SPEECH DELIVERED BY THE PRESIDENT OF THE NIGERIAN COUNCIL OF REGISTERED INSURANCE BROKERS, MR. AYODAPO SHODERU, FIIN, FCIB AT THE FEBRUARY 2015 EDITION OF NCRIB MEMBERS’ EVENING, HELD ON TUESDAY, FEBRUARY 17, 2015 IN LAGOS.
• Management team of Industrial and General Insurance Plc
• Distinguished members of the NCRIB Governing Board
• Our guests here present
• Gentlemen of the Press
• Ladies and Gentlemen
It is my honour and great privilege to welcome you all to the first edition of NCRIB Members’ Evening in 2015, which is being hosted by Industrial and General Insurance Plc. I like to use this medium once again to wish you all well in this year 2015. Permit me to appreciate the staunch support which I received from you, my dear colleagues in the profession, particularly last year. I must confess that your support, suggestions and encouragements were of significant help to me and my team in achieving the modest feats recorded in the first half of my tenure. Suffice it to say that the Council has continued to wax stronger against all odds and, like Oliver Twist, I will like to crave your further understanding and support to make the Council consolidate on its enviable status in the comity of other professional bodies in the country.
Permit me to note that the bi-monthly Members’ Evening has continued to be a veritable platform for interaction between insurance brokers and leading underwriters in the market. The event has also become renowned for throwing up issues that have continued to make our professional body relevant in the scheme of things in the country.
I like to commend IGI Plc for accepting to host this first edition of NCRIB Members’ Evening. I must also confess that the choice of IGI Plc at this time was deliberate and strategic. I guess, this is the first public outing of the company since the demise of its Executive Vice Chairman, Chief Remi Olowude whose footprint in the transformation of insurance industry in Nigeria remains indelible. For IGI to have accepted to host this event further underscores the fact that the company remains the most brokers’ friendly insurance company in Nigeria. Our Council proudly identifies with you even after the exit of Remi, and we are cock sure that the legacies he left behind will be protected by the new management team .
It is auspicious time for me to congratulate Mr. Rotimi Fashola on his elevation to the position of Group Managing Director. The elevation of Mr. Fashola did not come as a surprise to me, considering his pivotal roles in growing IGI to its present status coupled with his robust pedigree as a leading insurance practitioner. May the Almighty God grant you good health and divine wisdom to take IGI to greater heights.
RATE CUTTING AND CONSEQUENT LOSS OF BUSINESS BY SOME BROKERS
I am distressed to again address one of the unpleasant trends that have continually affected our operations as insurance brokers, and this is the pervasive incidence of rate cutting. You will recall that at the inception of my tenure, my team visited the Commissioner for Insurance who warned Brokers that indulged in collecting Overriding Commission from insurance companiesto desist from the act, warning that the Commission will not hesitate to sanction such unethical players. This and sundry issues we were to discuss more intensively with the Nigerian Insurers Association. It was our belief the forum should be a good platform to initiate steps towards upward review of the existing brokerage commission. Unfortunately, the meeting is yet to hold from the NIA end. It is more regrettable that the Council has continued to receive an avalanche of complaints about some ethical brokers losing businesses to those who continually cut rates or quote uneconomic rates. This trend is “killing” to the brokerage profession and must be condemned in its entirety. It is the intention of the Council to continually promote high ethical standards,seeing it as the only way the present generation of professionals could bequeath a sound and solid profession to the coming generation. Anything short of this is unacceptable. Also, I must stress that it will be most difficult for me or the Governing Board henceforth defend any member that violates the law or directive on insurance broking operation. To be fore warned is to be fore armed!
FRC COMPLIANCE
You would recall that the Council, on your behalf, had held several previous meetings with the Financial Reporting Council(FRC) on compliance with directives on International Financial Reporting Standards (IFRS), as applicable to insurance brokers. It was based on this that Brokers were given up till December 2014 to submit their accounts to the Council. The Council has again received a letter from the FRC directing that all Brokers submit their accounts 15 days from today, without fail. Permit me to advise that any member that has issues with this compliance should endeavor to liaise with our Secretariat which will in turn facilitate your assistance through IFRS Sub Committee which mandate is to help members having challenges of compliance.
ISSUES OF NATIONAL IMPORTANCE
As we are all aware, Nigeria is at another crucial junction in its existence as a nation, in view of the forth coming general elections. All over the world, elections or politics are a great determinant of national economic and political advancement. Whatever happens at the realm of polity affects all other facets of national economy, of which the insurance industry is a critical component. This is why we must do all within our means as practitioners to ensure we have a robust polity. Whilst challenging all our members to exercise their franchise by going out enmass to vote for candidates of their choice, I like to also appeal to politicians or the political actors to eschew any form of violence. In any game, there must definitely be winners and losers and those that fall on either of these two sides of the divide must be gallant losers and magnanimous winners in order to preserve the system.
