As the nation’s insurance sector looks head to 2014, there is enthusiasm that quite a number of regulatory policies instituted in the past year would begin to impact positively on operations. Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance plc, in this interview with MODESTUS ANAESORONYE shares his thought on recent developments in the industry and what the expectation is for the current year. Excerpts.
Taking a review of the Insurance Industry vis-a-vis your company, how would you describe the out gone year?
First and foremost, we have to thank God that as a company we are part of the industry at this time of the year, because back in January 2013 we were certain what the year was going to look like. And having seen that some colleagues who started the year with us are no more today, we could only but thank God for the gift of life.
Having said that, I would quickly note that the out-gone year was quite challenging because there were a number of steps that needed to be taken at the beginning of the year, which no operator had full control of.
Amongst them is the International Financial Reporting Standard (IFRS) which we started implement in 2013 because the previous years were only preparatory. Last year also was when our regulator felt that we needed to reorder the way we do things, moving from the credit era to cash and carry era in terms of premium payments.
These were two major events that redefined the year right from the start. It was a bit uncertain how it was going to play out and today we can say yes, we know where we stand. As an industry, I can confidently say that we have done very well with the help of our regulator in terms of ‘No Premium No Cover’. On whether we have done well in the issue of IFRS that will depend on which side of the divide you find yourself.
But when you look at it from that perspective of the number that have gotten their accounts approved as against the number that was yet to get approval up the 19th of December 2013, it is not a good pass mark because one would have expected that about 80-90 percent of the companies would have had their accounts approved. But right now, we are hovering around 50-60 percent. I want to believe that, that is not the wish of anyone of us and that obviously would have stressed the market.
Specifically, how has your company fared?
For us as Consolidated Hallmark Insurance, again, I want to thank God that we are part of the industry. We are growing slow and steady, though we are not cut out to make the big numbers but we are happy with the numbers we have made. And we are playing professionally and that explains why we are among the first few to have our accounts approved.
It is not because in terms of Gross Premium Income (GPI) we will rank amongst the top five, that is not it. But in terms of structure, system and professionalism we will rank amongst the top five and that explains why we are able to comply with the IFRS.
In fact, we are actually number four in terms of how quick we got our approval. And with all modesty, I say that we were the first non-banking related insurance company that got their accounts approved by NAICOM.
I say this because the banks have been at the forefront of this IFRS and therefore the structure was there for them. But for us that have no link at all with the banks, you can appreciate the level of work we did.
I take it that some have not got their approval yet for certain reasons; one, from preparation and taking the challenge early on time to embracing the IFRS while others might be for other reasons. But I think that largely, knowledge was an issue and some may have thought that it is Nigeria, we can always jump it but that isn’t the situation.
For us a company, the ‘No Premium No Cover’ has equally helped us. Essentially, collection has improved, though production dropped. If you plot our cash collection against previous year’s, you will see a marked difference.
We are happy we did this policy because it has improved market liquidity and this places us at better position to deliver more efficient service. I don’t believe that being the first year of implementation that these challenges will continue or production will nosedive; no, over time we will continue to record improvement as more consumers become aware of the policy.
Going forward, the insuring public will know that this policy has come to stay, so they either protect their assets through insurance or carry their liability themselves. And I think that respectability for the industry is growing, so now when we go for marketing we tell clients that we have come to help them protect their assets and manage their liability. I think the time we come begging for premium is over in insurance industry.
Looking at the business environment, what challenges do you perceive in 2014?
If you look at some of the things the National Insurance Commission is trying to do, you will discover that it is based on perception of anticipated challenges. We have the market; we have the population so to say, but in terms of penetration it is really very low.
And what do we need to do to take advantage of this population? It’s awareness, awareness, awareness and that is what the Commission is doing to increase penetration. They have come with micro insurance products, they have come with compulsory insurances and they have come with Takaful insurance products.
Once we are able to get more people into buying these products in addition to the mobile products by some of our colleagues, I can assure you we will make a lot of progress in insurance penetration and the volume of income coming into the entire industry will be huge.
Once that is done, we will be far better as an industry and can be in a position to lend to other sectors. All we are saying is let’s reduce the income to GDP gap so that we can do quite a lot as opposed to what we did in the past. That for me is the outlook going into 2014.
Foreign investors coming into the Nigerian insurance market is eliciting some levels of enthusiasm, how do you see this impacting on the overall state of the Industry?
