Political risks worry insurers ahead 2023 elections
As Nigeria prepares for the 2023 elections, insurance companies have raised concerns about the political risks in the country.
Some of the insurers are still smarting from the aftermath of the EndSARS protest in October 2020, which cost the insurance industry in excess of N11 billion on claims as at end of January 2022.
Mayowa Adeduro, managing director/CEO of Tangerine Insurance, said insurers like other operators in other sectors are always apprehensive whenever there is change of political power in a country.
He said: “Yes, elections will surely have an impact on the economy and the business environment, particularly if it does not go smoothly because government and individual assets could be touched if there are pockets of crises here and there.
“If crises in elections are not widespread and insured assets are touched, it becomes a loss for the insurance industry because claims will be filed.
“But if the crises are widespread, with a series of destruction to the extent that the government declares martial law or state of emergency, then that goes beyond insurance. Government in this case will pay for losses and compensate victims.”
Allianz Global Corporate & Specialty (AGCS), in its latest report on ‘Political Violence Outlook’, said strikes, riots and violent protest movements pose risks to companies because, in addition to buildings or assets suffering costly material damage, business operations could also be severely disrupted with premises unable to be accessed, resulting in loss of income.
“Civil unrest increasingly represents a more critical exposure for many companies than terrorism,” said Srdjan Todorovic, head of crisis management, UK and Nordics, at AGCS. “Incidences of social unrest are unlikely to abate any time soon, given the aftershocks of COVID-19, the cost-of-living crisis, and the ideological shifts that continue to divide societies around the world.”
He therefore urged businesses to also review their insurance policies in the event of increasing local unrest activity. “Property policies may cover political violence claims in some cases, but insurers offer specialist coverage to mitigate the impact of strikes, riots and civil commotion.”
Adeduro said there would not likely be crises, adding that the right thing should be done by ensuring transparency and a level playing field for all the parties during the elections.
On whether or not there are risk management measures being put together now by the insurance companies, he said: “There is no sovereign risk management measure at the moment, but individual and corporate policies will continue to be guided by effective risk management practices.”
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He therefore called for continuous advocacy for peaceful elections so that the country will continue to remain peaceful, while other problems like insecurity, kidnapping and banditry should be seriously looked into.
Obinna Chilekezi, chief executive officer of Intel Consult, said: “Political risk is not covered in normal insurance, but through policy extension it can be covered.”
Chilekezi said the events following the EndSARS protest underscored the need for insurers to start to deepen their offerings by letting policyholders and insured publics realise the need for policy extension.
“Policy extension will enable you to cover riots, political violence, civil unrest, and this could be particularly important as election is coming,” he said.
Ganiyu Musa, chairman of Nigerian Insurers Association, had said recently that the insurance industry witnessed a better renewal season this 2022.
According to him, the EndSARS experience created a lot of awareness on the need for insurance protection, as insurers added it as part of their marketing and many people are aware of the series of claims paid to victims of the incident.
He said the industry expects that the EndSARS claims would be about N20 billion when concluded, adding that some unsettled and pending claims are being investigated while some are being processed.
A breakdown of the EndSARS claims showed that 99 claims were settled on malicious damage; eight claims on business interruption; 455 claims on burglary attacks and 912 claims on fire and burnt sites.