Insurers prune management expenses to remain afloat

Insurers prune management expenses to remain afloat

Perturbed by hard business climate, insurers have engaged in pruning their expenses to remain afloat, The Nation has learnt.

Investigations reviewed that most companies have adopted the policy not to sponsor their management and low staff on foreign trips.

An insurer who asked not to be named said her company has laid a policy to stop sponsoring foreign engagements of board of directors, management and staff.

She noted that the development was aimed at reducing overheads which often arise from management expense, adding that the staff training programmes have also be streamlined.

Managing Director Niger Insurance Plc Clinton Uranta, who alluded to the cost reduction initiative, said the company was able to return to profit year, having posted loss in 2010, by reducing its expenses.

The Commission for Insurance Fola Daniel said situation where 40 per cent of companies expenses arise from management cost is inimical to the industry’s development.

He said companies can only thrive effectively, when operators put a check on their management overhead.

He said: “The management expenses of insurers compared with their foreign counterpart is something that should be properly considered. That of South Africa is probably about 15 per cent. But in Nigeria, the management expenses are about 40 per cent and that is criminal.”

He urged shareholders to challenge their companies’ management to improve their performance by leveraging on the opportunities created by the government and NAICOM.

“One of the Annual General Meeting (AGM), shareholders were so angry saying if NAICOM is implementing these compulsory insurances, we will be making more money and be sharing dividend, but I think what they did not ask themselves is how the management of their companies keying into the windows that we have opened, we are not meant to be selling insurance, hence, I am not expected to go and sell for anybody,” he said.

Daniel called on insurers to be proactive and embrace the MDRI programme, adding that NAICOM will only open up opportunities for them and would not sell insurance.

He urged shareholders to challenge their companies’ management to improve their performance by leveraging on the opportunities created by the government and NAICOM.