AN ADDRESS BY DR. NGOZI OKONJO-IWEALA, THE COORDINATING MINISTER OF THE ECONOMY AND MINISTER OF FINANCE AT THE NCRIB 2014 NATIONAL INSURANCE CONFERENCE HELD IN ABUJA ON 22NDOCTOBER 2014.
Protocol
I am delighted to be with you today on the occasion of your 2014 National Insurance Conference. I am quite sure that a good list of topics is lined up for discussion at this conference and reputable resource persons are on hand to do justice to them. However, I crave your indulgence to say one or two things on the theme of this conference.
With growing incidences of disasters across the country and their impact of loss on human and material assets, the theme: Disaster Management: Any Role for Insurance and sub-theme; Insurance Regulation: The Global Trend, is very apt.
The primary role of insurance is to restore the policyholder back to business whenever the risk insured crystallises. In fact, insurance is the confidence entrepreneurs need to embark on any significant venture. Natural catastrophes affect all sectors of business, both directly and indirectly. Disasters can cause operational and supply chain disruptions through the physical damage to property and/or loss of critical resources and infrastructure, which can cripple an entire operation.
Yet, there is this erroneous belief by some entrepreneurs that perceive insurance as a cost. This, indeed, is an error. In reality, insurance is probably on of the biggest value additions to any business. We have experienced devastating events such as natural disasters without any prior warning. Insurance is the only effective mechanism to minimise the loss caused by these unforeseen events, which in some instances can mean saving an entity from having to close shop.
There had been incidences in the country of fire disasters, collapsed buildings, flooding and storms and fatal accidents. Without insurance cover foe these losses, individual is immediately reduced to poverty while victims are left without compensations. The recent flood disasters in the country washed off so many homes and businesses including fish ponds. From available records, the insurance industry was on hand to restore businesses that were insured with them, particularly farmland and produce that were washed off by the flood. So to answer the question posed in the theme whether insurance has a role to play in disaster management, my answer would be emphatically yes!
It is noteworthy that you would spend time to discuss Insurance Regulation. The impression one gets is that insurance operators, intermediaries and underwriters abhor regulation. I’ve seen commentaries in the media of recent, of complaints from operators, of excessive regulation. I’ve seen and read about sections of your profession advocating and soliciting to regulate themselves. I’m glad that you would be discussing the global perspective of this subject in details and it is hoped that international best practice only and not self-interest would predominate in your discussions.
From understanding of regulation, especially that of financial services, the essence regulation is to do with the protection of multiple interests, sometimes against themselves. In insurance regulation, these interest could be that of the consumers (policyholders), Intermediary, Insurance Company and itsshareholders, its Board of Directors and Management. It could also be of the Government or members of the general public.
Conflicts between these parties are common place in modern business; therefore regulation becomes imperative to protect management from the excesses of Companies Directors, the Management and Directors against infringing the interest of Shareholders and Policyholders or the exuberant Insurance Broker against the interest of the Insurance Company or vice versa.
Given the above sample scenarios, definitely regulation is beyond the registration or management of a club membership. Clubs arevoluntarily set for the protection of some interest and the promotion of some benefits and where the two mix, conflicts arises. Regulation should be the coming together of some responsible structure that cater for all and more, of the interest listed above, especially that of responsible governance and of the public image at large.
I should not finish this address without admonishing you on the need to join hands with the Federal Government’s quest to ensure Financial Inclusion in all spheres of our community. This task will entail conducting yourselves in a manner that would help deepen insurance which arguably is the weakest in the chain of financial services.
We cannot add value to this noble objective with a decimated insurance industry, no matter the personal urge to satisfy private ends. I would therefore enjoin you all to avoid any journey in self-destruction, no matter the temporal benefit that may be perceived as attainable. This industry is growing at a pace not as fast as we desired but there has been remarkable improvement over the last five years, where the industry was ranked number five in Africa. Today, we are number three, trailing behind South Africa and morocco. Our economy is the largest in Africa, thus we have the potential to be thelargest insurance industry in the continent sooner than later. We can only achieve this by remaining cohesive and focused.
It is the exception of the Federal Government that the insurance industry will propel economic growth. We shall therefore continue to support the National Insurance Commission’s on-going efforts toinstil market discipline and international best practice.
It is my hope that by the end of this conference you would come out with responsible and dispassionate resolutions that would help move the Nigerian Insurance Industry to the right place it deserves.
While wishing you successful deliberations, it is my pleasure and honour to declare this conference open.
Thank you and God bless.
DR. NGOZI OKONJO-IWEALA
and Minister of Finance At the NCRIB 2014 National Conference in Abuja
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