Fola Daniel, the new commissioner for insurance, is indeed a seasoned industry operator and administrator. He is an associate of the Chartered Insurance Institute of London; fellow of the Chartered Insurance Institute, London; fellow, Chartered Insurance Institute of Nigeria; as well as Fellow of the British Institute of Management.
Before his new appointment, Daniel was the managing director of Globe Reinsurance from August 2004 to February 2007 when the company finally merged with the Nigeria Reinsurance Corporation (Nigeria-Re) at the tail end of the recapitalization exercise.
He started his career with Great Nigeria Insurance where he rose to become area manager, North, Daniel also held the position of head of technical division before his appointment as executive director, operations; and later managing director of the federal government-owned Nigerian Agricultural Insurance Corporation in 1994.
He was at various times visiting lecturer and member of the Academic Board, Postgraduate College of Insurance, Banjul, the Gambia. In this interview with Bisi Oladapo, assistant editor, he bares his mind on how to grow NAICOM as well as the insurance industry in general. Excerpts:
What is your assessment of the level of insurance is Nigeria?
The Nigerian insurance ideally should be an environment that is booming and exciting because of its population. Here, we have a huge population of over 140 million. Unfortunately, insurance awareness is very low and at an unacceptable level. Principally, because of inadequate education. More than half of Nigeria’s population is not properly educated. People are of the view, generally, that insurance operators do not pay claims. When you ask majority of these people, “Have you insured”? The example they give is third party, saying something like, “when my brother’s wife insured a vehicle three years ago, she suffered so and so, but in most cases they have never had anything to do with insurance themselves. Another reason is the kind of employment that the population is engaged in. if you take South Africa, for example, most people are employed in the formal sector and mining sector, among others. Their employment drives insurance. They take insurance policies like workmen compensation, group personal accident, health insurance and pension scheme. Most workers in South Africa have at least one form of voluntary or compulsory insurance. But in the Nigerian populace, those that are employed in the formal sector earn very small incomes. When you hear about the huge number of government employees, they do not constitute up to five per cent of the populace.
What should be done to eradicate these problems?
With the enhanced capital, insurance companies now have a lot of funds at their disposal to make themselves information technology, IT-driven, provide better service delivery and prompt claims processing. Insurance policies will be faster because we expect that a large chunk of this money that has been brought in as capital will be deployed to IT processing, high-skilled labor, the training of existing staff, and so on. The insurance industry will be able to employ the best brains. They should be able to go to the bank to poach good hands, and pay them well. Insurance is no longer for mediocre practitioners.
Why is it important to recapitalize the industry?
The recapitalization exercise was not done on paper alone. It is an event that will lead to increased insurance awareness and high patronage. If people have invested so much they expect good returns, because it is important that investors have the benefit of their investment. Of course, there are opportunities here and there. The oil and gas business we were doing before now was just one per cent and, in fact, if properly analyzed, 90 per cent of that one per cent was being transferred outside the country. So with this new capital at our disposal, we should be able to operate in a greater way in the oil and gas sector. I am also aware that before now multinationals preferred taking their insurance overseas. With the kind of capital we now have, we believe it will engender greater confidence of the insuring public particularly the industrial sector, which is the bulk of insuring interest and premium.
Last month, the technical committee invited some insurance companies found to have a shortfall in their recapitalization. Is it part of the power invested on the committee to do this?
There were 71 companies given licenses and they were supposed to have met the criteria of license. They were only asked to regularize. The committee is not a final authority. These are the companies they found to have deficit.
When will insurance fund kept in the escrow account with Central Bank of Nigeria be released to the operators?
If the technical committee instituted to re-verify insurance companies submits its report today, we will set in motion the process of collecting their money deposited in the escrow account from Central BANK OF Nigeria, CBN. As we are submitting the report, our letter will go to CBN with the approval of the minister of finance. Within 24 hours of submission we will begin to release the money. This is our priority because it is investors’ money. If people invested so much they expect good returns. So the money will be released to insurance companies soonest so that they can use it for their operations.
Why were the companies that did not make the recertification list of the last recapitalization exercise not announced?
I think what was done then was to give publicity to the 71 companies that recapitalized. There were 107 insurance companies before the exercise so it means those that were not mentioned did not recapitalize. When we release the technical committee’s report, we will mention those that are licensed to do business as well as those that did not recapitalize so that members of the public are not duped or led to believe that companies that are not mentioned also recapitalized.
After recapitalization, what kind of insurance industry should we expect in the next few months?
The new companies that we are going to deliver to the industry will be those that are well capitalized, efficiently run and responsive to their contractual obligations as at when due. A revolution has taken place in the insurance industry. I mean, we have moved from the pedestal of N350 million capital base to N5 billion. So it is quite revolutionary. Only professionals will remain at the end of the day.
What is your advice to investors and policy holders in view of the ongoing crisis in the industry?
Well, I don’t think there is crisis. There were observed lapses in the last recapitalization exercise. Insurance investors and policyholders must know that insurance is fast becoming a good investment. You can see that insurance stocks are appreciating quite reasonably on the stock market. The insurance industry is going to be strong in this country.
What is the future of insurance in Nigeria?
Very bright. With the industrial base expanding, the economy improving, more people are being employed and, of course, the Pension Act that government introduced three years ago, all these will deepen the penetration of group life insurance.
Why are the insurance companies not involved in rural insurance?
Insurance as far as Nigeria is concerned is urban-based.
Why?
Those who are likely to buy insurance products are not rural dwellers. They are in the urban centres. They work in factories, they work in the ministries. But this is fast changing. The economy of Nigeria is improving, so dramatically that you know find a lot of insurable assets even in the rural areas. Ten years ago, in primary or secondary schools in the rural areas, you would find a bicycle parked beside the tree belonging to the principal or headmaster. But in the last five years, a lot of our teachers dwelling in the rural areas are now buying cars, some of them are buying two cars, one for themselves, another for their wives, and they want to protect these properties.
How can insurance be made more attractive to increase its patronage?
We can’t deepen insurance penetration by rendering efficient and effective services to the consumers of insurance products. By also living up to our expectations in terms of prompt claims settlement, early settlement of claims will make those who are not aware of insurance to know its importance.
What is your agenda for the industry as its new helmsman?
My agenda is to preside over an insurance industry that is vibrant, that positively contributes more to the gross domestic product, GDP, of Nigeria. If you look at the contribution of the industry to the nation’s GDP, it is very minute, as low as 0.1 per cent. We will do our best to grow the insurance industry to create more awareness to make more and more people buy insurance policies.
What are your plans for certain sections of the Insurance Act 2003 not yet implemented?
Their implementation borders on awareness. A lot of government organizations are not even aware that they must insure. So, we are going to increase awareness through workshops, seminars and so on. But remember that the insurance of public buildings is not limited to the government buildings alone but every building that is a public place.
How does National Insurance Commission, NAICOM, intend to strengthen supervision of insurance business in Nigeria?
One of our priorities is to be thoroughly IT-driven. We want to network with all insurance companies so that we can have information at the tip of our fingers. We will be able to tell when a claim is reported, how long it takes to be settled and so on. This will deepen the confidence of the insuring public. Right now, we have complaints about unsettled claims and malpractices by insurance companies, among other things. All there will be a thing of the past.
What kind of turnaround for NAICOM should we expect?
NAICOM will need to undergo structural changes. It needs to have enhanced personnel, trained manpower, people who can work with minimal supervision within the framework that is laid down. There are fundamental issues that need to be addressed in the industry. The issue of discipline, prompt claim settlement which are more fundamental than money. NAICOM will be reinvigorated.
