Increasing Demand for Insurance Among Nigerians

More than ever before, there appears to be increasing demand for insurance among the Nigerian public, indicating improved consciousness and better days for the industry. While the public, which hitherto never believed in insurance and those behind it, have come to see that after all, players can meet obligations in times of crises, the operators themselves have also seen the need to fulfill their own part of the contract without delay.
Just as premium generation in the market is growing in geometric terms with companies smiling to the banks, the insured also are up making their claims.Some industry operators who spoke with BusinessDay agreed that quite a reasonable amount of premium was generated in the outgone year, for example from group life insurance which fully became operational during the previous year.
They also agreed that the year witnessed huge claims-take from the public, indicating increasing consciousness.
Before the industry recapitalisation and consolidation, premium generation was low as the public had little or no confidence in the market following bad image created by the inability of operating firms to pay claims at that time.
But with the reform, which increased the industry capital from less than N30 billion in 2005 to over N400 billion currently, the players have got the capacity to underwrite bigger risks and meet claims obligation.
Most of the results released beginning from the first quarter through third quarter by companies show more than 100 percent growth in premium income, indicating that the new capital injection have started impacting on the operation and performance of the companies.
Meanwhile, the current year looks prosperous, despite the global economic meltdown, as a number of opportunities spurred by the industry reform will begin to unveil. Players are optimistic that more than ever before, the insuring public would access insurance to hedge against the anticipated effect of the ongoing global financial meltdown, which has already affected the naira against other currencies.
This is as individuals and corporate organisations are presently seeking insurance covers for their assets to hedge the negative impact of the falling naira.
These assets that ran into billions of naira were acquired when naira was stronger against other foreign currencies.
For instance, banking and manufacturing companies’ assets worth billions acquired with foreign currencies, is feared may be difficult to replace with the dwindling state of the naira against other currencies.
Businessday investigations reveal that there appears to be increasing consciousness among the insuring public on how to protect their assets, as cost of replacement with the current state of the naira may be tripled.
Industry regulators have also allayed the fears of the public that the global financial crisis anticipated to affect other sectors negatively will instead have positive implication for the insurance industry.
They observed that most of the companies and individual assets were partly funded with foreign currencies and would be in high risk exposure if not adequately insured against the unexpected, as cost of replacing it might be unbearable.
According to Fola Daniel, commissioner for insurance, in an interview with BusinessDay, the current year looks prosperous for the industry as more premium income will be generated.
More funding will be expected from government through the insurance of their assets and that will impact heavily on the industry’s premium, noting that government, having released N4 billion for group life insurance in 2008, which is unprecedented, means that more money will be released for the current year.
Daniel noted further that other efforts by the commission, including implementation of compulsory insurances for public buildings and buildings under construction, would begin to manifest in the current year, producing huge income for the industry.
“We have succeeded in instilling discipline in the market and that is to the benefit of the insuring public as operators have joy now in meeting their obligations to sustain customer confidence.”
Though there was perception of high claims ratio for 2008, the commissioner stated that he was not aware of any escalation in claims, but if there was, “it is only an indication of more businesses done.”
To him, he was not aware if companies had concluded their accounts to indicate high claims ratio, pointing out that they have up to June to submit their accounts to the commission and “that is only when the commission can access the level of premium against claim.”