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Loss Adjusters back insurer’s recapitalization over gap in obligations

Loss Adjusters of Nigeria (ILAN)

The loss adjusting arm of the insurance industry, the Institute of Loss Adjusters of Nigeria (ILAN) are optimistic that the ongoing recapitalization of the nation’s insurance industry will strengthen their capacity to meet obligations including payment of loss adjuster’s fees.

ILAN who spoke in support of the increase in new minimum capital requirement for underwriting companies said its members have been victims of the low capacity that has characterized some companies in the industry which affects payment of their loss adjusting fees.

Femi Hassan, president of ILAN, said “we wish not to pretend that our underwriting partners at this time are challenged, but we believe that the recapitalization exercise will strengthen them to meet their obligations.”

Hassan also said, while our expectation is not that they should increase our rates now, but we want to see them meet their immediate obligations.”

But over time, we will ask for improved rates, he said smiling.

The Nigerian insurance regulator, the National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion, to N20 billion.

According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of this circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020.

Analysts have express concern that the loss adjusting profession faces imminent shortage of loss adjusters, if issues related to low payment scale and delayed payments from underwriters are not resolved.

The loss adjusting profession is charged with the responsibility of ascertaining the extent of loss suffered by an insured and the recommendation of proper sum of indemnity payable by the underwriters to the insured.

However this is steadily been eroded from the domestic insurance industry as its members are being hit hard by poor revenues resulting from their low payment scale compared with their international counterparts and the huge debts owed them by underwriting companies.

The implication of this development is that, the loss adjusting firms have become less sustainable, inability to pay quality remuneration, manpower shortage and increasingly less attractive to younger generation of job seekers.

Analysts fear that if the loss adjusting profession in Nigeria is completely eroded, it would cost local underwriting firms and the country huge foreign exchange value to secure loss adjusting services from other markets.

Darlington Mgbojikwe, managing director/CEO, Crawford Loss Adjusters Limited had noted that loss adjusting profession in Nigeria was facing a difficult time and could hardly sustain itself.

“This development is affecting the technical and skills regeneration since we can’t afford to bring in fresh graduates and pay them or offer necessary trainings for staff.”

“In fact, we have a lot of aging adjusters and because the money we are making has not enabled us employ graduates that will take over from us, the profession is endangered.”

Today available loss adjusters in the country are dominated by aging players who by design of faith could not seek for new careers by virtue of their age. So, their eventual exit could mean end of their business since it was becoming unsustainable and younger employees were leaving in droves for other professions, Mbojikwe stated.

According to him, the Nigerian Insurers Association (NIA)/ Institute of Loss Adjusters (ILAN) scale of fees reviewed in 2011 after about almost 20 years to 10 percent increment is still not implemented across board.

We are starved of revenue, and many of our members cannot change career at this age, Mgbojikwe noted.

While UK and other advanced markets underwriters pay between 6-7 percent of their premium for service charges to loss adjusters and lawyers, Nigerian underwriters still pay less than one percent of their premium, he hinted.

According to him, some loss adjusting firms was owed debts for reports it had done years past, stating that such development was dangerous for the profession.

 

MODESTUS ANAESORONYE