Managing Director, LASACO Assurance Plc, Mr Olusola Ladipo-Ajayi shares with ADEMOLA ADEGBAMIGBE, FUNSHO BALOGUN AND HENRY OJELU his expectations from President Muhammadu Buhari administration
What policy direction would you want this new government to pursue?
Well, so far as insurance is concerned, the Goodluck Jonathan administration allowed some positive direction to continue which started during the time of President Obasanjo. The local content policy actually helped the growth of the Nigerian Insurance industry especially in the Oil and Gas sector. We haven’t gotten it right but we have started. And then we have the national insurance commission which started the market development and restructuring initiative by harnessing all the insurances.
At the risk of kicking somebody who is down in terms of Goodluck Jonathan administration, there are lapses that were so apparent especially the administration of compulsory insurances, the group life scheme by the head of service. We also had too many problems that could have been avoided. Many of the policies were not allowed to sail smoothly. Lagos State Government has same policies with the federal government and it is running very smoothly without any of the avoidable problems that we see at the federal level.
I think the new government will do well to look into those areas. They are trying to encourage insurance and they have brought the no premium, no cover policy which has been very successful. I think the national insurance commission deserves kudos in terms of what they have done in the last four years to develop the insurance industry. I will just admonish this government to continue to help efforts in the development of the sector. It is not just the insurance sector that is losing from an underdeveloped insurance but the entire nation. Insurance is the best form of risk transfer mechanism known to man. It is also one of the biggest institutional investors in the economy. That is why we are part of the financial system because of the intermediation role that we play. We represent most sectors of the economy. Whereas the industry and commerce are the deficit sector. There are the ones that need money to do plans. They have the ideas but they don’t have the money. We have the money but we don’t have the ideas. So the banks will now do the intermediation by bringing the surplus and the deficit sector together. If the surplus sector is not effective, then the deficit sector will suffer. We have problems of premium collection before but that one has been solved. So insurance companies have funds which we don’t need immediately. So we have some disposable incomes which the banks can make use of.
•Olusola Ladipo-Ajayi
But government still has to drive insurance. In some commercial transactions involving big companies, they will ask for some of these things. They will want to see the group life cover of your staff, they want to see that the goods that you are carrying has cover; if you are going to be carrying their goods, they want to see that your vehicle is insured; they want to see the compliances as it relates to everything generally. And then whatever aspect of insurance you do not have, they want to see you comply with them.
Of course on the part of government, they are trying to enforce a lot of discipline to make the industry accountable to the society. It is good and a welcome development and the new government must continue in this direction. If one insurance company does something bad, it is every insurance company. People will say, oh! That is how insurance companies behave. But if one insurance company does something good, that company alone will take credit. People will say, Oh! It is an exception. Insurance companies don’t behave like that.
We that are in the industry, we don’t like anything that will tarnish our image. That is why we have established our own customer complaint bureau which runs parallel to that of NIACOM. This is to encourage our people to do their best.
Government should give insurance more boost. Insurance of import for instance is not being properly enforced. There was a bill before the National Assembly in this regard but I don’t know if it has been passed. The bill seeks to give the Customs Service the power to inspect insurance cover for import just the way the Road Safety Corp would inspect motor vehicle license.
I was part of the committee that was drawing up compulsory insurances like insurance for public buildings. Most compulsory insurances are just there in the statute books. They are just not being implemented or enforced the way it should.
Another area that I would like the new government to look into is to get the relevant agencies to do their jobs without duplicating them. If people can get to know the benefit of insurance, they will realize that it is inevitable. I am sure you knew the benefit of insurance when part of your company building got burnt. If there was no insurance, people will come and give pittance to you but when you are insured, you don’t need that. As a very vibrant median that your company is, it must be economically independent to be able to fulfill its duties. This comes by having your building under cover.
What are the insurance companies doing to make more people have confidence in the insurance sector?
I have come to know a lot of factors. One is the absence of credit. In an advanced country, you buy a television with your credit card and pay gradually. In this case, you will be forced to insure. If you do a car hire purchase, nobody will embark on that without compulsory insurance. If you have access to credit, the creditor will not allow you to go without insuring. If you have credit to buy a house, the mortgage firm will not allow you to go unless you insure. Compulsorily in their system, you see insurance at work. But here people will be asking you, if I insure my car for five years and nothing happens, what happens to my premium? The simple truth is that your premium is gone. I went to make a presentation to the Lagos State Council and one of the council members asked me, “We have been insuring in the past years and nothing has happened. What happens to our premium?
I simply told him that their premium was 25 per cent. That means to pay the full value of your asset, you have to pay the premium for 400 years. If you employ a guard and thieves don’t come, will you not pay him? Will you ask him to refund because thieves did not come?
