The President of the Governing Board of NCRIB
Other Members of the Governing Board
Distinguished members of the NCRIB Family
Members of the ever vibrant Press
Invited guests
Ladies and gentlemen
Let me start by thanking the President and Members of the Governing Board of the Nigerian Council of Registered Insurance Brokers (NCRIB) for availing IGI Plc this unique opportunity to interact with their teeming members, with a view to deepening the existing understanding between our company and them, and fostering a mutually beneficial business relationship in the future. We are especially grateful for the privilege of being the first in the new year to host the NCRIB Members’ Evening. Therefore, on behalf of the Board and Management of IGI Plc, I wish to sincerely thank you for the honour.
We also want to take this opportunity to express our deepappreciation to you for standing by us throughout the trying period of the death and burial of our Founder and Executive Vice Chairman, Mr. Remi Olowude, OON — may his soul rest in perfect peace. He was a friend and colleague of many of you. His vision was to have a world-class brand in insurance that would place Nigeria and, indeed Africa, on the world map of insurance giants. The Board of IGI Plc, under the chairmanship of General Dr. Yakubu Gowon, GCFR, as well as the Management is determined to pursue that lofty vision to fruition.
A forum such as this is crucial to the development of the insurance industry. This is because it provides a strong platform for the operators to compare notes, share experiences and review processes for the purpose of ensuring sustainable growth and development of the sector.
For us as a company, this event presents a veritable opportunity to articulate our roadmap and blueprint for a new, improved IGI that we are committed to. Our Board and Management have embarked on a fresh journey of reappraising our operations in all ramifications with a view to charting a new course that will return our dear company to its pride of place in the industry. In this journey, we consider all of you, distinguished brokers, as a critical success factor.
The pedigree of IGI is well known to most of you in this gathering. The company started operations in 1992. In 1996, barely four years after it commenced business, it became the first private insurance company in Nigeria to achieve N1 billion in premium income. In 2004, the company maintained its leadership position in the industry with a record premium income in excess of N4 billion, the highest at that time in terms of volume of business by any private insurance company in Nigeria. Today, we have grown to become one of the leading companies in the African insurance landscape.
From inception, our Board of Directors, chaired by General Dr. Yakubu Gowon, GCFR, has remained one of IGI’s foremost strengths. We are blessed with a highly reputable Board, comprising eminent personalities of proven integrity. The Board was furtherstrengthened recently by the injection of seasoned professionals with rich experience cutting across both private and public sectors. The fresh additions to the Board are: former Secretary to the Government of the Federation and one-time Minister of Defence, Alhaji Yayale Ahmed; erstwhile Head of Service of the Federation, Prof. Oladapo Afolabi; a Risk Management expert and former acting Managing Director of Fidelity Bank Plc, Mr. Kenneth Aigbinode, and an Administration and Information Communication Technology expert, Mrs. Foluso Gbadamosi.
As you are probably aware, a substantive Group Managing Director, in the person of my humble self, and a new Deputy Managing Director, Mr. Sina Elusakin, have also been appointed by the Board to drive the company’s new growth and transformation strategies, to ensure its continued competitiveness in the industry.
It will be recalled that in 2005, IGI launched the African Expansion Programme which underlined its resolve to be a key player in the African insurance market. This initiative led to the acquisition of 60% majority shareholding in the National Insurance Corporation (NIC), Uganda’s number one insurance company, after a competitive international bidding exercise. This groundbreaking feat was followed by similar investments in Sonarwa and The Gamstar, the largest insurance companies in Rwanda and the Gambia respectively, where IGI has the controlling shares.
It is important to mention that one of the intentions of the Africa Expansion Programme was to complement efforts of the Federal Government to strengthen Nigeria’s foreign investment profile, especially within the African region. This explains why IGI is flying Nigeria’s flag overseas by playing significant roles in the economies of other countries in the continent.
Today, IGI is a household name in East Africa, as its investments in the region are doing very well and running profitably. We are proud to note that our foreign investments have encouraged and emboldened other businesses, especially banks, to make a foray into other African countries. The insurance industry and our national economy are the better for it.
