It appears non-renewal of group life and police insurance schemes are impacting on companies’ performance, what is your take on this?
You have said it. The premiums have not been paid, and it cannot be ignored. We also know that there is a challenge in the economy. Government must set priorities for what they do but I believe that very soon they will look into that area.
There have been challenges, you know our main source of foreign revenue is oil and there is deep in the oil price so it affected everything. It affected government revenue, you know many state governments have not paid salaries, so they want to resolve these things before they pay insurance premium.
But overall, every business goes through turbulent times. It cannot be smooth and selling every time, you must go through some hard times too. The economy is going through hard times, but we pray that it will get better again.
How soon do you see recovery?
We have a new government coming in, and we pray that it will find solution to these problems. Look at the queue at the filling stations. But it is for everybody, not just for the insurance industry. It is for the entire economy and insurance is a reflection of what happens in the economy.
We don’t create businesses, we only insure businesses; so if the business is not doing well, what are you going to be insuring? We are the mirror of the economy, so it’s only when the economy is doing well that insurance will do well also.
Leadway is a major player in insurance and pensions. Between insurance annuity and programmed withdrawal, what would you be advising retires to take?
It depends on what the retiree wants. It is like you want to buy a car, there is Toyota and there is Honda. It is your choice; it depends on what you want. Programmed withdrawal sets for payment coming over a period guaranteed. Annuity may be for life, so they are different plans.
Even in some countries abroad where they used to have annuity alone, they are now encouraging programmed withdrawal also. So, let the people make up their minds on what they want. Every market should give people opportunity of a choice.
So, I think it’s good for our system to have annuity and programmed withdrawal, and let the people make up their mind on what they want. And they are not very complicated programmes so you can read it. Get conversant with whatever you want. So, there is space for everybody. Some people are happy with their programmed withdrawal and some others are happy with their annuity.
There has always been a reoccurring issue about insurance industry having so many fringe players. Do you see need for more consolidation?
I think you may not be totally wrong if you say that we still have a good number of small insurance companies. But you know, in some economies you have insurance companies that want to do mono product. Now, should their capital be the same with those that want to insure plane? I don’t think so.
So it is not just about size, you may have your niche. Like you know, in the banking now you have national banks and you have international bank with different capital base. An insurance company may say, I want to do this kind of product only, I think they should be able to have choice to do that one product, you specialise on it and be a master on it.
The industry has witnessed a lot of reforms driven by the National Insurance Commission (NAICOM) and key amongst them are the ‘No Premium No Cover’ and the ‘Risk Based Supervision’ policies. I will like you to access how far this has impacted on the industry?
I think we have a very vibrant NAICOM now and I think most of us in the industry are very happy with our Commission. They are pushing us very hard but they are pushing us in the right direction.
Now, we have overcome the issue of ‘No premium No Cover’. That has been a challenge for the insurance industry for many years. But now the Commission has come up with something that is working beautifully well. Yes, you still see a bit of outstanding here and there, but it is something we can manage.
On ‘Risk Based Supervision’, that is where we are going. That is where the world is also going right now, because you should look at the key risks that affects a particular company or product and target that area, that is what they do abroad right now.
What is the future of the industry given the growing presence of foreign investors into the market?
There is bright future when more people come in. They will throw more capital into the business and make the business more competitive. They will raise barrier to entry which is good because they are coming with a lot of capital. So it will take the industry to a greater level. So I don’t see anything negative in that.
Don’t you think their coming many be a kind of threat to the local players?
I think we will all co-exist together. It will be easy, except if we too are very lazy but at the end of the day, the consumer will get better product and better because there will be competition. But if the local players are not up to it, then, that is their own challenge.
All of these bothers on quality service to the consumer because if you are buying an insurance product whether from a local or foreign company, what is important to you is that you get your claims paid. That is what matters. Also there will be regulation and the regulators will like to make sure that people play by the rules.
It is good for us to develop strong local companies because our companies can also go abroad and compete. It’s not just by saying we want to play because we are Nigerians, no, you must do it properly, you must have a structure and build a good company not just by fiat, and you must do your product very well and respond to claims very well.
Leadway used to be a local company in Kaduna because we started from the North. But we came here, we have to prove ourselves to also exist here and be accepted in the market here. So, be it local, be it international, be it anything, you must serve the people properly. You must sell your products so well that they will believe in you and you deliver good service. That is the only thing that will differentiate anybody.
MODESTUS ANAESORONYE