Secondly, we have customary insurance. When you driving a Toyota Yaris and I am driving Okada. If I bash your car from behind, everybody will expect you to forgive me even though I was stupid. If you disagree, you become the villain. You will see people abusing you. This is a sort of insurance where the well off will insure the underprivileged.
If my car is stolen and there is no insurance and you are my friend, I will simply appeal to you to find me some money to replace the car. I will also appeal to many like that with the hope that they will be sympathetic enough and help me. In our cultural insurance practice, if you don’t help me with some money, then you are a bad man. If same scenario happens abroad, you are on your own. If you don’t have cover, then you are on your own.
I remember those days when Cocoa House in Ibadan got burnt and the government was calling on people to come and donate for the rebuilding. Nobody was asking the Managing Director then who was in charge of government assets why he did not insure the building. Instead they organized a fun fair fund raising and people were sending donations from everywhere.
These are the issues on the side of the society. Because you have to struggle to buy a car and build a house, by the time you finish, your pocket is already empty. And then somebody is talking about fire that will never occur in probable two three years. You will just simply say, God will take care of that. Meanwhile if you have had access to credit, or you had it with ease and you are repaying, even if you don’t want to insure, the man or organization that is giving you the credit will force you to insure. But when the case is different and somebody is telling you to insure, you won’t want to listen. Moreover, insurance does not mean that disaster or danger is imminent. It may not happen.
But that is the reason that many people go to their early graves especially old people in their old age who suffered fire loses. Most times everything they have labored for is completely burnt and they are too weak to start afresh. I know a man. The man lost his wife and not long after, his house just went on fire. Neighbors took the family in but the man refused to live the burnt house. He was living in the boys quarter among the ruins. Within a short time, he died. “ A captain does not abandon his ship”. That was what the man said before he died. But if he had had insurance, the case would have been different.
Most times, when people have financial crises, the first thing they yank off is their insurance. There was a young man working for a Chinese company here in Lagos. He was retrenched and he just came to us that he wanted the money he has paid for life insurance. That policy is supposed to work for about 20 years and he paid only one month premium. He paid only one installment out of 240! He was making so much noise that he wanted his money back.
Out of sympathy, we just gave him something because we know that if we didn’t, he would go and start bad mouthing the insurance company. The irony is that the little money we gave him, he would go and put it in the bank. Most people have more than one bank account but if you ask them how many insurance policies they have, it will be probably be a third party mortgage policy.
So that is the issue from the side of the customers. We as practitioners, we have our own problems. I am not going to hide behind one finger. I am a market leader. There is cut-throat competition in the insurance industry. So when some times claims occur and people are trying to introduce clauses that will not stand the test of time, I do not agree. Somebody told me about a policy for a goods carrying truck where they put a clause that loses occurring after the hours of 7pm will not be covered. How can that be when a truck can take off from Lagos Island for Ikeja at 5pm and it will not get there till 9pm? So what the policy is saying is that at 7pm when the truck is held up in traffic on the Third Mainland bridge, the cover for that truck ceases. That is a bad policy and we are encouraging ourselves not to promote them.
Unfortunately most insurance companies due to competition are also pay claims that they don’t have to pay for. Yet people don’t appreciate it. The truth is that the more professional we are, the more we will be appreciated. We need to be a lot more professional. Insurance is not something you do and you go to church or mosque to pray that loses should not happen. Loses are naturally phenomenal. If loses don’t occur, people will not need insurance. If someone comes to insure you that you will never die, will you pay? Everybody will die so nobody is talking about insuring against not dying. What happens when you die is what we are concerned about. So if loses don’t occur, insurance will not thrive.
The way the members of the public see loses is not the way an insurance practitioner looks at loses. If one tanker explodes in Lagos, everybody sees that as a big loss whereas the the insurance practitioner will consider how many tankers plied the same route that day. We are risk calculators so we calculate to see loss expectancy. We calculate to see the effect when one tanker goes down to see the financial cost. We then plan for more tankers to contribute money to offset the cost. It could be anybody’s tanker. We have calculated, once there is fuel shortage, there will be more movement of tankers and in an attempt to make several trips, accidents occur. So we need to be more professional in order to be appreciated. Nobody ever gets appreciated for doing the wrong thing.
It goes without saying that the economy of Nigeria is in bad shape. How have you been able to keep LASACO Assurance afloat ?
LASACO Assurance has not gone under because we have done the best we could in managing the economy. We have our areas of strength. Our major clients are the Lagos State Government and the local governments. We are strong in oil and gas insurance, space insurance such as satellite and all those special risks that are denominated in dollars. We seem to have knack for them because the premium are regular. We also do a lot of public sector insurance in Abuja. We benefit from the positive insurance policy of the Lagos State Government.
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