2014: Insurance operators to deepen reforms

Daniel

Insurance operators will leverage the reforms initiated last year to deepen their operations this year. Prominent among the reforms are, no premium no cover, take-off of microinsurance and takaful firms. Chuks Udo Okonta, in this report writes on how the reforms will impact the industry and roles expected from practitioners.

The insurance industry will witness a lot of activities this year that are expected to prop it to the next level. Reforms initiated last year, are considered as drivers that would take the industry out of the doldrums of underdevelopment.

Efforts to reposition the industry in recent years have really raised concern about the developments in the sector which is considered to be performing far below its potentials, judging by the enormous opportunities in the economy which have not been harnessed.
As operators gradually sail into the New Year, the public are anxiously awaiting to see, how they would leverage the ‘no premium no cover’ policy, take-off of microinsurance and takaful, conclusion of proposed merger talks, foreign partnerships and alliances, local partnerships and more to transform their operations.

NO PREMIUM NO COVER

The policy which is gradually taking root in the industry, since it took off January 1, last year, is expected to help take insurance practice to a lofty height this year. The policy has really enhanced the premium base of the industry, as operators have been counting their gains and smiling to banks.
Though the policy is presently contending with the issue of compliance especially with government businesses, it is expected that such challenge and others observed in the first year of implementation will be properly managed this year. Improvement on compliance will help attract much income into the industry thereby helping operators meet the needed obligations required to keep the industry afloat.
MICROINSURANCE AND TAKAFUL

Microinsurance and takaful, are two instruments the National Insurance Commission (NAICOM) is relying to revolutionize insurance practice and align it with global practice.  The Commissioner for Insurance Fola Daniel, said the introduction of microinsurance and takaful, would help reposition insurance practice, deepen penetration and reach-out to the public at the grassroots.

He called on would be operators to leverage the opportunities provided by technology and initiatives in the banking sector to reach out to the public, stressing that without technology, it would be difficult for the operators to operate successfully.

The take-off of microinsurance is expected to unlock the over N60 billion business that has remained untapped.  

The two business lines are expected to help take insurance to the unreached and underserved in the economy and mitigate their risk for the benefit of the economy.

Before the close of last year, it was learnt that some operators have commenced the process of obtaining the license to enable them tap the enormous resources at the grassroots.

FOREIGN PARTNSHIPS/ALLIANCES

The nation’s insurance industry has become a beautiful bride to many foreign suitors. With the coming of Old Mutual, Sanlam Emerging Markets of South Africa and others, more investors are likely to join the race to have a stake in the industry.

One of the firms already exploring the industry is South African company Liberty Holdings.

The firm has deplored its top executive to Nigeria, with a mandate to explore the insurance market and possibly establish partnership with a local insurer.
Its former property executive, Samuel Ogbu, who was giving the assignment, was tasked with building relationships with stakeholders and understanding the regulatory operating environment.

MERGER AND ACQUISITION

Some merger and acquisition talks that began last year may be consummated this year. This is expected to give birth to new firms and expand the frontier of the industry.

Cornerstone Insurance Plc is one of the firms contemplating a merger proposal with Fin Insurance. It is expected that the merger would help put the two firms which are presently ranked among the third category status, into the league of big firms.

The move by FBN Life Assurance Limited, owned jointly by FBN Holdings of Nigeria and Sanlam of South Africa, to become a composite firm with its planned acquisition of Oasis Insurance plc, a general business company, is another event that would impact the industry.

A source at NAICOM, who preferred not to be mentioned, described the development as a healthy one for the country’s insurance industry as the commission had long supported mergers and acquisition in the sector to boost capacity and bring expected synergy to enable the underwriting of big-ticket risks, particularly in the oil and gas

LOCAL PARTNERSHIP

The partnership between underwriters and telecommunications firms is the new trend in the industry. The love which started last year is expected to grow this year.

Those already tied together are Mansard and MTN Nigeria and First bank of Nigeria (FBN) Life and Airtel Nigeria.

The partnership is gradually taking insurance to the public, as the telcos, are in recent times bombarding their subscribers with text messages on the need to insure.

The first insurance claim on the MTN Y’ello Cover service has been lodged and settled.

The claim was made by Mrs. Abimbola Olufunke Ogunyemi, a subscriber of MTN Y’ello Cover, who, on November 7, 2013, had a minor accident while trying to open a corked wine, the statement hinted.

According to her, the pressure she exerted on the cork caused a snap in her right wrist, making it impossible for her to use the wrist for a couple of days.

She later visited a hospital, where the doctor diagnosed “ganglion,” which came about as a result of the force applied to the wrist.

MTN, therefore, said, “Following the receipt of Ogunyemi’s claim request on November 15, 2013 and completion of necessary documentation, Mansard Insurance made her an offer which she accepted. Her claim was subsequently paid on the same day her proper account details were received on December 3, 2013.”

The telco added, “MTN Y’ello Cover is a simple and convenient way everyone on the MTN network can access an affordable life protection plan directly from their mobile phones.

“From as low as N15/day, subscribers can enjoy a N350,000 life insurance cover, which is applicable in the case of accidents resulting in permanent disability or demise.”

CONCLUSION

As things unveil in the industry, the government and public are anxiously waiting to see positive outcomes of the initiatives taken by NAICOM and the operators. It is believed that the reforms, if properly adhered to and implemented, would help take the sector to the trillion premium regime a target it longs to achieve.