A review of economic activities particularly the insurance sector in the first quarter of 2013 shows a lull in the economy, dashed hopes and low productivity.
This was the conclusion of Wole Adetimehin, insurance industry expert and president, Chartered Insurance Institute of Nigeria (CIIN), during an assessment of economic activities and performance of the insurance industry during the first quarter at a Media Retreat in Ibadan. Adetimehin, who said economic activities in the first quarter could not pick up as expected, was following delay in the passage of the 2013 Appropriation Bill, when hopes had risen after it was presented to the National Assembly end of the previous year.
“Just like any other sector, our hopes were high on the expectation of early passage of the budget having been presented late last year, so formed the basis of our planning”
“All these hopes were shattered when the budget was not signed and so delayed every appropriation that could have been done by government or its agencies.”
According to Adetimehim, all these brought frustrations, salaries were not paid in some states, production of new businesses was not there and consolidation of existing ones also was tough, given that almost 80 percent of economic activities are driven by government spending.
“Things have been slow and the whole sectors are affected in one way or the other, which Adetimehin noted may drag to end of second quarter since the budget has just been signed. Allocations will start to happen, but not likely to be serious till end of second quarter.”
Specifically, on the insurance industry, the CIIN boss said the new premium policy “No Premium No Cover” introduced January 1, 2013 by the National Insurance Commission (NAICOM) in the short run has brought down business generation in terms of volume, but stated that what you find in the books of insurers as a result of the policy are quality businesses.
The implication of this is that there is going be a lot of liquidity in the market, huge investible funds which will enable companies earn good returns on investment for their shareholders and for meeting claims obligation more promptly.
“We are going to see improvement in the nominal value of insurance companies’ shares on the stock exchange, given that the companies are now in better position to earn good returns on investment with increased liquidity and more quality risks in their books.”
The turnaround in activities in the insurance sector is going to be enhanced by the current growth in the banking sector, given the full year results of the banks released recently. This will rub off on the activities in the insurance sector because when other sectors bubble, insurance benefits and that is what we are likely to see soon, Adetimehim stated.