Matthew Otoijagha
President Muhammadu Buhari has charged insurance operators not to work against the present recapitalisation which is aimed at taking the industry to lofty heights.
The President, who was represented by the Permanent Secretary, Federal Ministry of Finance, Dr. Mahmoud Isa-Dutse, said this at the on-going 2019 National Insurance Conference in Abuja, with the theme: Disruption, Innovation and Business Growth.
He stressed that the government will continue to support the industry to enable it contributes effectively to the growth of the nation. He urged the operators not to fight the recapitalisation just because they could not raise the expected capital, stressing that the act to deepen insurance penetrations remains a responsibility to be carried out by all stakeholders.
The Commissioner for Insurance, Mohammed Kari, said the need for radical reforms has been accentuated by the disruptive impact on the insurance industry of a series of digital innovations in areas such as online sales technologies, machine learning, the Internet of things, advanced analytics and virtual reality, among others.
He added that while these new technologies are already making it easier for consumers/policyholders to benefit from superior service and more choice, as well as lower prices, there are corresponding challenges.
“Therefore, in order to remain relevant and become a critical contributor to the national economy, the industry must consciously be proactive and organized so as to take advantage of the opportunities provided by these disruptive developments while at the same time curbing their corresponding negative impacts.
“It is important to note that firms will only benefit from digital technology only if they embrace its potentials along the entire insurance value chain, including underwriting and claims management.
‘‘This would therefore entail a rethink of the industry’s business strategy and alignment of its operational practices to contemporary economic context, such as the Economic Recovery Growth Program (ERGP) of the Federal Government, sustainable and inclusive insurance, as well as exploiting the benefits of the implementation of the 2nd Phase of Market Development and Restructuring Initiative (MDRI), among others,” he posited.
Kari noted that from the regulatory standpoint, the need to exploit the opportunities of digitalization and to tame the cumulative consequence of inflation and devaluation of the Naira heightens the necessity for the ongoing reforms of the insurance industry such as, expansion of the insurance distribution channels, financial inclusion, corporate governance enforcement, market discipline, professionalism and the recapitalization exercise aimed at strengthening insurance institutions and increasing the spread of insurance in the country.
“Let me hasten to add that these reforms are in furtherance of the President Muhammadu Buhari’s administration’s determination to revamp the economy as encapsulated in the ERGP in order to ensure that the insurance industry becomes a significant contributor to the economy of Nigeria,” he added.
The Chairman, Insurance Industry Consultative Council (IICC), Eddie Efekoha, pleaded with the National Insurance Commission to give favorable consideration to the suggestions made by the Nigerian Insurers Association (NIA) in their on-going engagements on the recapitalisation, so that the necessary guidelines when released will ensure that the objectives of this reform are fully realized.
“This recapitalisation exercise, like every past reform, presents both opportunities and new challenges. As operators, we must begin now and not later to address our minds to the following questions: How do we maximize the use of the additional capital to generate superior returns to investors?
How does technology help the industry to deliver superior service and deepen insurance penetration?
“How do we develop a data pool that supports improved pricing of risks underwritten and innovative products driven by consumer insights? What do we do to develop and attract the right skills and talents that can match the fast pace of technology revolution?
“How do we harness the values inherent in partnering with other industries like telecoms and banks to deepen insurance penetration? How do we partner with various arms of government like the NPF, Customs, and Fire Service to ensure compulsory insurances are enforced? Above all, how can we cooperate better than we currently do for the good of all stakeholders?”
Director-General of the Budget Office for the Federal Republic of Nigeria, Ben Akabueze, implored insurance operators to embrace the recapitalisation and ensure they revise the notion that they are the poor cousins of the banks.
He posited that the industry is ripe for technological disruption, adding that insurance remains one of the tools for mobilizing savings; hence, there is the need for consolidation.