Insurers spend N42.07bn on management expenses in 2011

 

Chuks Udo Okonta

Insurance companies in Nigeria, spent N42.07 billion on management expenses in 2011, Inspen has learnt.    

A report obtained from the Nigerian Insurers Association (NIA) revealed that the amount represents 19.32 per cent of the industry’s N217.74 billion gross premium income made in the year.

The report showed that Investment and Allied Insurance Plc, had the highest expenses, put at N158.39 million, as against N37.92 million premium income it recorded.   The firm was followed by Universal Insurance Plc with N347.73 million, as against N349.17 million (99.6 per cent) underwritten.

Custodian and Allied Insurance Plc, was the most prudent in the general business category with N886.81 million expenses out of the N10.06 billion (8.81 per cent) income. Mansard Insurance Plc had the lowest in the life business, with N13.87 million spent out of N 2.36 billion (0.6 per cent). Zenith Life Insurance Limited spent N9.61 million out of N1.01 billion.

Other firms with high expenses include, Cornerstone Insurance spent N1.13 billion out of N3.17 billion, Equity Assurance N1.07 billion out of N2.23 billion, International Energy Insurance N1.92 billion out of N4.61 billion, LASACO Assurance N1.20 billion out of N2.70 billion, NICON Insurance N1.05 billion out of N1.38billion, Niger Insurance N100 billion out of N3.04 billion, Standard Alliance Insurance N1.38 billion out of N4.76 billion.

Continuing, Unitykapital Assurance N1.08 out of N1.87 billion, NICON Insurance Life N154.51 million out of N246.55 million, UBA Metropolitan Life N973.15 out of N1.78 billion and Unic Insurance N375.31 million out of N464.30 million.

National Insurance Commission (NAICOM) has expressed worry over the amount spent by underwriters on their management. The regulator noted that what ought to have been return on investment are used as operating expenses by some insurance companies.

Deputy Commissioner, Technical NAICOM, Ibrahim Hassan, said Nigerian Insurance Companies have the highest operating expenses in the world.

He noted in spite the huge insurance opportunities in the country, the industry is placed at the eight positions in Africa in terms of penetration, adding that the deployment of huge income into expenses is unhealthy for the industry, and that urgent steps must be taken to reverse the situation.

He urged shareholders to always query the management of their firms over misuse of funds, stressing  that NAICOM has directed that all infractions should be well reported in the annual accounts of companies.