Experts call for review of investment channels in Insurance Act

Commissioner for Insurance, Fola Daniel

Some capital market operators on Thursday called for the review of investment channels in the insurance industry as contained in the Insurance Act 2003 to revive the sector.

According to them the review was necessary to win the confidence of majority of Nigerians to the sector.

They said that the people’s apathy to insurance products was responsible for its poor performance on the Nigerian Stock Exchange (NSE) and economic development.

Adebayo Adeleke, National Secretary, Independent Shareholders Association of Nigeria (ISAN), said the 2003 Act should be reviewed to accommodate investment in other sectors.

Adeleke said that the concentration of the sector on money and capital markets instruments would retard its growth.

According to him, voluntary mergers and acquisitions with incentives should be encouraged for insurance companies to transact into big businesses.

He said that the industry had yet to take its pride of place as an engine room for development and capital formation due to lack of trust.

"The directors and shareholders should scrutinise expenses to control excesses of managerial capitalists who are feeding fat at the expense of seed providers.

"There remains a pervasive negative impression about the industry. It bothers on trust. Captains of the industry are not ready to roll up their sleeves and penetrate the mass market.

"So, insurance remains very elitist,’’ Adeleke said

He stated that the poor operational results, occasioned by bloated expenses and non-payment of dividends contributed to dismal performance of the stocks on NSE.

Mazi Okechukwu Unegbu, a former President, Chartered Institute of Bankers of Nigeria (CIBN), said that National Insurance Commission (NAICOM) should introduce stiffer sanctions for illegal operators to create sanity in the industry.

Unegbu said that operators in the industry should come together and review their code of conduct to ensure integrity and transparency.

"The insurance industry has failed to contribute its quota to economic growth and development due to investors’ apathy to insurance products due to non-payment of claims by some firms.

"Investors will continue to shun insurance stocks on the NSE if erring and illegal operators are not sanctioned," he said.

Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said that many insurance companies on the NSE had yet to improve after the financial meltdown.

Kurfi said that there was need for many of the firms to merge instead of groaning under heavy debts.

He said that stakeholders in the industry should address the negative public perception and lack of mass participation in insurance products.

Source: Buisnessday