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| Soladoye |
Chief Yemi Soladoye, Managing Director of RiskGurad Africa Insurance Brokers, is an insurance expert and consultant. In this interview, he says vulnerable poor people in Nigeria earning less than $5 per day also needs to be insured, while also challenging the National Insurance Commission (NAICOM) to reduce its ‘exorbitant fees’, among other issues. Chukwuma Okparaocha, brings the excerpts:
Since the launch of Takaful and Micro Insurance by NAICOM, not much has been heard of both schemes, what do you think is responsible for this?
Basically, I will say, I don’t know. Like I have said earlier on the Market Development and Restructuring Initiatives (MDRI) initiative, what you have with you is a beautiful strategy document to say this is what you should do. But having a strategy document is not the same thing as implementing it. That is why I said I would not know. Talking about micro insurance and Takaful, we and our foreign consultant concluded our strategic work precisely two years ago, August 2012, and that is where our own assignment ended, unless we are invited to implement it. If you have the strategic document from the consultant that has spelt out the starting point and end point, it is now left for the owner of the project to implement it, and if they ask you to come and implement, then they must provide the requirements at the implementation stage.
With the implementation, can the target be realised?
Why not? In fact, with the implementation, the target will be exceeded. Because an experienced consultant will not be too optimistic about the end stage, we want them to be pleasantly surprised. Of course the strategy will be exceeded, part of what you should understand is that during the strategy craft, we realised that some of the data and information we used were not ours, and the National Bureau of Statistics (NBS) in 2011 revealed that there were 112 million poor people in Nigeria. Another organisation came up to say the population of poor people in Nigeria was equal to the entire population of seven other countries in West Africa. So we based our projection on available statistics within the market. We divided the 112 million poor people indicated by NBS to commercially viable poor people and the vulnerable poor people. The commercially poor people are those earning between $4 and $2 a day. The vulnerable are those earning below $2 a day who must even satisfy the physiological need of food, shelter and clothing before they can talk about security, because insurance is part of security. We did all these, so why won’t it be realised?
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Probably the strategic documents you presented are not implementable, because NAICOM seems to be enthusiastic about it?
Where did you see enthusiasm in NAICOM from the outset, is it because the commission says much about it, but where is action? You can be enthusiastic about buying a Jeep, but do you have the money to buy it? We went to Calabar where NAICOM asked me to present the strategy on Micro Insurance (which was done), and since then, there has never been any indication that the strategy presented is not implementable? So what really do you mean then by "not implementable"? We are talking about insurance, we are talking about the population of Nigeria, we realised that for success to be made on Micro Insurance, it must be categorised it into five stages; National, Regional, State, Local Government and Units, and this we did. But NAICOM has developed guideline for National only, and yet is asking people to bring N350million. I have always wanted to make my position known.
What is your perception of insurance industry performance in the last six months and what should be the expectation by the end of year 2014?
In the last six months, I have seen a lot of enthusiasm from the operators on the side of retail insurance and even Micro Insurance. Also I have seen that we are facing some challenges. In my interactions with them, I have seen that they need encouragement from NAICOM for them to do well. In many jurisdictions, when a new market is being introduced, the regulator comes to support the operators. And I will say that NAICOM support is required in about certain key areas: we need insurance agents to play very well in the retail market. At least, right inside MDRI, the fee being charged by CIIN and NAICOM to register an agent is too exorbitant. If NAICOM wants to develop the market, it must also separate market development from a day to day supervision.
Recently, some insurance companies are using Telecommunication (Telcos) outfit as a platform to sell life products, this doesn’t go down well with some operators who envisage loss of life product to telecoms outfit just like pension, workmen compensation, etc, what is your take on this?
Nigerian Insurance industry should be very grateful to those operators who have gone to that level to collaborate with the Telcos. Using Telcos is one of the 20 distribution channels for insurance, especially, micro insurance. This is why they are not growing, because all these years, we have restricted ourselves, mainly to one channel - insurance brokers. Telecommunication are not underwriting companies, they report their incomes based on what you and I pay them for recharge cards. Insurers can even adopt a platform like NAICO (National Insurance Correspondents) organisation to sell insurance. To me, it is a very beautiful development. There is one problem in our industry – our first reaction to anything that is new is to try shut it down; we don’t care whether it will work or not, or whether it will be for our benefit or not. Now everyone is grateful to NAICOM for the "No Premium No Cover" policy, but the initial response was hostility.
NAICOM was able to help insuring public recover over N2.2 billion claims form different insurance firms in 2013 and over N175 million in the first half of 2014, does that mean that there are still companies that will want to deny genuine claims in spite of NAICOM’s warnings and threats against such acts?
I think it is a very bad development, in the first place, claims ratio in the market is always 25 per cent of the premium, if with that percentage, and people’s genuine claims will again be delayed or denied until they are dragged to the regulator in Abuja, then it is a very sad situation. But this sad situation has continued to be prevalent.
But NAICOM itself is just tackling the effect, whereas, it should tackle the source. Part of the major problem is the high expense ratio of the market; NAICOM should look into the cost structure of the operators. It is true that cost of doing business in Nigeria is high, at the same time in some cases it accounts for about 47 per cent management expenses, and that is why NAICOM came with payment of rebate and payment of ledger commission. Also, part of the solution is specialisation. For instance, those who want to specialise in brokers market should be allowed to just face this area and subsequently, they will know how to arrange their cost structure in such a way that it will be profitable to everybody.
Is it true that the industry is over regulated as insinuated by some operators?
Unless NAICOM is doing something outside its law or outside the activities that are necessary and incidental to its power, that is when I will say the industry is over regulated, but at the same time, I will say yes in a sense. The reason why I will say yes now is the point I have been making. All that they are telling you indirectly is that, ‘we see more of stick than carrot from our regulator.’ So, it is not really about over regulation, it is about finding a balance to issues that would bring market development. For example, for eight years, the Central Bank of Nigeria (CBN) has been organising annual international micro insurance conference. As you know, the Federal Government, through the efforts of CBN is putting N220 billion into Micro Small and Medium Enterprises, this fund will be passed through Micro Finance Bank, who will not like to be regulated (in such a situation)?
Source: Nigeria Tribune
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