IGI is renowned for its role as an arrowhead in the endeavour to deepen the growth and development of insurance practice for the benefit of all. One of its efforts in this regard is its extensive network of branches in Nigeria and some parts of the world. In addition to the regional subsidiaries in Uganda, Rwanda and the Gambia, plus a representative office in London, the company operates 45 functional branches which cover all the geopolitical zones of Nigeria. The aim is to ensure that insurance products and services are taken to the doorsteps of customers wherever they are, including the remotest markets.
IGI remains the most endowed insurer not only in operational spread but also in asset base. That strength is being leveraged to restore IGI’s dominance in its chosen markets and products. Currently, our investment in Real Estate/landed properties and subsidiaries is huge and concentrated. It is worth about N22 billion, which far exceeds the threshold stipulated by law. The concentration is largely due to the crash of the Quoted Equities market. However, we have started restructuring our assets and offering some of the properties for sale. This is aimed at boosting our liquidity and enhancing our capacity to promptly meet our obligations. The restructuring has generated over N2 billion in the last one year, part of which has been ploughed intorepositioning the company.
Our expansion in Africa, branches in Nigeria and other investments are all reflected in our financial statements. We are taking a long-term view of our investments and are already benefiting from the diversification effect on our portfolio. Our next phase is to consolidate those investments in a way that grows return on investment and shareholder value. Therefore, we have rested further expansion in the meantime to enable us concentrate.
We are restructuring our operations and repositioning the entire organisation for optimum performance for the benefit of our business, our investors and all stakeholders. In particular, our marketing team has been strengthened and streamlined to serve the brokers more expeditiously. To this end, six brokers units have been created for effective and efficient service delivery, including ensuring real timedocumentation and payment of commission.
As part of the ongoing restructuring to refocus the company, we have overhauled our human resource machinery to make it more efficient and responsive to the company’s new direction. The morale of all categories of staff has been boosted considerably with promotions, improved emoluments and a reward system that surpass competition. Currently, our employees are well motivated and inspired to give their best as members of a team pursuing a common goal for the well-being of the organisation and its stakeholders. It is the desire of the Board and Management to make IGI a workplace of first choice in the industry.
Distinguished ladies and gentlemen, you will agree with me that IGI has come a long way. Our achievements over the years have been made possible by the support, co-operation and contributions of key stakeholders like you. For all your efforts, I thank you as well as our clients and patrons, without whom we will not be in business. We also do not take for granted the support of our friends and partners in the media who have continued to be there for us through all seasons.
For us in IGI, it is a new dawn. We cannot run away from the harsh reality of the business environment today, but I want to assure you that IGI has retooled and is poised for a paradigm shift that will take it to greater heights. Our Board and Management are irrevocably committed to a NEW IGI that is determined to regain market leadership and delight shareholders with robust return on investment. Our conviction is that we can make it happen in the shortest possible time.
We have carried out a holistic appraisal of our operations and taken steps to address our limitations. The challenges confronting us are being tackled head-on and the signs are clear that our efforts are already yielding positive results. We are vigorously pursuing a policy that will ensure prompt payment of claims and commissions, an issue which has always generated controversy and bad blood for the insurance industry. Some of you here present will testify to the fact that we have improved tremendously in this regard. From 2014 till date, we have paid a total of N2.1 billion as claims.
The challenge of getting our accounts ready on time for NAICOM approval, which was caused by our international subsidiaries with different accounting standards, has also been addressed. There has been appreciable improvement year on year and things will continue to get better, as we are committed to NAICOM’s directive that accounts should be presented by April. With the full cut-over to IFRS and the experience curve we now have, future accounts will be out as at when due.
THE INSURANCE INDUSTRY: AN OVERVIEW
All around us, we see challenges and opportunities that abound in our industry and the nation's economy. But the Nigerian insurance market remains at an embryonic stage of development with the combined assets of the country’s insurers comprising only a tiny percentage of GDP and total premiums, lagging behind more developed markets such as South Africa.
