NAICOM mulls new premium rating for riot, social unrest as #EndSARS protest exposes vulnerability rate
National Insurance Commission (NAICOM), assessing the recent #EndSARS protest and its impact on the industry, has come to terms on the need to increase the premium rating for riots and civil unrest going forward.
The Commission says this has become necessary having seen the level of vulnerability to which individuals, businesses and governments faced with the #EndSARS nationwide protest.
Besides that, this is also necessary to enable insurance companies be in position to meet claims’ obligations arising from such incidents, and at the same time pay dividend to shareholders and contribute to the economy.
Sunday Thomas, commissioner for Insurance/CEO, NAICOM, made the disclosure at the 2020 Insurance Professionals Forum organised by the Chartered Insurance Institute of Nigeria (CIIN).
The Forum had as its theme: “Defining the Future of the Insurance Industry.”
Thomas said, “The recent outbreak of protests and civil unrest across the country and the resultant losses has exposed the vulnerability of government, businesses and individuals to unforeseen events.”
These incidents have further reinforced the value and necessity of the insurance industry, he said, saying, “However, these incidents are likely to increase insurance claims, thereby exacerbating the already weakened liquidity and capability of insurance companies.”
According to Thomas, this has reinforced the need for proper underwriting to ensure insurers are able to settle corresponding claims obligations to cushion the effect of losses on Nigerian households and businesses.
“It is pertinent to note that insurance coverage for Strike, Riot and Civil Commotion (SRCC) clauses, which were redundant in the past and which by competition, are mostly offered free of charge must now be adequately rated as an important product for the survival of Nigerian businesses,” he said.
He, therefore, noted that the Commission would be issuing directives to ensure that underwriting was strengthened to appropriately rate and charge requisite premiums so that profitability could be guaranteed and claims settled promptly without financial strain on the companies.
The Commission also urged the industry to utilise the opportunity created by Covid-19 and #EndSARS to lead in the quick recovery and restoration of the affected businesses and also showcase its role in reinforcing the economic resilience of individuals, businesses and the economy at large.
“The suddenness of the Covid-19 pandemic imposed immense pressure on all businesses including insurance business. Pressures faced by consumers in the form of reduced finance and business activities, lack of access to credit, expiration and wastage of perishable goods, temporary or permanent business closures and employee contract terminations, life threatening illnesses and deaths all combined to increase the propensity for claims,” he said.
One of the major challenges for insurers is the inability to market/sell insurance products to consumers, which, in turn, reduced the premium income. This has necessitated the need for a robust online automated marketing and feedback system in order to reduce the dependence on in-person sales and marketing.
“It is worthy to note that considering that most losses arising from the pandemic are not adequately covered by existing insurance policies, it has become obvious that current insurance product offerings are not adequate to respond to emergent risks and needs of our society,” he noted.
There is therefore the need for a review of conventional insurance products in order to upscale the value proposition of the Nigerian insurance industry, he said, noting, “We cannot continue to ignore the impact of unforeseen events on individuals, businesses, and the insurance industry as a whole.”