I must also utilize this platform to counsel politicians to always embrace insurance, during or after electioneering periods.Recent cases of attacks within the political circles have undoubtedly left us without any other option than insurance in mitigating loss of lives and properties. It is a known fact that electioneering period is characterized by high level exposure to diverse human and material risks and this could be mitigated if the political class factor in insurance into their plans and expenditures.
DEVALUATION OF NAIRA
As professionals, the Council is concerned about the inclement economic environment which Nigeria has today found herself in view of the dwindling oil prices in the global market. It is most distressing that the price of the nation’s crude has dropped by about 40 per cent from the initial projected cost of $140 per barrel to about $62 per barrel. The implication of this is that there is a great pressure on the naira as many foreign investors will feel unsafe in our equity market making many of them to divest and take out their monies. Similarly, our foreign reserves has continued to go down given the fact that oil is the main revenue earner of government as the nation run a mono product economy. The only option that is open to the CBN in order to salvage the situation is to embark on devaluation of the naira as already being done. My take is that the entire situation will also adversely affect the insurance industry, given the fact that insurance thrives when the economy is robust. At the corporate level, there is the likelihood of a bulls run on the already fragile equities of quoted insurance companies, affecting their solvency. Also, at the level of the common man, the devalued naira will reduce the disposable income of Nigerians, further precluding them to care less about undertaking insurance.
Whilst the present challenge should make national policy makers to be more ingenious in managing the precarious economic state, the onus is also on us as practitioners to be more prudent and more resourceful in running our businesses. On the part of the political class, my take is that the time has come for Nigeria to break fast the façade of mono economy and develop other latent mineral resources that the nation presently has in abundance. We must also continually put in place strategies to promote the nation’s industrial sector so as to transform our nation from consumption-based to production-based nation.
RECENT FIRE INCIDENCES IN NIGERIA
You would recall that our nation’s news media were recently awashed with stories of fires which gutted several markets almost all over the country, leading to wanton loss of properties. The consequence of these unfortunate developments to many of the victims; most especially those without insurance cover, remains horrific. Our Council had since commiserated with the victims, especially, those affected in popular food stuff market on Ugboro Road in Edo State, Iron Rod Market, Agodi in Ibadan and Balogun markets in Lagos and in other parts of the country.
It is worthy of note that these ugly fires coupled with lack of penchant for its mitigation through insurance has continued to deplete the nations’ meagerly managed wealth as most of the victims constitute a significant chunk of entrepreneurial class, who are supposedly great contributors to the nation’s Gross Domestic Product (GDP).
We use this medium to again call on government to embark on aggressive asset protection through public enlightenment about risk prevention and control in major markets in Nigeria. Permit me to reiterate the call for compulsory insurance of all Nigerian markets and public edifices as enshrined in the legal provision under Insurance Act 2003 (section 64 and 65) of insurance of public buildings.
FELLOWS’ DAY
I am most delighted to inform you that the preparations towards the 2015 Fellows’ Day have been concluded. The Governing Board of our Council has approved the admission of 10 new members into the Society of Fellows of the Council. The successful candidates scaled the hurdle for admission as stated in Section 6 Subsection 4a of the NCRIB Act No. 21 of 2003. The new Fellows will be formally admitted on February 24, 2015 at the Sheraton Hotel and Suites, Ikeja, Lagos on Tuesday, February 24, 2015. Time is 5:00pm prompt. We have been highly honoured to have the consent of the Pro Chancellor of the Pan Atlantic University, Dr. Christopher Kolade to deliver the induction lecture entitled “Leading: Heart before the Hand”. Please note that admission is strictly for Fellows.
INTERNATIONAL TRIP
I am most delighted to inform you that the Council is already putting finishing touches to the 2015 International Business Trip to Malta. The choice of Malta for this trip is informed by the ever increasing number of foreign players registering as insurance licensees in that economy. Malta’s development as a reputable financial services centre has been further enhanced by her membership of the European Union. Record shows that in competitive index (2011-2012), Malta ranked 15th out of 143 world economies surveyed in the financial market development sub-index. I assure you that we have made wide consultation to ensure that this years’ trip is worth the while and devoid of any itch. Registration has commenced and it will close on Friday, February 27, 2015. Please note that there are limited spaces available for interested participants. In case you have not been formally advised, please endeavor to visit the Secretariat for more information on the trip.
CONCLUSION
Once again, I thank you all for your esteemed attendance and appreciate IGI Management for hosting this event.
Wishing you all a delightful Evening.
AYODAPO A. SHODERU, FIIN, FCIB
President/Chairman, Governing Board
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