‘Insurance industry needs catastrophic events to shape-up’

‘Insurance industry needs catastrophic events to shape-up’

Chuks Udo Okonta

The former Chairman Nigerian Insurers Association (NIA) and Managing Director Lasaco Assurance Plc, Olusola Ladipo-Ajayi, has said the insurance industry needs catastrophic events for operators to no know where they belong.

He told Inspen that the industry needs a revolution that would stem the level of unhealthy competition among operators, adding that the move would send some operators out of the industry while those capable to whether the storm would remain.

He said: “I cannot explain why much ignorance runs in the insurance system. I spent two years as the Chairman of the association explaining how to understand business issues to member companies, but the industry is blindfolded by stiff competition and cut-throat price war. We need some catastrophic events - market forces to send some parking and keep others. When I was the Chairman of NIA I went to present a paper to Ghanaian Insurers Association (GIA) and in the course of my research, I found out that in the early 1900, when motor vehicle made its debuts, in the first 10 years of its existence, almost all the insurance companies that wrote motor insurance went completely under, because they could not put their house in order. That was one of the reasons that led to a tariff change and that went for a period of 50 years, and then the operators agreed to bring down the tariff. So, unless something of that happens that would really shake the fabric of the industry, there would not be change.

“In the insurance market time was when risk for fire was rate .75 per cent. Then was when most textile companies had fire incidences, the rate of fire really went up. Today, most of us who were around that time are not around now and most of the practitioners around now were not around then, and if you tell them that textile industries had been rated at .75 before, it would look like you are telling them a story. So, market forces would get things right, it may take time, but that is more enduring.”

He said the association will not relent in its efforts to sanitise the industry, adding that the customer complaint bureau was set up to also make operators abide by the rule of a unified premium rate.

He noted that to counter free fall of premium, the association established the customer complaint bureau, adding that the operators have resolved not to go to court to settle insurance cases and that all the cases decided by the bureau, would be accepted by members.