not be realised even in 2018.
She said if the industry is planning to achieve the N1 trillion insurance premium income, then all the stakeholders such as the operators, regulators and government must play their respective roles to achieve this vision.
Describing the role of the government as germane to the success of insurance industry, he called on governments at all levels to insure their assets as required by law, while paying their premium as at when due.
He also urged government to extend the same hand of fellowship it gave to the pension industry by including pension certificate as part of the requirements to get government contracts.
He said government should also demand for evidence of insurance from companies seeking government contracts, adding that this would allow the industry to quickly grow its premium base in a bid to realise and surpass the N1 trillion premium income benchmark.
It would be recalled that the Goodluck Jonathan-led administration had at the Nigeria Insurance Summit in December 2014, through the coordinating minister of the economy, Dr. Ngozi Okonjo-Iweala, said the government was working assiduously to grow the Insurance Written Premium (GWP) which was then at N300 billion to N1 trillion in the next three years and to N5 trillion in the next 10 years.
The then minister submitted that the insurance industry is a powerful engine for job creation in the country, saying government’s target was to grow the number of direct employment to 100,000 in the three years from its present 10,000.
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