By BISI OLADAPO
For Olushola Lasisi, an insurance analyst, the first half of this year can be described as a mixed grill for the insurance industry. “Even though the industry survived the trauma of recapitalization, the little successes achieved was overshadowed by pockets of failures”, he says.
The usual influx of renewals that often greeted the beginning of an insurance year was clearly absent last January. Instead most insurance companies had to grapple with the problem of raising sufficient capital to meet up with the deadline given by National Insurance Commission, NAICOM, the regulatory authority.
At expiration on February 28, 2007, the coast became clear. While a large number of companies have succeeded in qualifying for NAICOM’s validation, other’s fate still hang in the balance as investigations are still on concerning their capital base. However, as at the last count, out of 103 insurance and four reinsurance companies prior to the exercise, only 26 emerged to underwrite life business, 43 for general business and two reinsurance companies.
Besides, the conduct of the exercise has been said to be fraught with irregularities, throwing up new challenges in the process. Oye Hassan-Odukale, managing director, Leadway Assurance, told the magazine that “the challenges resulted in positive consolidation activities within the industry which now boasts of virile and stronger components”. But Henry Obasi, an insurance analyst, does not agree with him. “The exercise was not thoroughly done, so how can you describe it as being successful and resulting to positive changes?” Obasi queried.
However, as a result of the exercise, many workers suffered. While some were retained and elevated, the unfortunate ones lost their jobs to merger and acquisition processes. Again, for the first time in the history of the industry, insurance companies embarked on aggressive marketing. As part of the competition thrown up, many operators resorted to reputation management and re-branding like change of names, logos, vision and mission statements, thereby creating a new face for an erstwhile uninspiring industry.
On the flip side, investigations by the magazine reveal that insurance underwriters are groaning under insufficiency of funds to undertake their businesses. Many of the companies are still holding a deep-seated grudge against NAICOM for what they described as unnecessary “holding up” of their paid up capital still in the vault of Central Bank of Nigeria, CBN, five months after the exercise. About N50 billion deposited by the companies as part of NAICOM’s requirement for recapitalization, which should have been released to the operators two weeks after completion of the exercise, is still hanging. Although, Mohammadu Husainni, the acting commissioner for insurance, during his short tenure in office had ordered the release of the funds to the underwriting companies, this was not done as the Ministry of Finance was said to have issued a counter-order that the status quo be maintained in respect of the funds till further notice.
For brokers or intermediaries, it was a half-year of struggle for survival. They had to contend with the initial fear of a likely increase in their capital base, even when they had vehemently resisted the attempt in the past on the ground that there was no basis for such.
However, subtle moves are being made within Nigeria Council of Registered Insurance Brokers, NCRIB, the umbrella body of brokers, to gradually build up their capital and indemnity policy covers in case of unavoidable circumstances.
In order to also play big in the market, brokers are expanding their horizon to function in strategic areas of the economy, especially in the oil and gas sector. An oil and gas consortium was put in place recently by NCRIB to enhance the human capital of the practitioners to be able to meet the unfolding challenges in the industry.
Unlike last year, the relationship between NAICOM, and NCRIB has been quite harmonious this year. The two bodies recently fine-tuned the areas of disagreement in the registration and licensing of brokers which has been a lingering bone of contention between them. To put paid to past misgivings, Babajide Olatunde-Agbeja, president of presentation of NCRIB, was a special guest at the presentation ceremony of registration certificates to 25 workers held by NAIOCM last month.
As for the educational arm of the industry, the Chartered Insurance Institute of Nigeria, CIIN, there was an apparent extension of a hand of fellowship to other professional bodies in the financial service industry.
In June, for instance, a tripartite conference was held by the Institute of Chartered Bankers of Nigeria, ICBN; and CIIN in Lagos to harmonize areas of common interest. This “Synergy may later metamorphose into an amalgam of the various sub-sectors of the financial services sector in the country as obtainable in United Kingdom”, says Emmanuel Mayowa, an insurance analyst.
Unfortunately, while other arms of the industry had a seemingly peaceful half-year, it has nothing but turbulence for NAICOM, the apex regulatory body of the industry, with the sack of Emmanuel Chukwulozie, the commissioner for insurance. He was removed from office by the federal government for his alleged mismanagement of the just concluded recapitalization exercise.
On the international scene, Prisca Soares, former managing director, NICON Insurance, became the first Nigerian to be elected secretary-general of the African Insurance organization, AIO. She is also the first woman to serve in that capacity in the annals of the organization.
With half of the year lost to recapitalization, the operators appear to be settling down to make the best use of the second half of the year with only four months to go. For the industry to make good returns on investments and extend same to shareholders, Justus Uranta, managing director, Niger Insurance, says “there is need for the level of consciousness to be increased to enhance public patronage of products”. He expressed high hopes that the industry will have improved performance by the end of the year in spite of all its challenges.