Managing Director/Chief Executive Officer, Access Bank Plc, Herbert Wigwe has also supported the recapitalisation of the insurance sector.
“Relative to the size of the Nigerian economy and the opportunities it offers, the insurance sector needs serious capitalisation to increase its capacity to underwrite transactions in sectors such as the oil and gas, marine, aviation, technology,” Herbert Wigwe, Managing Director/Chief Executive Officer, Access Bank Plc has said.
Wigwe, who said this while delivering a paper with the theme: “Disruption, Innovation and Business Growth” at the just concluded 2019 National Insurance Conference (NIC) in Abuja, organised by the Insurance Industry Consultative Council (IICC) noted that the recent rise in minimum capital for the insurance industry by the National Insurance Commission (NAICOM) by over 200 per cent will go a long way towards repositioning the Nigerian insurance sector.
“Early this year, May 20, 2019, NAICOM raised the minimum capital for the insurance industry by over 200 per cent. Whilst this will go a long way towards repositioning the Nigerian insurance sector in terms of product offerings and customer experience, the sector must grow big enough to provide cover for huge exposures,” he said.
With the advent of innovation, he advocated strategic alliances and partnerships between traditional insurance companies with upcoming “insurtechs” so as to explore the technological and growth opportunities there from and give customers better and more innovative product offerings.
He advocated for a Claim verification processes that must be reviewed to foster trust, noting that partnership with the Banks for viable ‘Bancassurance’ opportunities is also a formidable route to growth.
On Insurance Penetration, he called on insurance companies to explore further the use of the new media to deepen insurance at the retail segment of the market, noting that the need for the implementation of a robust compulsory insurance policy cannot be over-emphasised.
“In 2016, the Nigerian insurance industry generated approximately $58.4 billion in Gross Premium Income (GPI) despite a low penetration rate of 0.45% (Kenya -2.7 %, South Africa -16.99%). With only 1per cent of Nigerians holding an insurance policy, there is clearly an untapped opportunity in the country.
“It appears the Nigerian insurance sector has started experiencing disruptions as Insurtech start-ups leverage technology to take advantage of the opportunities in the sector to gain market share and pursue growth.
“In 2014, AutoGenius which was launched by Venia Technologies allows users to buy auto insurance online, working with traditional insurance companies to shape the user experience. Similarly, CompareIN which was launched in 2015 allows users to compare and buy an insurance policy online.
Also, Cassava allows individuals to make small weekly and monthly insurance subscription payments via debit card or USSD.
“Today, businesses and economies compete in a networked world in which the key to competitive advantage is no longer the sum of all efficiencies, but the sum of all connections.
“Strategy, therefore, must be focused on widening and deepening linkages to access ecosystems of technology, talent and information. Today’s decision-makers must let go of the traditional linear thinking of change and think strategically about the forces of disruption and innovation shaping our future. Innovation is our new reality,” he added.
Insurance Brokers Warn Against Automatic Business Placement With Insurance Companies
Stakeholders have warned insurance companies not to expect automatic placement of businesses with them by the brokers except where their books are certain that such a company can make the recapitalisation requirements as prescribed by the National Insurance Commission (NAICOM).
The companies, it was said, should also think of merger with the like-minds where it is obvious that they cannot go alone.
The assertion was made by Mr Olumide Lateef, the Chairman, Abuja Committee of the Nigerian Council of Registered Insurance Brokers (NCRIB) while chatting with SUNDAY INDEPENDENT recently on the issue and on the sidelines of the chapter’s Members’ Evening held at De Hotel Horizon in Abuja.
“From their books, we will know those who will easily sail through the recapitalisation. But any company that is not going to meet the requirement, not as if we are not going to patronise them, but we just have to be very careful about how to deal with them.
“Every insurance company is a friend to brokers but we will look at the type of business such a company can do. Companies will merge while others will be consumed so we have to take our time and watch out where to place business in order to protect ourselves and the policyholders”, he said.
According to him, the consolidation exercise was not new to the industry as the sector had embarked on it in 2006, adding that companies have the option of consummating merger deal with like-minds to be able to make it to the final whistle come June 30 2020.
He said as professionals, the insurance brokers are taking their time to examine the books of companies before placing business with any insurer so as to protect the integrity of the arm of the industry and interest of the policyholders.
“Recapitalisation affects the whole of the industry through targeted at insurance companies. What we do as professionals are to take our time and examine the books of all the companies licensed in Nigeria and from their books we will be able to know those who will easily sail through.
“In 2006 we witnessed it. One thing in the insurance industry is that if you cannot meet up going alone, you have the opportunity of a merger with others.
He said that it is difficult to actually predict how many companies would sail through the recapitalisation hurdle given the fact that most of them are quoted companies whose chances are that they could go all out to source for funds to scale up their paid-up capital.
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