• Friday, July 12, 2024
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‘Brokers will drive uptake of insurance in 2016’

Insurance-Brokers

Insurers are looking forward to supporting government achieve its set objectives in the 2016 budget with focus on infrastructure development. Kayode Okunoren, president, Nigerian Council of Registered Insurance Brokers (NCRIB) in this interview with select journalist shares his thought on role of brokers, impact of falling oil prices, faith of delisted members, retail business among other issues. Modestus Anaesoronye was there. Excerpts.

Looking at the 2016 budget and provisions on capital project, what is the future of insurance in 2016?

The insurance industry in 2016 obviously will take a cue from what government does in terms of outcome of the budget. We are waiting to see the full details of the budget, but from the feelers we know that government is going to spend a lot of money on infrastructural development and this is expected will impact on insurance because these are all insurable assets. And with the visitations we are making to government agencies and parastatals to take up insurance for their assets. We can’t say because what we have said in the past were not acted upon so we should stop, know.

Definitely, if they spend such money on infrastructure, employment will be created and so there will be insurance for both human and material assets. There will be activity for insurers and the brokers will be the people to drive it. So, the future of insurance in 2016, i will say is bright subject to us doing our own fair share of the effort because gone are the days when things will fall on your lap, you have to work for it.

The mere fact that the government is taking a hard stance on corruption further reinforces our hope that things will be done the right way this time around, in an atmosphere of transparency and good corporate governance. And that will be to the good of our dear nation, Nigeria. The council on receipt of the original version of the budget has scheduled a retreat to review and analyse the document to see specific impact and also identify how our members can support the government to achieve its set objectives.

Insurance of national assets

There could not have been a better time to raise the issue of insurance of nation’s national assets than now, in view of the present administration’s disposition to prudence in management of the nation’s resources. It is our take that inputs should be solicited from the insurance industry in the government’s economic policies. As it is today, many of the nation’s assets are uninsured by government through its ministries and agencies, despite the promulgation of the law on compulsory insurances. We must not forget that aside from providing investible funds, insurance is one of the financial management strategies that must be factored into genuine economic revival development initiatives. In this vein, our Council wishes to commence a sensitisation campaign under the slogan, “National Risk Alert” to continually draw attention of government to its risk exposures. We passionately solicit your assistance through your respective medium.

Impact of the falling oil price

The price of oil has plummeted as a result of glut, and for the fact that OPEC members could no longer agree on what they were doing before to force prices we have been left in this situation. Before now, they were able to reduce production to force prices up, but it has gone beyond that now. They could gang up as usual, but for the mere fact that production is going up outside OPEC it’s enough reason for them to say look we have lost the battle and that is why we are seeing that trend. We as a country is being hit seriously because we are a mono product economy, having depended on oil for a long time. There is therefore need to diversify, and i think government is working in this respect particularly in the area of agriculture. They have promised to spend a lot of money in that area. Government right now is thinking outside the box, for the first time by looking at the other sources of income including taxation. I know when we here about taxation we get worried, it is not necessarily to increase tax but to widen the net so that more people will be captured to bring in more money.

Foreign Exchange

On the issue of foreign exchange, there has been issue of policy summersault. At a certain stage, they said you can’t pay into your domiciliary account, now they said you can pay into the domiciliary account. If you now pay, how would you be allowed to utilise it. Most people will prefer that they are able to transfer their funds for various needs, but they are saying may be you can get cash, but how much cash would you be allowed to carry to go and do your business. Lately they said the banks should now be sourcing foreign exchange by themselves. Its mind bugling, and if you watch carefully, may be in the next 24-hours another policy pronouncement will be made and all of these have negative effects on businesses and the economy as a whole. I also saw that dollarization is creeping back again, but we are watching it to see how things develop.

However, if government does what we are hearing by encouraging private investors and they are able to construct refineries so that we spend less in the international arena, and we can produce locally, a lot could be achieved. If we get the existing once working and new once up and doing, we would have saved a lot of resources to support domestic economy.

The focus of the larger insurance market now is on retail given limited space in the corporate business. Brokers i would say have not shown much enthusiasm in this area, what would be your position on this?

It is actually the brokers that started efforts to develop the retail space. Our Council in the past has met with market leaders, the ‘Oloja’s’, and that is retail. We want to do it in a way that we can group them for orderliness because it is not easy to be walking round the whole market talking to individual sellers. You need to try it one day to see how it is, just to sell one product may be for N2, 000.00. You need to try it, it’s a herculean task. But then, we need to work on it because that is where the money is because it adds up. We also have a full fledged committee on micro insurance and Takaful to support our members in delivering brokerage services to the grassroots.

We have also been to some governors for partnership in this regard. For instance, when some calamities happen you see government going there to sympathise, empathise and at the end of the day they set up relief fund. You and i know that maybe it’s only a small proportion of that fund that actually gets to those affected, but what we are trying to say to government is this: partner with us, we can fashion out a kind of coverage which you will fund from a part of the relief fund. At the end of the day, you are not spending anything extra.

We are not saying you should discard the relief fund because if you say so, you would have affected your chances of sailing through with the proposal because of varying interest. We are not saying government should give us the whole relief fund, because ours is insurance. It’s a proportion of the value of the risk presented that you pay as premium. We are trying to tell the government that they can concentrate their efforts in other things and leave this area for insurance people to take care of. Of course, they will be watching us. If anything happens and we don’t take care of it there won’t be renewal and we know that. We believe it can work.

About 108 Insurance Brokers were delisted in December by NAICOM and 21 of them were said to be your members. Is that the end of the story?

When that incident happened, we called a stakeholder meeting. They idea was to ensure we did not hear from one side which was NAICOM because they had facts and figures, so we created an opportunity to also hear from our affected members. We needed to hear from them where the shoes are pinching, what led them into allowing their licenses fall into that precarious situation. And so a lot of things were said and because of the feedback we are getting, we quickly set up a NAICOM/NCRIB help desk to address the matters. We made them to write to us, providing reasons what has led to their indictment for infraction. You can see that from December 14 and now, the committee has met about five times outside of other consultations. We were able to narrow it to 21 members, and they are those who are actually current with their membership requirements. As i have always said, this is an institution that protects the rights of its members, but members have their own responsibility to that central body to be able to maintain full membership rights. So, all the action we took was not only on the 21 members because we are taking of brokers now, and that has led to NAICOM listening to our plea. Before now, such offence was tantamount to affected companies forfeiting their licenses, but instead the Commission has offered a seven phase arrangement whereby re-registration of the lapsed license can commence.

The alternative would have sent a bad signal, send people into unemployment market, put their families into suffering and all that. The window has been opened to those who can still play by the rules because when you are in a regulatory environment you have to abide by the rules, otherwise you will be regarded as having infracted. So, apart from the appeals we are making, this administration over time now has resolved to do more collaboration, rather than being combative that will not help anybody. If you are combative, it means you will be talking about rights without looking at actually why those things happened.

So, what we have done is to make sure that those members who are affected show remorse and are now prepared to do things the proper way and also play by the rules. It is only then it becomes easier to engage. So, we are collaborating with NAICOM, again for this and other issues. We cannot stop engaging, and when issues come up we address them and that is when value of NCRIB will be known to the members. So far, the feedback we are getting is positive and we shall continue to engage Commission to see how they can show kindness and bit of mercy.