However, the past few years witnessed considerable expansion in the sector, as rapid economic/population growth and rising prosperity boosted demand for life and non-life products. The sector has also benefited from the increased entry of foreign life insurance providers. This is attributable largely to the elimination of fringe players as a result of the regulator’s Market Development and Restructuring Initiative (MDRI). While the development of the non-life sector has been less impressive, the rate of growth in terms of premiums written has remained steady.
Today, there is still little opportunity to achieve economies of scale in this highly fragmented market. This is because the lack of basic information, for instance on motorists, means that insurance companies often underbid on the risks that they underwrite. Evidence suggests that life insurance has been boosted by the introduction of compulsory group life policies among companies and public sector organisations. Rising wages and disposable incomes are leading to rapid growth in home and car ownership, which together increased the insurance market.
UMBRELLA BODY OF INSURANCE OPERATORS
The time has come for all players in the industry to close ranks in order to take full advantage of the untapped potential demand for insurance in Nigeria; for this is a major step to engender the relevance of our business to the growth of our nation. Towards achieving this goal, I am advocating greater collaboration among all insurance practitioners. We should encourage healthy competition. To actualize this goal, I suggest we form the Nigerian Insurance Organisation as an umbrella body that will bring together all insurance sector groups — NCRIB, NIA, ELAN, PILA, etc. The forum, which will serve as a platform for deliberations on critical industry issues, should have its chairmanship rotated on a yearly basis.
NAICOM
With all sense of fairness and responsibility, NAICOM, under the leadership of the current Commissioner and his deputies, have done extremely well in stabilising the industry. The commission deserves applause for introducing the MDRI, which was designed to promote compulsory insurances, the rejuvenated policy of No Premium No Cover; the regulation on micro-insurance and the exposure draft on market conduct guideline, which focuses regulation on ethics and best practice principles. NAICOM must be commended for always making it a point of duty to put the industry on notice early enough before full implementation and application.
However, for an industry that still needs to grow and contribute to the nation’s GDP, it is imperative that some of the current regulatory interventions are re-examined thoroughly to determine their effectiveness and to ensure that they are not counter-productive.Some of the critical issues that are of great concern to operators are:
• ‘No Premium No Cover’
It is a fact that many Governmental Ministries and agencies are no longer insuring their assets because of the delay experienced in the approval of their budget. We are advocating for these agencies to be exempted from No Premium No Cover as this will encourage them to embrace Insurance. Afterall, their receivables are always collected even if delayed
• Inadmissible foreign investment
The current law makes any foreign investment an inadmissible asset. In the same vein, the law encourages foreigners to invest in our insurance industry. This position should be reviewed.
• Brokers’ yearly renewal of license
It is onerous for Brokers to be renewing their licences yearly. Advanced countries have dispensed with such practises. It is high time we embraced activities that we deepen insurance in Nigeria.
• Investment in properties
The Insurance Act 2003 pegs investment in landed properties at 25% and 35% for General Business and Life Business respectively. This needs to be reviewed in the face of the crash in the Quoted Stock market which made some insurance companies lose heavy investment in the past.
• The encroachment on insurance business by government agencies, which try to provide insurance protection to aviation passengers and public liability for nuclear risks.
The Federal Government in 2007 divested its interest in Insurance business when it sold NICON and Nigeria Re, on the understanding that such concerns are better managed by the private sector. But ironically, the same Government extracted workmen’s compensation insurance business and transferred it to NSITF as Employee Compensation Scheme.
In similar vein, the Federal Government transferred pension business from the insurance industry to the Pension Fund Administrators; while it also moved health insurance from the insurance industry to NHIS.
It is my hope that the income from both sides are credited to the Insurance industry in determining its true contribution to GDP, as the income should have been earned by insurance companies if not for government intervention and operation of the law.
