Nigerie:FG increases efforts to grow insurance premium to N1 trillion

  • 10 September 2020 / News / 145 / ABI 1


Nigerie:FG increases efforts to grow insurance premium to N1 trillion

Nigeria’s insururance industry is going through a transformation with the National Insurance Commission (NAICOM), and major players strategizing to take prime positions for growth. The Commissioner for Insurance, Sunday Thomas, in this interview with BANKOLE ORIMISAN, speaks on how the industry is planning to attain N1 trillion premium income benchmark in the next two years, and plans to acquire greater capacity.

You took over as Acting Commissioner for Insurance in August 2019, before you were formerly confirmed as substantive Commissioner. During this period, you moved fast with getting activities started. Can you give us an idea of some of these activities and what you hoped to achieve with them?
We are far behind schedule, so we are doing a catch up. Some of the things we ought to do have been on the drawing board and we need to bring them down for full implementation. I wouldn’t consider it as being fast though, we are just trying as much as possible to keep up with the strategic document in the sense that we have set for ourselves what we want to accomplish this year. And if we don’t start early, it will be a challenge to the realisation of the N1trillion premium income benchmark in the next two years.

The environment is changing and very frequently. What you can do today, you don’t have to defer till tomorrow. Why can’t we do things that we have all it takes to do now? Of course, I took over in acting capacity last year, and since then we just continued from where my predecessors stopped. We try to conclude those things that have been in the works, and we are also looking at ways to see how we can put them into reality.

The potential of the insurance sector is huge. We have found ourselves where we are today not by reason of inaction by my predecessors, but probably the environment was not too conducive to get certain things done.

The environment changes from time to time, so we are presently leveraging a fairly good environment to see how fast we can run. This is why it seems as if we are running so fast; although the Covid-19 pandemic has since slowed us down, we are trying to do everything in our capacity to forge ahead.

Micro-insurance is a key area the Commission has identified for growth. But progress in this area seems very slow because it has been in the works since 2010. Till date, there are only three registered micro-insurance companies. Why is this so?
It is one of the areas we want to fast track the process. We have a couple of applications that we should be able to conclude soon. One thing is for you to initiate something; another is for others to see the viability of the vision. We have this, but people seem to be catching up with us in terms of our vision and their understanding of this vision.

For us, micro-insurance in financial inclusion generally is the way to go. Financial inclusion is going to help us, and it is going to drive penetration. I believe that with the way we are going about it, things will get better. We are trying to rejig the entire guideline to be more realistic. What we had before in the guideline issued about six years ago was the national, state and the unit licensing of micro-insurance companies. The amount of capital required for this with respect to some of the sectors is looking unrealistic, and we may have to tinker with it.

So, are you considering reducing the amount?
No, it can’t get lower because if you look at the unit, which requires N40 million or thereabout, what can it do when you want to establish a sustainable company. But it looked adequate as at the time it was conceptualised, but obviously it is no longer adequate. The exchange rate was about N160 to a dollar and now it is N380 to a dollar.

This does not seem good to drive the business from a sustainable basis. So we are looking at it. So far, we have two that are states and one that has a national outlook, which is Consolidated Hallmark. Already, the company has an insurance culture. The national company is required to operate with N600 million and of course, it will not be adequate. We still believe that we need to do much more in micro-insurance and financial inclusion in general, for us to get the desired penetration. We know that only 1.5 million Nigerians have one form of insurance cover or the other.

Have the figures changed much?
Certainly, the figure have changed, but not as substantial, as it should be. With little enforcement that is being done on motor insurance for example, many are coming into the net. Of course, we need to do much more than we have ever done before because the number has changed significantly. You will recollect that in the last three years or so, we have been hovering around N350 billion to N400 billion premium. I believe that in the next two years, we must make a remarkable change. If we cannot hit a trillion in the next two years; we should reach half a trillion. We must hit a 50 per cent increase over what it is now. In which case, we should be talking of N700 billion instead of still dancing around N400 billion, which is not progress. That is not my vision. Actually, we should be in the realm of a trillion naira in the two years.

Insurance regulators and stakeholders identified mobile telephony transactions as a growth booster, but this is being delayed in Nigeria due to prolonged discussions between industry regulators. How far has NAICOM gone with this?
We are close to it. The Central Bank of Nigeria (CBN), the Nigerian Communication Commissions (NCC), and NAICOM have been meeting. Essentially, CBN and NCC, and of course occasionally, NAICOM is brought into the discussion.

They are close to resolving this matter. I must also sound a note of warning that technology will not automatically translate to efficient service delivery in the sense that financial inclusion requires attending to the needs of the lower end of the pyramid. But how many people are actually transacting business using technology?
Majority of them still try to go to banks. In which case, brick and mortar is still very relevant. Even as popular as banking is, you still find banks opening branches around despite being technologically-driven. This is not to talk of a sector that is doing catch-up in terms of trust. Will somebody in my village buy insurance using technology when he doesn’t know who he’s talking to, or where his money is going to, and what value will they deliver in his hand? So, it’s going to be difficult, but as a distribution methodology I’ll go for technology. You can use it to distribute to those who already have knowledge of the products.

What are the mechanisms for sustenance?
First and foremost, we must have our offices in the places we want to visit. Secondly, relevant committees will be set up in the states. Three, there is a role unit that will monitor the performance in the state. With this of course, the mechanism of the state will be fully deployed for enforcement, and we believe that is going to make a difference.

But some observers think the Commission has not been able to enforce these?
Well, when I hear this statement, I respond by saying that we must do this in a way that will still identify the fact that there is a difference between regulation and the job of the law enforcement agencies.


source: guardian.ng

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