In addition, feelers from official quarters indicate that the NCAA, under the Ministry of Aviation, is planning to establish insurance fund for aviation passengers’ liability. All over the world, aviation passengers’ liability is subject to international conventions and the risks are covered by conventional insurance policies; Nigeria cannot be an exception. Similarly, the Nuclear Agency wants to establish fund for nuclear damage insurance, instead of seeking conventional Insurance cover for the risks which are covered in international insurance market.
• Government patronage of insurance services and the need for prompt payment of premium.
Government and its agencies have been paying lip service to the importance and benefits of insurance, without serious patronage and support. There is hardly sufficient budget provision for payment of insurance premium by government and its agencies. Therefore, when insurance services are patronized, payment of the premium becomes an issue, a clear negation of the provisions of the law on “No premium, No cover”. Some government parastatals or enterprises are funded without allocation for insurance. Many insurance policies contracted by the MDAs in the past were not renewed, thus leaving the assets exposed to risk, damage and losses without insurance protection.
Many of the parastatals are no longer contracting insurance, certainly in breach of some of the compulsory insurances, because of the government budget system. It is my considered opinion that exemption be granted to Government in the strict application of Section 50, ‘No Premium No Cover’. The reason is that government debt is a statutory, sovereign debt which will be paid by succeeding administration.
• Restriction on insurance investments and recognition of offshore investments.
There is urgent need to review the current restriction on investment to ensure safe but adequate returns to stakeholders for the viability of the industry. There is need to amend the provisions of Insurance Act 2003 and Regulation of insurance company investments in line with the realities of business.
The National Insurance Commission (NAICOM) needs to review its position on off-shore investment for the purpose of solvency calculation and actuarial valuation which we have started discussing with the commissioner and his team.
• Insurance of oil and gas imports
There is need to activate the various laws relating to Marine Insurance of refined petroleum products imported into the country. The Insurance Act 2003, for instance, provides that all imports into the country must be insured with an insurance company registered in Nigeria. This law is only observed in the breach.
• Cabotage Act 2003
The NIA and the NCRIB must collaborate to ensure that the law, as it relates to insurance, is enforced in the best interest of the Nigerian economy.
• Amendment of Companies Income Tax (Amendment) Act 2007 with a view to correcting the absurdities in the Provisions which made the statutes inimical to the growth and development of insurance industry in the country.
• Multiple taxation of insurance companies by different tiers of government.
• The need for Federal Government to support the quest for accelerated insurance penetration and density in Nigeria through micro insurance and takafulinsurance.
• To enhance the development of these forms of insurance, there is need to enact laws that will guarantee government subsidy because the insurances are for the benefit of the poor who cannot afford conventional insurances. Without Government subsidy, agricultural insurance would be unable to play its role in the development of farming.
Moreover, micro insurance will play very important role in poverty alleviation programme of the Federal Government by guaranteeing compensation to the poor who are perennial victims of flood, fire and other natural disasters.
• As a matter of necessity, government should cultivate the habit of seeking the input and contribution of insurance professionals and experts to relevant government policy decisions. It is also important thatinsurance practitioners are considered for appointment into the governing boards of companies, parastatals and agencies where risk management considerations are relevant.
Mr. President, distinguished ladies and gentlemen, the list is not exhaustive. We must all resolve to continue to insist on best practice in order to engender the relevance of our business to the growth of our nation.
We are positive that our ongoing reform in IGI will engender a more vibrant company that will take its rightful place in the Nigerian insurance market and pursue the vision of a world class insurance company. But we cannot go it all alone; we need everyone in this room — brokers and the media — to make our dream come true.
For us at IGI, we believe strongly in collaboration and cooperation with stakeholders. It is in the light of this that we want to take this opportunity to request for a special reconsideration and partnership with the brokers, under the auspices of NCRIB, as we chart the pathof a new beginning. We promise efficient, expeditious and satisfactory service delivery at all times.
I thank you all for your attention. Please enjoy the rest of the evening. God bless you.
ROTIMI FASHOLA
Group Managing Director
IGI Plc
17 February, 2015
No comments:
Post a Comment